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Diversification of taxi fares

Article 9 of the Road Transportation Law stipulates that taxi fares must be approved by the Minister of Transport. According to the law, the criteria for taxi fare approval are that the fare (1) covers a reasonable cost including a normal profit margin, (2) does not impose unjust discrimination, (3) gives due consideration to the financial burden on passengers, and (4) eliminates undue competition. In July 1955, the Director-General of the Road Transport Bureau, the Ministry of Transport issued a directive instructing the taxi industry to adopt the same area, same fare principle, which remained in place for many years. However, as the debate on deregulation picked up momentum, Kyoto MK Taxi sued the government for rejecting its application for fare cuts. The case was fought over whether the Kinki District Transport Bureau could reject the application on based on same area, same fee principle. The claim by the taxi company was upheld in the district court, and the case was subsequently settled out of court. This decision increased the general pressure for diversifying taxi fares. In March 1995, the Deregulation Action Program pointed to the need for diversification to expand options for taxi users. Similar comments were made at the revisions of the program in March 1996 and March 1997. Based on the 1993 report by the Council for Transport Policy on the future of the taxi industry, the Ministry of Transport decided to abandon the same area, same fare principle in Tokyo, Osaka, and other major cities. In September 1995, the ministry set up a study group on taxi fares to study possible alternatives including (1) diversifying fares while maintaining the overall cost system, (2) introducing the band system or a fare system in which several fare options are approved for individual businesses to choose from, and (3) introducing a price ceiling system that defines an upper limit. At the administrative level, the government allowed the introduction of multiple fares within a single block, the taxi fare unit, adopted a more flexible approach to setting discount fares, and, in 1997, introduced the band fare system. As a result, by the end of March 1997, thirty-five of the nations 77 taxi fare blocks adopted multiple fares. The trend was especially evident in Osaka, Nagoya, and Kyoto. The hike in the consumption tax rate in April 1997 divided taxi operators into two categories: taxed businesses and exempt businesses. Taxed businesses passed the increased tax burden onto their fares while exempt businesses kept the fares unchanged. This resulted in diversified taxi fares in most areas. Meanwhile, the flexible approach to discount fares led to the creation of such versatile discount systems as long-distance discounts, No My Car Day discounts, pre-paid discounts, and initial-fare discount coupons for regular users and or senior citizens (examples in Osaka). In Tokyo, a taxi service is offering a lower initial fare for short distances (the so-called 340 yen taxi).

 

 

 

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