In this blog post, we will look at the possibility of recognizing Korean taxis as public transportation, focusing on the public nature and efficiency of taxis and their harmony with national transportation policies.
On January 1, 2013, the political circles passed an amendment to the “Public Transportation Development and Use Promotion Act” in the National Assembly, which recognizes taxis as public transportation, causing a major controversy between the taxi and bus industries. According to the amendment, the government planned to provide more than 1 trillion won in subsidies to the taxi industry annually, including the transfer discounts applied to the bus industry, loss compensation under the quasi-public system, income tax deductions, and vehicle purchase cost support.
The controversy was caused by the complex role of taxis as a means of transportation in South Korea and the economic problems that arise from it. Taxis have long been an essential means of transportation for various social classes, and in particular, they have provided convenience to residents through 24-hour operation and accessibility regardless of region. However, the role of taxis has been declining in recent years due to the spread of designated driver services and car-sharing services. Therefore, the taxi industry supported the amendment with the aim of resolving its financial difficulties by securing government subsidies by being granted the status of public transportation.
In response, the bus industry rebelled and went on strike, and after former President Lee Myung-bak vetoed the amendment to the “Public Transportation Development and Use Promotion Act” that would recognize taxis as public transportation, the National Assembly attempted to reconsider the bill. However, at the time, public opinion was largely opposed to the idea of recognizing taxis as public transportation, so the government drafted a bill to develop the taxi industry and achieve three main goals: reducing the oversupply of taxis, raising fares, and increasing the income of taxi drivers. However, due to strong opposition from the taxi industry, the bill has not been properly implemented.
There has been an ongoing debate on whether to view taxis as public transportation or as a luxury mode of transportation. Taxis are not considered a personal mode of transportation like a private car or a motorcycle, but they are also not considered public transportation. This is because taxis do not operate on a fixed route or timetable, and the fare is more than twice as expensive as that of a bus or subway.
As of 2023, the Korean transport contribution rate is 56.8% for passenger cars, 8.6% for taxis, 24.6% for buses, and 15.9% for railways. This shows that the usage rate is relatively low for taxis to become part of public transportation, and the current situation is rather dependent on passenger cars. In addition, taxi fares have been subject to regulations that are similar to those for public transportation, with fares remaining unchanged from 2009 to 2013 despite high oil prices and rising prices. As such, although taxis have a lot of characteristics of public transportation, the government’s support for them is insufficient, according to those who favor making taxis more like public transportation.
By recognizing taxis as public transportation, the welfare and treatment of taxi drivers can be improved, which will enable them to provide better quality services and lower taxi fares, making it more convenient for the general public to use. It is expected that the working environment and treatment of taxi industry workers will improve, which will in turn improve the quality of service in the long run. On the other hand, some say that this discussion is also related to the aging of taxi drivers. The average age of current taxi drivers is in their 60s, so it is urgent to improve their treatment to attract new personnel.
However, even if a taxi is a public transportation, it cannot be considered as public transportation. Looking at overseas cases, it is difficult to find cases where taxis are recognized as public transportation in the United States, the United Kingdom, or anywhere else. Taxis in other countries are not classified as public transportation, but rather have high fares and are considered as high-class transportation for the upper class and tourists. This case suggests that taxis are far from being popular and that the reality in Korea is not much different.
In addition, treating taxis as public transportation will have a significant impact on national transportation policies. Currently, Korea is suffering from serious traffic congestion and parking problems due to excessive private car use. In response, the government is implementing policies to increase the share of public transportation, such as expanding the route of express buses and establishing a late-night bus route in Seoul. The purpose of these policies is to reduce the demand for private cars, which is the root cause of traffic congestion and parking problems.
In this situation, if taxis, which are similar to private cars, are treated as a category of public transportation, the direction of national transportation policy will be lost. Proponents of making taxis a form of public transportation argue that lowering taxi fares will encourage people who use private cars to use taxis, alleviating traffic congestion. However, due to the nature of taxis, unlike other forms of public transportation such as buses and subways, they can only accommodate up to four people, and the reason why people use taxis is because they are more comfortable than other forms of public transportation.
In fact, the assumption that private car users will use taxis due to the aforementioned taxi fare reduction is also uncertain. If taxis are classified as public transportation, fare reductions will occur, but as of 2024, the current taxi base fare is 4,800 won, which is still a burden for ordinary people.
Meanwhile, there is also a lot of controversy over whether it is appropriate to include taxis in the public transportation system, given the efficiency and affordability that are the hallmarks of public transportation. For example, in Japan, taxis emphasize the convenience of their services while maintaining high fares that set them apart from public transportation. Also, since public transportation is not aimed at making a profit and is more focused on providing welfare to the public, even buses and subways run at a deficit every year, but are maintained with subsidies from the government. Therefore, it is likely that the reduction in taxi fares will be subsidized by the government, that is, by the taxes of the public.
Finally, those who argue that taxis should be treated as public transportation claim that the supply and fares of taxis are subject to state regulation, but the income of taxi drivers is less than half that of Seoul city bus drivers, and the work intensity is high, so the treatment of taxi drivers is poor. However, the fundamental problem lies in the excessive supply of taxis. According to an analysis by the Korea Transport Institute, the demand for taxis has recently decreased by about 10% due to an increase in the number of private cars and designated drivers.
However, the number of taxis has decreased from about 240,000 in 2022 to about 238,000. Therefore, even though the demand has decreased a lot, the number of taxis has decreased slightly, and the treatment of drivers is becoming increasingly poor. Given the structural problems in the taxi industry, the designation of public transportation may not have a significant impact on the actual improvement of the treatment of taxi drivers unless the imbalance between supply and demand is resolved.
Those who argue that taxis should be accepted as public transportation are asking for subsidies to be provided in recognition of their popularity, but taxis do not fit with the direction of the current national transportation policy, and even if they are accepted as public transportation, there is no economic benefit for ordinary citizens. In addition, the fundamental reason for the poor welfare of taxi drivers is the excessive supply of taxis, so in order to improve the welfare of taxi drivers, it is necessary to take policy measures such as government-level regulations to regulate the supply of taxis to meet demand, rather than classifying taxis as public transportation.
