This draws attention on an important issue with regards to approved fixed metered fares in conflict with competitive forces. Vast majority of regulatory authorities have limited resources and the easiest way to ensure compliance on metered fares is to impose fixed approved fares on everybody.
While this may be simple and convenient from the viewpoint of a regulatory authority with limited resources to ensure compliance, it does impose a most significant impediment to the natural forces of healthy competition.
The taxi industry is a service industry no different than any other service industry, but it alone is shackled by a narrow fixed fare schedule, set by a regulatory authority as the easy way out. Furthermore, that fixed fare schedule is in most jurisdictions mandatory for all rides, making it illegal to transport passengers without the meter in operation.
In the eyes of the customer, he sees a taxi "company". It is identified by a certain image, by advertising, by yellow pages entries, et al. The customer does not see an independent contractor behind the wheel. What the customer sees is a taxi bearing the colors and identity of a chosen service.
As a service industry, a taxi company should not ever be prevented from gaining a competitive edge by offering volume discounts, or preferred rates to large corporate customers. That's what any service industry should do to expand their market share and grow.
There is no good reason why a taxi company should not be prevented from expanding business opportunities by using their excess capacity by interleaving package/courier delivery services; contracts of exclusivity for hotels, convention centres, major corporate clients, agencies serving the community of people with disabilities; contracts for major sporting events and so on.
There was a time back in antiquity when fixed fare schedules may been a logical approach to ensuring compliance and fairness. However, in today's highly competitive environment, coupled with leading edge technology, taxi companies should not ever be shackled by fixed fare schedules simply because of thin regulatory resources.
I believe it to be quite appropriate for a taxi company to enter into contracts with major corporate clients for a preferred rate off the meter. By such means they gain a competitive edge over their opponents, increase their market share and the customer wins.
Such contracts should not be of any interest whatsoever to a regulatory authority. They are negotiated by knowledgeable people under sound business principles. If the regulatory environment is such that these contracts must be negotiated and honored surreptitiously, then it is the regulatory structure that should adjust to contemporary business practices.
This is a long simmering issue in vast majority of jurisdictions. I do not disagree that most regulatory authorities simply do not have the resources to cope with a mixed fare environment where some trips are metered, and contract trips not metered.
There must surely be a way for to establish a regulatory environment where metered rides and contract rides can co-exist. I would appreciate knowing what jurisdictions out there have been successful in establishing and monitoring such a progressive situation.
From an InterNet discussion 4 May 2001.
To the Editor, Irish Times
Re: A Taxi Licence Is Not An Asset!
As a former taxi regulator (now retired), I have been following the trials and tribulations of Dublin's taxi industry for last couple years and with great interest. For this industry, there are no geographic boundaries, similar problems and situations replicate themselves worldwide.
The issues of licence values and regulatory fees have a common background in common law which seems to get overlooked in all the political rhetoric emerging from all sides.
Quite simply, a taxicab business licence is not an asset and cannot ever become an asset. In common law, it is nothing more profound than official government authority to operate a taxicab for hire for a fixed period of time, at end of which there is automatic expiry, with no guarantee of continuance, no guarantee it will not be revoked for cause, and no guarantee that the regulatory environment will not change one day.
The physical piece of paper, or tin plate, or whatever a licence holder acquires as each licence year commences, is simply evidence that an appropriate fee has been paid in return for companion regulatory action. Such evidence for collateral purposes is a high risk investment for it is absolutely not an asset.
It is extremely unfortunate that many licence holders paid out exorbitant sums of money in good faith, without first doing their homework to determine the security of their investment. That a taxicab business licence is not an asset is not a secret. It has never been a secret.
The illusion that a licence has value had its origin back in regulatory antiquity. All economists are very much aware that any time a regulatory authority limits the number of licences, without simultaneously prohibiting transfer, those licences will immediately begin to acquire an unofficial value out there on the street.
It is regretable that the regulatory authority back in antiquity did not prohibit transfers simultaneous with imposition of the limit. The anguish felt by many today would never have emerged.
Also in common law is a fundamental requirement that regulatory fees must bear a reasonable relationship to the true cost of the administration and regulatory actions behind that fee. The amount of fee can be set by regulatory action, but the type of fees must have a permissive basis in legislation. A fee cannot be used as a vehicle solely for revenue generation, that is solely a legislative authority.
Any regulatory authority setting a fee must be prepared to defend that fee in understandable terms relative to the activities and actions behind it, else it may well fail a court challenge.
Regulatory authorities worldwide, not just Dublin, have often found themselves in great difficulty trying to unravel the oversight and inattention of their ancestors. Most any attempt to "fix" the situation today will most likely have the effect of extinguishing something perceived to be an asset.
This is hugely unfortunate, but no mystery. An intangible "authority" to do something cannot ever become an asset, a simple impossibility.
2 October 2000
To the Editor
Re: A Taxi Licence is Not an Asset
Your editorial, FULL SPEED AHEAD ON TAXI CHANGES, d/28 September 2000, is fundamentally correct, revealing its author has done appropriate homework. Reform is needed, it will not be easy, but is absolutely critical.
