It is logical and reasonable: The petroleum price hike prompted the cost of running a taxi to soar; hence taxi fares need to be raised. Taxi passengers will have to pay more. That doesn't sound unfair - the person who enjoys the service should pay for the changing cost of producing that service. Surveys found, however, that 80 per cent of urban citizens oppose the authorities' plan to raise taxi fares. This is only too predictable. Nobody would like to spend more except those who can get 100 per cent reimbursement from somewhere.

What is beyond prediction, however, is that most taxi drivers "do not favour the rise of taxi fares."

Their argument is that the move will force the passengers to take other means of transportation (buses for example), individually run taxis and hei che (unlicensed taxis). "That would further reduce our income," Chen Tao, a Beijing taxi driver said. Like most other taxi drivers in the city, Chen is an employee of the government-authorized taxi companies. The municipal government's plan to raise taxi fares is mainly set for these companies.

Individual taxi and hei che drivers, however, will most likely keep their fares unchanged in order to lure more passengers over from taxi companies. Beijing has 277 taxi companies, which employ about 100,000 drivers, while there are about 70,000 hei che drivers and 1,157 licensed individual taxi drivers.

The latter two groups undoubtedly constitute a threat to their counterparts in taxi companies. Their intention to keep fares unchanged indicates that they can afford the rise of the operational cost caused by the oil price hike. The increased cost, about a few hundred yuan a month, is well within their affordability given their monthly gross income, which is much higher than that of taxi company employees. It is reported that the tax and administrative fee a self-employed individual pays to the municipal authorities amount to 40 per cent that of the "administrative fee" a regular taxi driver has to pay to his company. As hei che drivers operate illegally without paying tax and administrative fees, their operational costs are even lower.

Taxi company drivers said they would rather have the "administrative fee" the companies charge them reduced than see taxi fares raised. They said the fee is unreasonably high.

The Beijing government will hold a "public hearing" next week to solicit opinions from concerned parties and industry experts on taxi fares. So far there is no word about what will be discussed at the public hearing. I assume that it will not be likely to discuss the "administrative fee."

The fee, however, is the crux of the matter.

At present, taxi companies charge their drivers an average 4,000-5,000 yuan per month. A driver has to work 14 hours a day for almost 30 days a month to earn enough to pay the fee before they can take home about 2,000 yuan.

Most of the drivers call the taxi companies "a windfall industry." A calculation based on publicized statistics indicates that the taxi company's gross annual income from a taxi car is about 90,000 yuan (US$11,100). A new car commonly used by these companies is priced at about 80,000 yuan (US$10,000). Drivers alleged that the fat profit mainly originates from the "administrative fee."

The companies, however, all denied the allegation but never publicized the way they calculated and determined the size of the fee. A taxi company manager, who requested anonymity, said: "The profit gained by taxi companies is not as big as what it is generally believed to be. It is actually small for a reason that is inconvenient to reveal."

Given the controversy, it would be better if the municipal government made some in-depth investigations about this "inconvenient-to-reveal" reason to find out if the "administrative fee" is really more reasonable than holding a "public hearing" on taxi prices.

Email: liushinan@chinadaily.com.cn

(China Daily 04/19/2006 page4)