Comments on: Taxi Licences – a gross market distortion

By: To licence or to not licence « Thoughts on Freedom

To licence or to not licence « Thoughts on Freedom — Mon, 22 Jun 2009 19:24:47 +0000

[...] cost more than constructing a new house. Perhaps the government and the Greens could take a look at that regulatory stuff up. There is no public policy defense for taxi licences being so [...]

By: hc

hc — Tue, 11 Mar 2008 11:12:18 +0000

There is a vast economics literature on the case for deregulating the taxi industry and most of it supports deregulation. But this literature suggests we are starting off from scratch and have to decide between a regulated and an unregulated industry. That isn’t the choice. The relevant choice is to continue with the current system, to expropriate by stealth by gradually increasing taxi licences, to expropriate licenses, or finally to buy them back on terms acceptible to the owners. Of the last three options I prefer the last.

By: Terje (say tay-a)

Terje (say tay-a) — Mon, 10 Mar 2008 17:02:55 +0000

HC – I agree with your approach to a wind up, however you seem rather non-commital about whether the scheme should be wound up. Do you see any benefit in keeping it going?

Observa – when you say they are in it for the capital gain are you saying that they expect prices to go even higher?

By: hc

hc — Mon, 10 Mar 2008 15:17:55 +0000

If you do wish to end the taxi licensing system then buy back the licences held by taxi owners at their market prices. For many owners their life savings are tied up in the licence. A capricious change in government policy would be unfair – it won’t happen either.

Assignment fees have been declining in recent years and driver salaries are low. Licence values have been rising along with the general rise in economy-wide asset prices.

By: observa

observa — Mon, 10 Mar 2008 13:03:10 +0000

‘qwuestion’… Streuth the pecking skills are getting worse or Elmer Fudd is taking me over…

By: observa

observa — Mon, 10 Mar 2008 12:52:01 +0000

Here in SA licences sell for $360k when they were $8k back in the early 80s. Investors buy them for capital gain and lease them to the cabbies for about $300/week. Very few drivers actually own their own licence but effectively pay rent to their landlord owner. Now you might say $300/week is not a decent return to the owner but it’s just like real esate rentals. They’re high marginal tax rate taxpayers and are in it for the capital gain. You can of course gear the investment too, just like RE and shares, etc. It’s not just a case of govt economic rents doled out here, it’s also the interaction of the income tax system. The qwuestion you’ve got to ask yourself is- Would the govt charging the extra $300/ week for anyone wanting to drive (assuming they are not rapists and can drive and have a multi language GPS of course)with zero tradeable value, really benefit passengers. Not bloody likely and that’s all you’d get.

By: Terje (say tay-a)

Terje (say tay-a) — Sat, 08 Mar 2008 10:06:27 +0000

Smally – the winking smiley face in my comment was not put there purely by chance.

By: Mark Hill

Mark Hill — Sat, 08 Mar 2008 09:08:38 +0000

That’s a bloody good point.

By: smally

smally — Sat, 08 Mar 2008 08:30:38 +0000

Terje, it is misleading to describe taxi users as “the beneficiaries of reform”. They are the victims of the current state of affairs. Lifting your boot from someone’s neck is not benefiting them.
By the same logic, you could argue that if amnesty is ever granted to harmless imprisoned drug users they should pay the administrative costs of their release.

By: Tim Quilty

Tim Quilty — Wed, 05 Mar 2008 09:23:06 +0000

Well, mostly I like my idea because I thought it out myself. All those years of poking round the farm on my motorbike trying to come up with good ways to transition to a less regulated system. I agree there is probably not a lot of difference. I just like the idea of the price being set in a market rather then dictated by fiat. Even if it is a dirty market.