It is unfortunate that significant sums of money have been expended on the perception that a taxi licence is an asset. However, it is well established, all the way back into common law, that a licence is not an asset. It has never been a secret.
A licence is simply an intangible government authority to operate a taxicab for a fixed period of time, at end of which, that authority automatically expires. There is no imbedded right of continuity, no guarantees of any kind, and no guarantee that the regulatory environment might change.
The presence of a piece of paper, or a tin plate, is nothing more than visible proof that the holder of the licence is properly known to the authorities, has paid an appropriate fee for the current licence period, and has agreed to certain conditions attached to the licence.
The holder of a taxicab licence is authorized by the government to "operate" a taxicab for a fixed period of time. That is all the holder is authorized to do. There is no imbedded authority to do anything else. Those holders who choose to "rent" their licence are in violation of fundamental common law, for they do not possess the authority to do so.
Those who have "bought" a licence out there on the street are unfortunate victims of a simple failure to do some basic homework. That a licence has no asset value is well established in basic economics and law text books. There is even ample evidence out there on the InterNet.
Banks know this simple fact and are understandably reluctant to grant loans to pay for such a risky venture, unless there is ample collateral on the table, other than the licence.
The Taxi Project Team is to be commended for finally dealing with an archaic system in a courageous manner. The transition will not be easy, but the Ottawa Transition Board must not ever be seen to cave in to erroneous industry demands to preserve status quo.
TAXI-L Founder and Moderator
"...growing problems emerging from the IC/leasing environment...."
relative to the documented problems in Philadelphia, an interesting statement emerged from a TAXI-L participant:
It looks to me like a testimonial to weak-willed regulatory people.
The city is free to inspect cabs, demand English competency, driving skills, and geographic knowledge, but it chooses not to. It has nothing to do with the IC/leasing environment and everything to do with taking the easy way out.
Unfortunately, this selective quote did not include my concluding observation. My total statement was:
"..... growing problems emerging from the IC/leasing environment and its consequential regulatory inadequacies."
My observation reflected the reality that in our world of atomized IC's, the regulator cannot ever have enough resources so long as civic budgets are controlled by sharp pencils in a budget department completely removed from the reality of the front line.
Yes, "... The city is free to inspect cabs, demand English competency, driving skills, and geographic knowledge, .....". It is not only free to do so, but also has a duty and an obligation to do so. However, so long as the regulatory agency is locked into budget control mechanisms over which they have no control, they will not ever have enough resources for effective compliance.
There was a time 'leventy-7 years ago, when the regulator had a compliance partner in the Operations Manager of typical taxi companies that "employed" drivers. Span of attention was within a mangeably small group of people.
However, since the widespread emergence of the independent contractor, over whom taxi company management claim "no control, else we incur the wrath of the tax folks", span of attention exploded from a handful to thousands - the Two Thousand Puppy Dog Model.
There is an option.......
If the politicians are sufficiently provoked, they have the power and the authority to impose legislated cost recovery, where the regulatory agency becomes an independent agency funded by its own revenues to cover the full cost of its operations, including compliance.
Under such a scheme, regulatory fees will quickly escalate out of sight to pay for all the compiance officers they need out there on the road, doing their best to round up all the puppy dogs to get them all pulling together for consistency of performance and service standards.
This is not a pipe dream, nor your worst nightmare, for such regulatory environments already exists. They have tended to emerge as an act of desperation to deal with growing problems emerging out of the IC/leasing environment.
Do not be too quick to condem the regulators, for they basically do the best they can with very limited resources. In most cities, they simply never satisfy all the requirements imposed upon them, for reasons not always within their control.
From an InterNet discussion 2 April 1999
Over past couple days some interesting revealing observations have emerged:
The new class of owners and drivers entering the industry here do not even deserve to be called Taxi Drivers. Most of these drivers own their own cabs because nobody else would let them drive.
They see how divided we are, so they feel we are powerless to fight back. In NY they tried to unify to fight Giuliani, and actually did amazingly well in such a short time, but there were still divisions and things got rolling too late.
... the future of this industry depends on business people with taxi experience making the comitment to build strong companies operated with professional drivers who put the customer first.
These observations are not new revelations. Each in their own way, each in their own words, many have been expressing similar concerns over past 2 1/2 years of TAXI-L's life. That this negative, corrosive environment persists at all is clear evidence of powerful lobbying and political forces at work to preserve, at all costs, the "independent contractor" status and its companion evil - leasing.
The recent New York City fiasco is yet another example of how helpless are the poorly represented, financially dependent, unorganized, hopelessly fragmented lessee drivers. As a direct consequence of the leasing/IC environment, we no longer have an industry focusing all its attention on the paying customer in the back seat. As John Lanigan so clearly defined for all, the industry is today 3 separate industries, each chasing different markets, each focusing attention elsewhere in dramatically different opposing directions.
Bruce Schaller added yet another piece of evidence helping to expose ever clearer the horrific consequences of the leasing/IC environment emerging out of regulatory inattention back in antiquity. The accident rate has a direct inverse relationship to driver income which basically is unregulated. In huge majority of situations, lessee drivers are very much at the mercy of merciless licence holders.
