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Tokyo taxi fares to be hiked? Not if Ota has her way

Over the last week, after the Ministry of Economy, Trade and Industry told us that spending on Japan’s service industries has picked up, the Cabinet Office released a report revealing that labor productivity at Japan’s service industries is at 60% of US levels.

With an ongoing economic recovery, hopes for increased consumer spending and expectations of greater wealth pouring into Japan’s service industries, the Cabinet Office defined low labor productivity as a problem to be worked on. According to the report that was released, the slow pace of deregulation in service sectors has help back growth in labor productivity. In fact, the Cabinet Office is expected to announce a program to improve productivity that will put emphasis on speeding up the deregulation of non-manufacturing industries sometime before the holidays at the beginning of May.

This all seemed like good news. Then I saw this headline at Kyodo News on Friday: “Economic minister Ota questions proposed taxi fare hike in Tokyo.” That raised my eyebrow, since taxi fares are, of course, regulated; they are set in collusion (or with the approval of) the Ministry of Land, Infrastructure and Transport. Ota essentially questioned the operators’ claim that increased rates would trickle down to the paychecks of taxi drivers themselves:

Accountability to consumers should be a priority when raising public service costs. We need to consider whether the taxi industry has truly made efforts to curb its inefficiencies.

Taxi companies, of course, are private businesses, and not public services. Kyodo only had a few quick quotes, so I looked around for articles in Japanese, of which there are many out there (Jiji, Nikkei).

Kyodo’s English version tended to leave out the extent to which Ota repeated that the government would have to continue looking at data, that the Cabinet Office would have to examine the data, that the Ministry of Health, Labour and Welfare would have to be consulted, that the Ministry of Land, Infrastructure and Transport…you get the point.

Who’s being inefficient here? Ota goes to to say that there could be a decline in the number of passengers if the prices are raised. True enough.

Let the market decide what the correct fares are. I am fully aware that taxi rates are set by municipalities and/or governments in other countries as well, and I’m also against that in those places. The issue here is how the situation is being treated in Japan, and it does not seem as though years of government encouragement of taxi firms to rid themselves of inefficiencies is working. It’s time to try something new.

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