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No rise in Tokyo taxi fares in the horizon

Back in April, we discussed the possibility of a rise in taxi fares in Tokyo. At that time, Economics and Finance Minister Hiroko Ota spoke out against the move, saying, “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 fares in Japan fall under the regulatory wing of the Ministry of Land, Infrastructure and Transport - and the discussion over whether or not they can be raised is back in the news. A few weeks ago, the Yomiuri quoted two Tokyo taxi drivers as saying, “My annual income has fallen to 4 million yen, though it was more than 5 million yen before . In Tokyo, where prices are high, managing my household finances has become harder and harder,” and, “I wonder how I’ll be able to pay my children’s tuition when they grow older.”

The latter driver had recently taken a part-time job driving a taxi in Tokyo for 800 yen an hour (about $6.60). Taxi drivers in Japan do not receive tips.

According to the Ministry of Health, Labor and Welfare, the average annual income for taxi drivers in Tokyo fell from 5.28 million yen in 1995 to 4.06 million yen in 2005, a fall of about 23 percent in a decade. During that same period, the average income of male salaried workers in Tokyo climbed slightly, from 6.69 million yen to 6.72 million yen.

So, who’s in favor of de-regulation? The article also tells us:

The number of taxis in the Tokyo fare zone has increased from about 49,000 in fiscal 1995 to about 53,000 in fiscal 2005. But during the same period, the number of passengers who used taxis fell 3 percent, partly due to a lingering economic slump.

Yasuhiro Machitori, general secretary of the National Federation of Automobile Transport Workers Unions, which comprises taxi and other professional drivers, said, “Overly drastic liberalization caused excessive competition.”

Minister of Transport Tetsuzo Fuyushiba hit back at Ota and Machitori’s position by saying, “Taxi drivers’ wage levels are a serious matter. Unless the problem is solved, drivers will cause more accidents, suffer extreme fatigue or be unable to live comfortably.”

Today, however, Kyodo News gave us a bit more of an insight as to why we might not see a rise in Tokyo taxi fares, at least not yet:

The central government will not endorse the taxi industry’s proposed fare hike in Tokyo until after August to avoid public anger in the runup to the July House of Councilors election, government sources said Thursday…

…The official said one labor representative on the panel who favors the increase said cabbies are having a hard time maintaining a basic standard of living at their current wages. But another panel member said he doubted whether taxi companies would use the extra revenue to increase drivers’ wages.

One committee member suggested the industry wait and see how it faired as the economy continues to grow.

I’m fully in favor of pushing the companies to cut costs, but that’s what the invisible hand is there for. At the same time, what’s with the ‘wait and see’ approach? Wait and see the rest of the economy grow? Or wait and see if the economy starts declining so they don’t have to do anything?

The last fare rise in Tokyo was in 1997, and was meant to cover the rise to the current 5% consumption tax.

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