When a lessee driver pays up front money for the use of a taxicab, he's already under pressure before he's rolled an inch. Under such pressure, it is no wonder that cab drivers are universally condemmed by the media and perceived by the general public as being basically an industry out of control, populated by rag tag rabble rousers. The 2,000 Puppy Dog Model fits. Couple years ago, the TV news magazine "48 Hours", aired a documentary on the New York Cabby. It was quite revealing, adding more evidence exposing the horrors of this situation.
No matter that Mayor Guilliani violated fundamental civil rights, he basically has public support for his actions. Out of this outrageous serious of events, which incidentally are about to be repeated in Philadelphia, I perceive taxi drivers will emerge ever more downtrodden, and the leasing/IC environment ever more firmly imbedded.
It is no secret that industry leaders are firmly commited to preservation of the independent contractor status. A very well funded lobby group has been at work for many years, very effectively ensuring preservation of this fundamentally evil environment. That it is legal does not necessarily make it right.
Lessee drivers cannot ever hope to effectively combat this situation. Preservation of the IC status guarantees that lessee drivers will continue to be totally disorganized, divisiveness nourished, and unable to ever mount an effective rational industry wide reorganization.
Regrettably we have far too few lease operators consiously focusing their attention on the paying passenger in the back seat. They really don't need to. Their revenues are virtually guaranteed regardless of the level of service provided to the paying passenger, and by a relentless over-supply of driver candidates, most from far away lands, prepared to drive a taxicab as a final futile act of desperation.
It is no wonder at all that the media and general public have grown to perceive the industry as an employer of last resort. The population of experienced, professional career minded drivers is dwindling inexorably, adding to this perception. The days of taking a taxi because its fashionable are rapidly evaporating. All as a direct consequence of preservation and nourishment of the leasing/IC environment.
The handful of concerned lease operators out there cannot hope to oppose the strong momentum of the current situation. So, is there enough regulatory and political courage out there to fix this horrific situation, or will the fundamentally evil leasing/IC environment continue to be nourished into perpetuity?
From an InterNet discussion 1 June 1998
It is clear that the huge, ever widening chasm between owners and lease drivers is creating huge problems trying to deal with fare reviews aimed at fare changes. Who gets what share of whatever fare is set continues to be a sensitive issue.
Principal regulatory authority responsibilities must always focus on general public. They are there to ensure the public interest is well served. In theory, they are not there to serve owners, but the reality is that every regulatory authority has a duty and a responsibility to monitor the economic health of the industry they are regulating. It gets real tough trying to strike a realistic balance between public expectations and perceptions, vs owner and driver demands and expectations.
The difficulties emerging out of the leasing/IC environment are mammoth and not likely ever to diminish so long as this environment continues to be nourished. There is universal recognition that this environment emerged out of regulatory oversight and inattention in antiquity. It will take enormous regulatory courage and insight today to fix the problem.
In this context, the "regulatory authority" is not just the local agency that specifically regulates a local municipal taxi industry, but rather the complete array of agencies that play a part, from a broader viewpoint, in focus of official government attention on this industry. They include other agencies at all levels of government, including income tax, sales tax, goods and services tax, environmental protection, transportation for people with disabilities, vehicle safety, vehicle registration, driver training, immigration, police, a whole host of activities.
Often the local regulatory agency gets hammered by the local industry for regulatory issues over which it has authority or control. This local regulatory agency is basically out there on the pointy end of the ship, seen as the all powerfull, omnipotent holder of the industry's destiny. Nothing can be further from the truth.
Yes, the local taxicab regulatory authority normally does have responsibility for monitoring and setting approved fares. But many of the problems, like the leasing/IC environment, basically had their origin with oversight and inattention of other agencies, most notably the tax folks.
Bruce is absolutely correct as he observes that "debates over medallion prices contribute little to fare-setting decisions". However, the reality is that whenever fares emerge as a public issue, medallion prices and who gets what fare share do emerge to dominate and muddy the critical issues, making it extremely difficulty to come up with a fair and equitable decision.
There is universal recognition that medallion values are artificial, a product of regulatory inattention and/or oversight back in antiquity. That does not make it right, but it does make it extremely difficult to fix. All licence holders know full well the value in their licences is fragile, sustained only by government policy easily influenced by powerful, well funded lobby groups representing owners.
Neither the general public, nor lease drivers have that kind of representation, so a natural by-product of of the lobbying process does tend to favour perpetuation and nourishment of a system that continues to protect artificial licence values, to the detriment of lease drivers and general public. A terribly lop-sided situation. Anything that emerges as a threat to these licence values is greeted by fierce, highly effective resistance.
As licences are simply an intangible official government permission to operate a taxi for hire for a fixed period of time, one wonders how it is that they ever acquired a value at all. And furthermore, how it is that they continue to not only be perpetuated, but also accelerate at alarming rates. As a consequence, public service has tended to evaporate in the face of aggressive licence value speculation, coupled with guaranteed unencumbered lease revenues.
