The lie of cost recovery

Once again, people in the taxi business have crunched the numbers and while they are not pretty for taxis, they do go a long way to explaining why cities like Toronto and Mississauga have been bending over backwards to accommodate Uber and potentially other ride-hailing services at the expense of taxi drivers.

It is not as if we at Taxi News have not been reporting and editorializing about this for years, for decades actually. We have, and the City ignores rationality and its responsibilities towards the companies and drivers paying outrageous fees for the right to suffer continuing abuse from regulators and politicians who place the public at risk from cursorily inspected cars driven by untrained and too often inadequately insured drivers.

In short, what Toronto (at least) has been doing is illegally operating taxi licensing as a profit center, despite provincial law and ostensible City policies that mandate that Licensing collect fees on a “cost recovery” basis. Even court decisions, going all the way up to the Supreme Court of Canada, require fees to accurately reflect the cost of providing the service, and if monies collected are greater than the cost of the service, they clearly be labeled as taxes.

Despite pious and utterly hypocritical comments by politicians and bureaucrats that they operate on a cost recovery basis and they care about the welfare and incomes of taxi drivers, who are supposedly the first and highly influential ambassadors for the city visitors encounter, as well as their (supposedly) deep concern for public safety, virtually every policy council has enacted for more than 20 years has been to make it as hard and expensive as possible to earn a living in the taxi business while maximizing City revenues from the industry.

The simple reality is that, in Toronto, closing the cab driver training school and shutting down the City run vehicle mechanical fitness inspections, the City has done at least two things: it is more dangerous to ride in any for-hire vehicle and they have reduced the qualifications to drive said vehicles to the lowest conceivable level.

At one point we had hopes, at least, to see driving cab perceived as being a legitimate profession, decently paid, respected, providing top rate customer service. No more. The City, along with Uber and other companies like it, see and treat driving cab as nothing more than a low-skill, easy entry, part-time way to make a few bucks. So that makes you nothing more than cash cows contributing as much money as humanly possible to anemic City coffers. These people have zero respect for you and your skills.

A wonderful example of how badly municipal politicians think of and treat taxis is now in evidence in Mississauga. That city now plans to issue 250 more taxi licenses. Never mind that taxi driver incomes are at historic low levels, these geniuses think it is just wonderful to put more unneeded cabs on the road and reduce taxi incomes even more. It is a deliberate insult and calculated move to devalue taxi people to rock bottom while, intentionally or unintentionally, throwing out the red carpet for Uber and similar businesses. Mississauga Council expects it will make more money from the new licenses and it will tap into windfall profits from getting a percentage from Uber rides, paid for by apparently ill-paid Uber drivers.

Meanwhile, it sure looks as if the supply of Uber drivers is drying up even though cities like Toronto don’t bother to enforce what rules they have put in place to govern these companies. When was the last time anyone saw an Uber car sporting legally required ID stickers, and does the City have on file the legally required insurance papers for every one of the 25 or 30,000 cars possibly registered with the company? At least, federally, Uber and its drivers will now have to pay the GST/HST that taxi companies and drivers have had to pay from the start. That welcome move in the latest federal budget is very, very long overdue.

Here are serious suggestions for any city dealing with Uber and similar services: before allowing any driver to work for these companies, require written proof of GST/HST registration and submission of these taxes.

As well, show there is a clear and well-defined public need for additional taxis before one more license is issued.

Also ensure all for-hire vehicles are inspected to the highest standard to ensure public safety and make sure all drivers serving the public for hire are trained to a decent standard.

And finally, operate licensing on a true cost recovery basis, not on a for profit model.

Doing these things would be a good start to correcting the regulatory calamity we are seeing now.


2017 Taxi News


May 2017