In 2013, a bill to recognize taxis as public transportation passed the National Assembly, sparking controversy between the taxi and bus industries. While there are advantages to government subsidies and better treatment of taxi drivers, the high cost and low transportation efficiency of taxis raises questions about their suitability as public transportation. Overseas, taxis are not classified as public transportation, and the fundamental solution is to eliminate oversupply.
In South Korea, a major controversy erupted between the taxi industry and the bus industry on January 1, 2013, when the National Assembly passed an amendment to the Public Transportation Development and Use Promotion Act, which recognized taxis as public transportation. Under the amendment, the government planned to subsidize the taxi industry by more than 1 trillion won per year, including the same transit discounts that are available to the bus industry, as well as loss compensation, tax deductions, and vehicle purchase cost support for the quasi-public system.
The controversy stemmed from the role of taxis as a multimodal transportation system in South Korea and the economic problems it creates. Taxis have long been an essential mode of transportation for a wide range of social classes, providing convenience to residents through their 24-hour service and accessibility to all areas. However, in recent years, the proliferation of ride-hailing services and car-sharing services has reduced the role of taxis, so the taxi industry supported the amendment in order to gain public transportation status and secure subsidies from the government.
In response, the bus industry went on strike, and after former President Lee Myung-bak vetoed the amendment to the Public Transportation Development and Use Promotion Act to recognize taxis as public transportation, the National Assembly attempted to reconsider. However, as public opinion was largely against recognizing taxis as public transportation at the time, the government proposed a taxi development bill to achieve three goals: eliminating the oversupply of taxis, raising fares, and increasing the income of taxi drivers, but it has not been implemented due to strong opposition from the taxi industry.
There has been a long-standing debate about whether taxis should be viewed as public transportation or luxury transportation. Taxis are not private transportation like cars and motorcycles, but they are not public transportation either. Taxis operate without regular routes or timetables, and their fares are more than twice as expensive as buses and subways.
The transportation share in South Korea is projected to be 56.8% for passenger cars, 8.6% for taxis, 24.6% for buses, and 15.9% for railways in 2023. This shows that taxis are not yet well established as a part of public transportation, and the country is still highly dependent on private cars. Furthermore, taxi fares have been subject to fare regulation similar to public transportation, with fares frozen from 2009 to 2013 despite rising oil prices and inflation. As such, taxis have many of the characteristics of public transportation, but the government’s support for taxis is lacking, according to proponents of public transportation.
The argument is that by recognizing taxis as public transportation, the welfare and treatment of taxi drivers can be improved, resulting in higher quality services, and taxi fares can be lowered, making them more accessible to the public. There is an expectation that better working conditions and treatment of taxi industry workers will lead to higher quality of service in the long run. On the other hand, some argue that this discussion is also linked to the aging of taxi drivers. With the average age of current drivers reaching 60, it is urgent to improve their treatment in order to attract new workers.
However, even if taxis are public transportation, they cannot be considered public transportation. If you look at overseas examples, you won’t find any cases in the United States, the United Kingdom, or anywhere else that recognize taxis as public transportation. Rather than being classified as public transportation, taxis in other countries are more of a high-end transportation system with high fares and targeted at the upper class, tourists, etc. These examples suggest that taxis are far from being popular, and the reality in Korea is not much different.
Furthermore, treating taxis as public transportation would have a significant impact on national transportation policy. Currently, South Korea is experiencing severe traffic congestion and parking shortages due to excessive private car use. As a result, the government is implementing policies to increase the transportation share of public transportation, such as expanding trunk express bus routes and establishing late-night bus routes in Seoul. The purpose of these policies is to reduce the demand for private cars, which is the root cause of traffic jams and parking shortages.
In such a situation, treating taxis, which are similar to private cars, as a category of public transportation would be disorienting for national transportation policy. Proponents of taxis as public transportation argue that lowering taxi fares will encourage people with private cars to use taxis, thus alleviating traffic congestion. However, the nature of taxis is such that they can only accommodate a maximum of four passengers, unlike other public transportation such as buses and subways, and the reason why people use taxis is because they are more comfortable than other forms of public transportation.
In fact, the assumption that the above-mentioned taxi fare reductions will encourage private car users to use taxis is also uncertain. If taxis were classified as public transportation, the fare would be reduced, but as of 2024, the basic fare for a taxi is currently 4,800 won, which is still unaffordable for the average person even if the fare is reduced.
On the other hand, there is also a great deal of debate about whether it is appropriate to include taxis given the universal characteristics of public transportation: efficiency and affordability. In Japan, for example, taxis emphasize the convenience of their service while maintaining high fares that distinguish them from public transportation. Also, since public transportation is not aimed at profit but at providing welfare to the public, even buses and subways are subsidized by the government even if they run a deficit every year. Therefore, taxi fare reductions are also likely to be subsidized by the government, i.e., the public’s taxes.
Finally, those who argue that taxis should be treated as public transportation argue that although the supply and fares of taxis are regulated by the government, taxi drivers earn less than half of Seoul’s city bus drivers and work harder, resulting in poor treatment of taxi drivers. The underlying problem, however, is an excessive supply of taxis. According to an analysis by the Korea Transportation Research Institute, the demand for taxis has recently declined by about 10% due to the increase in the number of private cars and surrogate drivers.
However, the number of taxis has decreased from about 240,000 in 2022 to about 238,000, so the number of taxis has decreased slightly while the demand has decreased significantly, leading to increasingly poor treatment of drivers. Given the structural problems in the taxi industry, unless the imbalance between supply and demand is addressed, public transportation designation may not have a significant impact on improving the actual treatment of taxi drivers.
While some advocate for taxis to be accepted as public transportation and subsidized in recognition of their popularity, taxis are not in line with the current direction of national transportation policy, and there is no economic benefit to the average citizen from accepting them as public transportation. Furthermore, the fundamental reason for the poor welfare of taxi drivers is the excessive supply of taxis, so policy measures such as government regulation to regulate the supply of taxis to match demand, rather than classifying taxis as public transportation, are needed to improve the welfare of taxi drivers.