The New York City situation where the city itself benefited hugely from an auction of medallions has not helped the situation at all. One wonders under what legal authority the city hung a mammoth value on an intangible that it does not and cannot ever own. It "ownership" of any kind can be attached to an intangible "authority" of any kind, then logically they belong to the taxpayer.
The fact is though that the city did attach a value, did receive huge revenues that basically only saddled its local taxi industry with a mammoth debt load, and firmly planted the fiction that medallions can have a value. The city is now responsibile for protecting, sustaining and nourishing that value into perpetuity. An impossible situation.
Bruce has quite properly noted that original licence holders have long since left the industry and took their excess profits with them, leaving the current licence holders proping up a system that defies economic common sense. The city created the problem, and any attempt to fix it is seen as a grossly unfair action aimed at extinguishing an asset that basically emerged by tacit government approval in the first place.
This is not a situation unique only to New York City. It has become pervasive, almost on a world scale. It is absolutely mind boggling that our regulatory ancestors could ever have allowed such a situation to emerge in absolute defiance of fundamental economic principles.
As John Lanigan correctly pointed out, this industry is no longer a single industry focused on providing a transportation service as a public utility. It has become a number of different industries, each pursuing different goals and objectives, somewhat independent of one another.
As a consequence, fare reviews can no longer produce a fair and equitable result without courageous offsetting regulatory changes aimed at diverting some portion of the increased revenues into improved service. After all, this is what the taxi industry is for, is it not?
So long as the leasing/IC environment continues to be nourished, I fear the general public and lease drivers will not ever get their fair share of attention, support and service they rightfuilly deserve. Is the courage and political resolve there to fix the problem?
From an InterNet discussion 27 April 1998
Some years back, I did some research into administrative law relative to taxicab regulatory fees. Some interesting common law principles emerged:
The fundamental overriding principle is that any regulated industry, being basically a protected industry, must be prepared to pay for the cost of that regulation. Out of this emerges the principle of "full cost recovery" in most cities.
Prudent legislation simply provides for appropriate fees by a single permissive clause authorizing a taxicab regulatory authority to set fees by regulation. Sometimes regulatory authorities are burdened by legislation out of antiquity that imbeds specific fee authority in line item legislation.
For example, 1935 legislation may provide specific authority only for fees for licence issue and transfer, perhaps no more than 6 specific types of administrative transactions. However, a typical regulatory authority, charged under political direction to migrate itself into full cost recovery, is caught between a rock and a hard place.
It can only charge these 6 fees, and each must bear a reasonable resemblance to their companion administrative costs. An attempt to raise these fees to achieve full cost recovery may emerge in such high amounts as to fail a court challenge. The pressure is on to charge fees for legitimate services without legal authority to do so.
If, in response to a legal motion, the court finds that a "fee" is so exorbitant as to be clearly seen for the purpose of generating revenue, rather than its related administrative costs, the fee will be struck down and the regulatory agency censured for exceeding its authority. There are ample case law precedents for such a court decision.
Going still further into this murky poorly defined area of administrative law, something else of interest emerges. Over time, as the leasing/IC environment becomes ever more pervasive, the regulatory authority by default begins to assume some of the responsibilities of a Personnel Department for the industry, functions previously conducted by the industry for itself. The issue of "control" is critical here.
This process can easily provoke the regulatory authority into spending money out of its budget for things over which it has no legal authority to do so. For an auditor's viewpoint, every dime that a regulatory authority spends must have a trail leading back to a specific authority in legislation. It matters not that the monies spent may be beneficial, appropriate, even quite simply the right thing to do.
However, under such circumstances, the regulatory authority risks censure for unauthorized spending and misuse of public monies. Taxi driver training is an excellent example of such a predicament. Nobody will ever argue that taxi driver training is not a good, right, proper, and prudent thing to do. But if there is no specific authority in legislation to specifically spend public money on training, then it cannot happen, no matter how righteous it may be.
This not an isolated example, for a number of regulatory authorities around the nation are caught in this shortcoming of legislation still on the books since antiquity. Their political masters have directed they migrate themselves into full cost recovery, but in the process overlooked the absence of enabling legislation. They are dammed if they do, and dammed if they don't.
The process of amendments to legislation is extremely difficult and costly, fraught with opportunities for failure through fierce lobbying in opposition, or simple political procrastination. Conversely, amendments to regulations are a comparative "walk in the park", well within the authority of a regulatory agency to propose, authorize and implement, by virtue of some permissive clause in legislation.
In the absence of such a permissive enabling clause, what we sometimes find are new fees emerging as if by magic, or raised fees emerging from some "in-camera" process that may well be clearly exorbitant. It may well be a simple gamble that opposition will not emerge. "If it sticks, don't knock it!", seems often to be a guiding perception.
The reality is that opposition to new fees and unfairly raised fees is not simple, nor is it cheap. Typically there is no appeals mechanism other than a motion through the court system, a very costly, long drawn out process where typically the only winners are the lawyers involved, both sides.
There is no question that the regulatory authority incurs costs in such a situation, and it has a duty and obligation to care for public monies. Unfortunately, it's a little like, "We shall economy, no matter what the cost!". A fee of some kind is not unreasonable.
