Public Policy Planning & Consulting Co. (SEISAKU-KOUBOU) is a public policy consulting firm based in Tokyo, covering broad policy areas such as economic policy, fiscal policy, regulatory policy, administrative reform, international trade and investment, etc.
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Taxi Fare Regulation and Decentralization

(HARA Eiji, PPPC President)

In this May, there were consecutive rulings in Osaka and Fukuoka district courts to suspend the regulation by the central government over taxi fares.

The background was
l  Based on the legislation passed in the last year’s extraordinary Diet session, it’s been arranged that the Ministry of Land, Infrastructure, Transport and Tourism decides the “official latitude” of taxi fares.

For example, the fare of mid-sized cab in Osaka city is set as “maximum 680 yen, minimum 660 yen” and any fares above or below the latitude would not be licensed.

l  Opposing to this decision, several taxi business operators having managed the business with reduced fares (MK taxi and others) maintained the reduced fare below the minimum after April.

Meanwhile, the MLIT instructed the operators to increase the fare. And further, the MLIT announced to release a compelling order to change the fares to the business operators.
Then the taxi operators appealed for a suspension of the order to the judiciary and the appeals were accepted in the Osaka and Fukuoka courts.

With regard to the taxi fares, it’s been ruled as “same fare in same region” since 1955, but the regulation has been relaxed gradually since 1990s given criticisms that such uniform regulation should be revised (“zone fares” was introduced in 1997).

In 2002, the “automatically-admitted fare” system was introduced (the fare below the maximum would be automatically licensed. Fares below the latitude would be examined individually), which opened possibility of discount taxi such as one coin.

However, the 2002 deregulation was later brought into criticisms as a symbolic example of “excessive deregulation under the Koizumi administration.”

It was argued that relaxation of not just the fare but the entry into the business caused an increase of taxicabs on the streets and excessive competition, which resulted to worsened working environments of the drivers and tragic accidents, etc. And there was a reregulation on the taxi fare in 2009 by the Taxi Correction and Promotion Law.

And it was the so-called “Law to decrease taxi” in the last year’s extraordinary Diet session that was proposed to enhance the regulation further. By the legislation, it‘s been returned to the framework in which the central government decides the “official latitude” of the taxi fare.

Still, the rulings in Osaka and Fukuoka district courts did not deny the entire framework of “official latitude.” These were the rulings that there was room for consideration on the price-setting as “maximum 680 yen, minimum 660 yen” in Osaka city.

However, if working environments or safety standards need to be reconsidered, it should be responded by labor regulation or safety regulation measures. It is nothing but a ducking of the issue to return to the “official latitude” framework. The author thinks the whole framework itself is not appropriate.

There is another point for discussion.

Even if the official latitude would be maintained, the problem is who decides the latitude.
While it is the MLIT under the current framework, should it not be the local governments well informed of the actual situation of the region that would arrange the latitude of the taxi fare?

Although the enthusiasm for decentralization reforms has been cooled down lately, it is hoped that local governments voice that such issues should be decided on their own discretion.

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