Should taxis be recognized as public transportation? (South Korean government’s transportation policy and the taxi industry’s conflict)

In South Korea, a 2013 law was amended to recognize taxis as public transportation, sparking controversy between the taxi and bus industries. The debate is whether to recognize taxis as public transportation or keep them as a luxury mode of transportation.

 

On January 1, 2013, South Korea’s National Assembly passed an amendment to the Public Transportation Development and Use Promotion Act to recognize taxis as public transportation, sparking a major controversy between the taxi industry and the bus industry. According to the amendment, the government planned to provide more than 1 trillion won in subsidies to the taxi industry annually, including transfer discounts, compensation for losses due to the implementation of a quasi-public system, tax deductions, and support for vehicle purchases. The bus industry protested and went on strike, and after former President Lee Myung-bak vetoed the amendment to the Public Transportation Promotion and Utilization Act to recognize taxis as public transportation, the National Assembly attempted to reconsider the bill. However, as public opinion was largely against recognizing taxis as public transportation at the time, the government proposed the Taxi Development Bill to achieve the three goals of eliminating the oversupply of taxis, raising fares, and increasing the incomes 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.
As of 2023, the share of transportation in South Korea is 56.8% for passenger cars, 8.6% for taxis, 24.6% for buses, and 15.9% for railways. In addition, taxi fares have been subject to fare regulations similar to those of public transportation, with fares frozen from 2009 to 2013 despite rising oil prices and inflation. As you can see, taxis have many characteristics of public transportation, but they are not supported by the government accordingly, 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 service, and taxi fares will be lowered, making it more accessible to the public.
However, even if taxis are public transportation, they cannot be considered public transportation. Even if you look at overseas examples, you won’t find any cases where taxis are recognized as public transportation in the United States, the United Kingdom, or anywhere else. 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.
Furthermore, treating taxis as public transportation would have a significant impact on national transportation policy. Currently, Korea is experiencing severe traffic jams and parking shortages due to the excessive use of private cars. 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, unlike other forms of public transportation such as buses and subways, taxis can only accommodate a maximum of four people, and the reason why people use taxis is because they are more comfortable than other forms of public transportation. Therefore, taxis are somewhat out of line with the current national transportation policy.
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 lowered, 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 lowered. Currently, taxi drivers are arguing for the public transportation of taxis because their salaries are too small, and it is unlikely that the fare will be reduced enough to be felt by the common people even if it is adopted as public transportation. In addition, public transportation is not aimed at profit but at providing welfare to the public, so even in the case of buses and subways, even if there is a deficit every year, the government subsidizes them to maintain them. Therefore, taxi fare reductions are also likely to be subsidized by the government, i.e., the public’s taxes. This could result in a situation where taxes are used to reduce taxi fares, but taxis are not actually available.
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 state, taxi drivers earn less than half of what Seoul city bus drivers earn 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, and drivers are increasingly being treated poorly.
Some people argue that taxis should be accepted as public transportation and subsidized in recognition of their popularity, but taxis are not in line with the current direction of national transportation policy, and there are no economic benefits for ordinary citizens 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.