Is a $200 filing fee reasonable?
First question to ask - "Is there legal authority to charge such a fee at all?" Then ask, "Is the fee in an amount reasonably close to actual administrative costs incurred against the agency budget to provide this specific service?"
You have not told us if the regulatory authority is one that specifically regulates the taxicab industry, or one that concerns itself with all licencing matters for the whole of the city. In the former case, cost allocation is relatively easy to determine. In the latter, very difficult, sometimes leading to abuse of power, albeit at most times unintentional.
More on this may be found in my paper, "Regulatory Fees", on our TAXI-L significant documents page.
From an InterNet discussion 5 April 1998.
I received a private email from someone very concerned about hotel vans operating in an illegal fashion, basically stating (paraphrased):
Here the hotels think that they can take anyone to anyplace at anytime. The regulator's position is as long as the hotels and casinos don't charge for courtesy transportation, they can't do anything or better put - they won't do anything.
There is likely some truth in the regulator's position. I faced something similar here in Winnipeg. Scalpers in unmarked personal cars were soliciting rides from little-old-ladies at the local supermarkets. The local industry complained to me these people were operating illegally, gave me documented details, including videotapes.
I was basically powerless because my legislation only gave me jurisdiction over holders of licences (still same to this day). The scalpers did not hold a licence, so they were outside my regulatory net. I got little sympathy from local city police, but eventually an interested policeman gave us some off-duty time for random surveillance, along with one of my inspectors.
We got a few, but little emerged from the exercise. With each documented case, I would send a formal letter to the holder of the vehicle licence, pointing out they were providing a vehicle-for-hire service illegally, uninsured, and directing them to cease and desist.
I had no authority to do so, but what it amounted to was legal terrorism, hopefully inspiring the scalper to stop. But there is always more coming along all the time.
Regulatory authorities can only act within their legislative authority. Sometimes, their legislative authority requires action far beyond their resource capability. All regulatory authorities are controlled by budgets, most in the hands of central accountants with sharp pencils, well-worn erasers, and little understanding of the environment within which the taxi regulators must work.
Most regulatory authorities never have all the resources they need to uphold the letter of the law. It's a constant juggling act, trying hard to do what's needed without the needed resources. Most police departments face a similar dilemma.
Curiously, the local regulatory authority is all too often burning up huge chunks of time listening to complaints for action over which they have no legal authority to do anything. They are perceived by the local taxi industry population as the all-powerful "boss".
Complaints to do something about illegal immigrants invading their territory, people falsifying their tax returns, etc., are typical concerns brought before the regulatory authority, which has no authority to even get involved. There are many in the industry who have difficulty understanding why the regulatory authority isn't doing anything about these complaints.
The regulator is likely grinding his teeth in frustration, wanting to help, but powerless to do so. There is a huge gap of understanding between the unstructured world of a typical I/C free to do as they wish, vs the highly structured world of the regulator confined by documented rules, regulations and laws.
I've noted frequent observations from some of our participants, basically harsh accusations of regulatory incompetance, inaction, etc., often taken out of context, often an unjustified broad brush condemnation of all regulators.
Let there by no doubt that the vast majority of regulatory authorities try hard to do a good job. But don't ever forget the limitations under which they must work, the limitations of budget, resources, and the often conflicting media pressure, political pressure, and industry demands.
The regulator is just the messenger, so don't shoot the messenger. Rules, regulations, legislation all emerge at the political level in most democratic communities. The politicians in power listen to their constituents and colleagues and act accordingly. The politicians in opposition listen to their constituents and colleagues and act accordingly.
Out of this process emerges the needed regulations and legislation. It is unfortunate that it takes time, but that's the way it is. That is a fundamental flaw of the democratic political process that we must all live with.
So if there are clear violations by hotel (and similar) vans appearing to be operating illegally, please remember they emerged for a reason. There is no reason why the taxicab industry cannot be in the hotel van business, the tour bus business, the non-motorized carriage business, the kiddie kab business, the courier business, the limousine business, and most any other form of transportation perceived by entrepreneurial operators.
It is very unfortunate that the I/C environment basically is incompatible with entrepreneurial marketing. The recent Toronto media investigation very clearly focused much needed attention on this situation that is just too easy for exploitation to emerge.
From an InterNet discussion 17 March 1998
In the past week or so we have seen discussion relative to a moratorium on licence issuance and a perception of regulatory unfairness. From a broader perspective, there are some considerations worthy of close review.
On regulatory issues, the tail does not wag the dog. Regulatory authorities do not represent the industry. They represent the general public and take policy direction from elected political representatives of the general public.
True, general public rarely becomes involved in regulatory issues. This is unfortunate but true. What is significant is that regulatory authorities do listen to and do negotiate with bona fide representatives.
Regulatory authorities simply do not normally negotiate with isolated single representatives of themselves. The tragedy here is that the 2,000 puppy dog model demonstrates all too frequently an inability to organize for itself a responsible association with whom realistic negotiations may emerge.
