Opinion / Liu Shinan

Unspoken reason for admin fees
By Liu Shinan (China Daily)
Updated: 2006-04-19 06:29

It is logical and reasonable: The petroleum price hike prompted the cost
of running a taxi to soar; hence taxi fares need to be raised. Taxi
passengers will have to pay more. That doesn’t sound unfair – the person
who enjoys the service should pay for the changing cost of producing that
service. Surveys found, however, that 80 per cent of urban citizens
oppose the authorities’ plan to raise taxi fares. This is only too
predictable. Nobody would like to spend more except those who can get 100
per cent reimbursement from somewhere.

What is beyond prediction, however, is that most taxi drivers “do not
favour the rise of taxi fares.”

Their argument is that the move will force the passengers to take other
means of transportation (buses for example), individually run taxis and
hei che (unlicensed taxis). “That would further reduce our income,” Chen
Tao, a Beijing taxi driver said. Like most other taxi drivers in the
city, Chen is an employee of the government-authorized taxi companies.
The municipal government’s plan to raise taxi fares is mainly set for
these companies.

Individual taxi and hei che drivers, however, will most likely keep their
fares unchanged in order to lure more passengers over from taxi
companies. Beijing has 277 taxi companies, which employ about 100,000
drivers, while there are about 70,000 hei che drivers and 1,157 licensed
individual taxi drivers.

The latter two groups undoubtedly constitute a threat to their
counterparts in taxi companies. Their intention to keep fares unchanged
indicates that they can afford the rise of the operational cost caused by
the oil price hike. The increased cost, about a few hundred yuan a month,
is well within their affordability given their monthly gross income,
which is much higher than that of taxi company employees. It is reported
that the tax and administrative fee a self-employed individual pays to
the municipal authorities amount to 40 per cent that of the
“administrative fee” a regular taxi driver has to pay to his company. As
hei che drivers operate illegally without paying tax and administrative
fees, their operational costs are even lower.

Taxi company drivers said they would rather have the “administrative fee”
the companies charge them reduced than see taxi fares raised. They said
the fee is unreasonably high.

The Beijing government will hold a “public hearing” next week to solicit
opinions from concerned parties and industry experts on taxi fares. So
far there is no word about what will be discussed at the public hearing.
I assume that it will not be likely to discuss the “administrative fee.”

The fee, however, is the crux of the matter.

At present, taxi companies charge their drivers an average 4,000-5,000
yuan per month. A driver has to work 14 hours a day for almost 30 days a
month to earn enough to pay the fee before they can take home about 2,000
yuan.

Most of the drivers call the taxi companies “a windfall industry.” A
calculation based on publicized statistics indicates that the taxi
company’s gross annual income from a taxi car is about 90,000 yuan
(US$11,100). A new car commonly used by these companies is priced at
about 80,000 yuan (US$10,000). Drivers alleged that the fat profit mainly
originates from the “administrative fee.”

The companies, however, all denied the allegation but never publicized
the way they calculated and determined the size of the fee. A taxi
company manager, who requested anonymity, said: “The profit gained by
taxi companies is not as big as what it is generally believed to be. It
is actually small for a reason that is inconvenient to reveal.”

Given the controversy, it would be better if the municipal government
made some in-depth investigations about this “inconvenient-to-reveal”
reason to find out if the “administrative fee” is really more reasonable
than holding a “public hearing” on taxi prices.

Email: liushinan@chinadaily.com.cn

(China Daily 04/19/2006 page4)

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