NEW TAXI FARE STRUCTURE (Revision)

Mr Goh Chee Wee asked the Minister for Communications and Information and Second Minister for Defence, in view of the substantial drop in demand for taxis after the introduction of the new fare structure and the consequent reduction of income of taxi drivers, if the Minister will consider revising the fare structure after taking into consideration the views and suggestions of taxi drivers and operators.

Dr Yeo Ning Hong: Sir, last year, as Members will recall, the taxi situation in Singapore was one of excessive demand for taxis. Commuters complained about long waiting times, about long queues, and time wasted waiting for taxis. They also complained about choosy drivers who refused to stop or refused to take them to their destinations.

On the other hand, Sir, taxi drivers also asked for fare increases. As a result of this, the Ministry decided last year to increase taxi fares to resolve these problems. We allowed for the passenger demand for taxis to drop by about 30% initially, and then recover to about 15% to 20% over a two-month period. Under those circumstances, taxi drivers would have been able to pay the diesel tax to be implemented in October, and still have an increase in take-home pay.

Sir, as it turned out, the drop in demand was greater than expected. In response to a request from NTUC Comfort on behalf of taxi drivers, my Ministry agreed to a 20% discount on the new fares. This has helped to improve passenger demand for taxis.

Sir, the fare increase has achieved the objectives of reducing excessive passenger demand due to unrealistically low fares, and has improved the level of taxi service all round. However, contrary to expectation, taxi drivers were unable to increase their take-home pay.

NTUC Comfort has been discussing with their drivers and representatives regarding more appropriate fare structures. NTUC Comfort has also exchanged views with other taxi operators and companies. When the various taxi companies and associations have finalized their proposals for a new fare structure, my Ministry will give their proposals full consideration.

Sir, as far as possible, taxi fares, like prices for goods and services in other sectors of the economy, are best determined by market forces. Therefore, taxi fares should be determined by taxi companies and associations. They will of course have to assess consumer demand.

Government's role must be to ensure, firstly, a reasonable and competitive level of taxi service to serve the segment of our population that does not own cars and uses taxis occasionally and selectively; secondly, that the increase in the number of taxis does not contribute to excessive traffic jams; and, thirdly, that fares are common among different taxi operators so that a commuter knows what fare he has to pay when he steps into the taxi.

Sir, as I have informed the House on 21st March this year, my Ministry will continue to monitor closely the travel pattern in taxis in the coming months. I shall review the overall position closer to October, and if necessary, I shall take up the matter of diesel tax with the Minister for Finance.