Put quite simply, in the 2,000 puppy dog model, everybody is a boss, but nobody is in charge. The regulatory authority cannot ever begin to contemplate negotiating or consulting with individual members of their local industry. None represent the whole. All are representing "self".
A regulatory authority cannot consent to a single industry member request appealing for a moratorium on licence issuance. What the regulatory authority will do is report that request to his political masters, with an accompanying background paper for their consideration, outlining the pros and cons of the request relative to existing legislative provisions and authority.
By now, most regulatory authorities are very much aware of the oversights of their regulatory ancestors, emerging out of quota setting without simultaneous licence transfer prohibition. It is out of this oversight that one of today's most serious problems has emerged.
Regulatory authorities today are saddled with having to deal with the phenomena of artificial licence values, contrary to fundamental common law. Any form of licence (permission) granted by a regulatory authority, should not ever acquire any kind of real property value, however informal, out there on the street.
The difficulties for the regulatory authorities emerge because of a history of licence transfer approvals without comment as to the validity or correctness of serious money changing hands in the process. As a consequence of historical custom and usage, it is aguable that the regulatory authority can be held responsible not only for having created the value in the first place, but also for protecting it into the future.
This is completely contrary to the public good. The regulatory authority is not there to protect an artificial industry asset, but having been the inadvertent author of that asset, it is now placed in the difficult position of having to take some kind of action that will have the effect of extinguishing that asset. Dammed if they do, dammed if they don't.
A moratorium on new licence issuance only has the effect of protecting existing licence holders, and is clearly not in the public interest. What the regulatory authority can do is present to their political masters a plan to implement a package of performance standards complimentary to open entry.
Such performance standards will have the effect of limiting entry to only those prepared to make the necessary investment to comply with these standards. That is very much within the concept of the public good.
By chance, by its very nature, this suppresses perpetuation of the 2,000 puppy dog model. The kind of investment needed to satisfy quality performance standards is ordinarily beyond reach of individual single vehicle owner-operators. Thus clumping into cohesive "companies" dedicated to a common good, emerges as a viable option. With such a migration, it is possible to once again make it fashionable to take a taxi.
It also makes possible collective action to recover customer base and market opportunities lost to the 2,000 puppy dog model. There is little that a single isolated owner-operator can do to enlarge customer base and seize market opportunities. Collectively, there is much than can be done. Its simply nothing more profound that "marketing"
Please do not fall into the trap of perceiving that marketing is just a Yellow Pages entry, coupled with a cell phone and isolated good service. Sorry, while that might be useful and even beneficial for the occasional aggressive owner-operator, the general public is not well served, for the 2,000 puppy dog model continues to rule supreme.
And so long as the 2,000 puppy dog model rules, the regulatory authority will continue to resist yielding to the demands of isolated local industry members. The regulatory authority will listen to and negotiate with bona fide representatives of an association to which the local industry is committed.
For such an association to be valid, it must be seen to be a bona fide vehicle for meaningful negotiations. Its credentials must be credible. Agreements reached as a consequence of such negotiations must filter down to and be complied with the 2,000 puppy dog members. Anything else will erode credibility. And if that happens, return to the present unhappy situation is a certainty.
This is not regulatory unfairness. The regulatory authority must and can only represent its ultimate employer - the general public. The industry has a collective responsibility to recognize it has a companion duty to serve the paying public in accordance with the provisions of granting it permission to provide personalized transportation service to the general public.
How these can be reconciled with one another is a supreme test of the validity and longevity of the 2,000 puppy dog model.
From an InterNet discussion 1 March 1998
A recent Winnipeg Free Press news article (13 January 1998, Premium Cabs to be Curbed, by Stevens Wild) carried a comment that,
"....The luxury cabs are newer Cadillacs with wheelchair accessibility. The cabs are allowed to charge higher fares than regular cabs."
This is yet another example of why the media folks and regulators are persona non grata with each other. The media folks (TV and newspapers, not trade magazines) will almost invariably get it wrong, even when provided with the correct information in writing. One gets the feeling that the most likely culprit is the local city editor who simply does not give his reporters enough time and direction to do a proper job.
The news item was clearly in error, and the reporter blew it in failing to detect an obvious error and ask a simple question. Cadillac has never built a wheelchair accessible vehicle, although Lincoln has possibly taken a step in that direction with their new sport vehicle.
The whole question of premium taxicabs had as its origin a market research study done for the Manitoba Taxicab Board by Prairie Research, a local market research company. The study looked only at residential consumers and determined for them there was a market for at least 100 additional new licences for a premium class taxicab that the public would be prepared to pay more for. The study did not look at the business or tourism community.
At the same time, the issue of transportation for people with disabilities was gaining momentum, and the Taxicab Board Report of March 1990 recommended implementation of both premium class taxicab licences and accessible taxicabs on a formula of 7 to 1. The initial decision was to charge a fee of $38,000 per premium licence, and for every 7 of those, a free accessible licence would be granted.
In common law, a fee must bear a reasonable resemblance to its companion regulatory costs. The $38,000 was not a fee, but rather a contribution into a proposed 3.8 million $ benefit fund for the local taxicab industry, and as an aside to provide modest protection for existing licence holders.
The local industry fiercely opposed issuing the new licences and put into place a litigious environment that exists to this day. In taking the Board to court for an injunction to stop the issuance of the premium licences, the industry lost on two counts.
The courts found that the Board did not only have the authority to determine the number of licences needed to satisfy public convenience and necessity, but also a duty and an obligation to do so. It also found that the Board had exceeded its authority in trying to establish a benefit fund.
As a consequence, the Board was given the green light to issue new additional licences for only the fee of $400, and the industry lost a benefit fund for itself.
Under an abundance of caution, the Board decided not to issue 100 new premium licences all at once, but rather phase them in starting with 40, then invited applications, using the formula of 7 to 1, for both premium and mandatory accessible taxicabs. They went together, and were not divisible.
After much litigation and heartburn, the Taxicab Board ultimately came down to a decision, but were unable to decide between two excellent applications, so they split the award to 20 premium licences to each.
However, in their applications, service level promises were made on the assumption of 40 licences. Those service level promises included a commitment for majority operation of these vehicles under contract off the meter. But with only 20 licences awarded, the original service level promises were severely compromised.
By chance, very shortly after the licences were awarded, the government went through a Cabinet shuffle. On that day, the Board lost its Chairman at 9:00 am by induced resignation, lost its Minister of Transportation at 10:00 am by Cabinet shuffle, and by noon, lost 2 of its Board members by additional resignations in sympathy. At that moment of time, the Taxicab Board ceased to function for anything but routine administration. No decisions could be made.
Of the two successful applicants, both needed supplementary Board approvals on a number of critical issues, not the least of which was vehicle choice, so their plans ground to a halt. In this interim period without a Board, one of the applicants went belly-up, was disqualified, and terminated all further plans to proceed.
When a new Taxicab Board emerged many months later, one of its first actions was to consider the supplementary submission from Blueline Premium Taxi, the sole remaining applicant. However, the new Board was no longer disposed to carrying on the fight, capitulated to industry lobbying to suppress issuance of new licences, and took an devastating tactic by approving Blueline's choice of new Cadillacs, but imposing a severe condition that all their needed vehicles had to be acquired within a short 3 week period.
It was impossible for Blueline to acquire 20 Cadillacs in 3 weeks. By the deadline, they had acquired only 9. Blueline's original service level promises were based on the premise of 40 vehicles. Now they only had 9, nowhere near enough to enter into contracts as per their original marketing plan.
The original plan for 40 premium taxicabs at that moment was doomed to failure. They never did have enough vehicles to go after contractual business. To survive at all, Blueline basically had no option but to put their vehicles out there on the street, competing with standard taxicabs.
Local operators of standard taxicabs formally complained to the Board that Blueline was not fulfilling its promises. At a Show Cause hearing, the new Board seemed to forget history, forgot that they had effectively changed the rules in mid-game, and astonishingly held Blueline to their original service level promises. The final ingredient for ultimate failure was imposed at that moment.
Evolution took it toll, and Blueline is now perilously close to bankruptcy. The old Taxicab Board contributed to the failure by deciding to issue only 40 instead of 100, then splitting the 40 down to 20. The new Board added fuel to the disaster by imposing an unrealistic deadline appearing intended to minimize the chance of success. The final chapter had all the characteristics of regulatory capture.
The newspapers dutifully report the failure of premium taxicabs in Winnipeg, and the Board now appears to be yielding to industry pressure to revoke all those premium licences. What the newspapers and the industry, even the community of people with disabilities, have overlooked is that if the premium licences are revoked, then the companion couple of accessible taxicab licences must also be revoked.
It's going to be an interesting scene when full realization of this debacle hits home, for there really is a legitimate market for upscale vehicle for hire. Hindsight is always 20/20, but perhaps "black cars" without meters might have been a more prudent choice of a new class of taxicab licences.
In 1947, the Board imposed at quota of 400 taxicab licences. The population then of greater Winnipeg was ~320,000. At that moment of time, the Board failed to simultaneously prohibit licence transfers. As a consequence, these licences immediately began to acquire an informal artificial street value. While the Board has never recognized these street values, it has never prohibited a licence transfer.
The population of Winnipeg is now ~660,000, but the quota of 400 standard taxicabs is still in place. The premium licences only added 9 to that list. Currently, taxicab licences are trading at ~$90,000 (Can $$). That's the critical issue. The quota of 400 licences is being fiercely protected by current licence holders, solely on the basis of these inflated artificial licence values. Has nothing to do with public service, convenience and necessity. The public loses.
Unless of course the industry realizes there never has been a prohibition against providing an upscale premium taxicab service at standard fares, coupled with a marketing plan intended to generate new business and expand their market base beyond their ability to serve the need with only 400 taxicabs.
At that moment of time, if it should ever materialize, the industry itself will have no option but to approach the Board with a business plan in which substantial additional new licences will be requested on the basis of aggressive marketing, a critical missing ingredient for far too long. How wonderful such a moment will be!
The phenomena of fierce protection of taxicab licence values is no different conceptually that a residential district spontaneously organizing effective protest and lobbying to prevent introduction of half-way houses in their district for convicted criminals being released from prison. They fear shrinkage of their personal home property values and will fight fiercely to protect their investment.
All too often the newspapers continue to get it all wrong, this time by mixing up the issue of the premium taxicabs with the issue of accessible taxicabs, simply adding to the confusion. And no, there never have been Cadillac accessible taxicabs.
But there are purpose built taxicabs out there, right now, ready to serve a potentially huge market ready and waiting, but for want of aggressive marketing. The days of simply waiting for the phone to ring are rapidly evaporating, for in the absence of marketing, the phones continue to ring ever less.
From an InterNet discussion 17 January 1998
In response to a question posed about regulatory funding and staffing, etc, some serious considerations emerged about the manner in which regulatory authorities are organized, operate and are funded.
All too often the rhetoric claims the regulatory authority is funded by assessments, in fact such revenues typically do not flow into the office of the regulatory authority; they typically flow directly into the General Revenue. The regulatory agency does not see a dime of it to offset its expense side of the ledger.
Municipal bureaucracy is the villain. On the one hand, you have the revenue folks aggressively seeking out new ways to extract monies from regulated industries, while on the other hand, the budget folks are equally aggressive in seeking out ways to cut costs. Rarely do the two groups speak to one another, and all too often both sides win, to the detriment of both the regulated industry and the public it serves.
The regulatory authority is far too often directed to downsize and cut costs without any real regard for reality. Such direction emerges out of agitated reaction to perceptions of costs far too high as compared to other regulatory bodies.
For example, the costs of regulating speeds and access roads is dramatically less than the proportionate cost of regulating the taxicab industry. Unfortunately, such comparisons curiously focus on the least costly regulatory function that the budget folks can identify. Surprise! Surprise! "Your Board is much too costly, you are gonna have to cut staff and reduce costs...... etc."
All too often, the regulatory authority, typically established as a theoretically independent administrative tribunal, is not master of its own destiny. It is just too often "managed" to death by bureaucrats in their ivory tower downtown, totally out of touch with reality.
In common law, the revenue should bear a reasonable resemblance to the true costs of its companion regulatory activities. They should be in relative balance with one another. Otherwise known as "cost recovery". Little known in common law is any attempt to raise regulatory revenues significantly out of synch with actual costs will not survive a court challenge.
The plot thickens however if the regulatory authority is recreated in law as a truly independent agency fully responsible for maintaining its own accounts of expenses, and totally funded out of its own revenues in the form of fees, charges and fines, etc. If such a regulatory agency has responsibility for a multitude of licences ranging from massage parlors to dogs to pool halls to pawn shops to tow trucks to taxicabs, then a recipe is in place for serious aggravation and hostility, for it becomes extremely difficult to isolate costs and revenues to any particular type of regulated activity because of merged and co-mingled functions and activities.
If such a truly independent administrative tribunal is established solely to regulate the taxicab and limousine industry, with responsibility just for regulating any form of vehicle for hire - taxicabs, limousines, sedan service, jitneys, horse drawn carriages, pedicabs, water taxis, etc., yet another serious problem emerges.
If such a Board, Commission, Tribunal, etc., is required by law to be fully funded by the industry it is charged to regulate, then that industry quickly perceives it "owns" that agency. Any attempt by that agency to develop its own budget and financial controls is met by fierce industry response to impose external control. Its annual budget review process is reduced to a shambles, particularly if the industry is highly atomized by many hundreds of presidents of their own single vehicle company, each perceiving the right to challenge the budget.
Any attempt by the agency to budget for more staff or more facilities for inspections or more regulatory activities perceived to be necessary for the public good, are quickly blocked by industry intervention.
The problems associated with these three fundamental bureaucratic structures often provoke over time, devolution down into fragmented regulatory activities divided up among a variety of civic entities. Licences sold across the counter by a general licence office, enforcement by local police force, inspections by civic fleet vehicle agency, charges and appeals heard by a municipal court, and so it goes.
I've seen all these systems in application and all have their problems trying to be effective. None satisfy everybody, least of all the travelling public. I personally do not favour one over the others. Each has evolved in its own community by tradition, heritage, evolving government, and strength of political commitment. Changes typically provoke heartburn at most levels.
I fully recognize how difficult it becomes in a community infected with the scourge of atomization where everybody is a boss but nobody is in charge. The best way for any regulated industry is for it to be self-regulating, self-policing, self-selection, self-training, self-supervising, self-rewarding. How to make it happen? Can such an initiative overcome political interference? Is it realistic to expect general public to participate in such an initiative?
From an InterNet discussion 23 November 1997
In response to a discussion about permit leasing and service excellence to the travelling public, a number of critical questions emerge.
The single market objective must focus all attention and resources solely on the paying customer in the back seat. That's where the money starts, the reason for the permit in the first place.
Give real serious consideration to substitution of by-laws and regulations with performance standards all aimed at service excellence to the paying customer in the back seat, then open the system to anybody who wants to come in. All an applicant has to do is meet the standards, not only initially, but ongoing into perpetuity.
By this strategy, an opportunity is presented to let the artificial quota evaporate in favour of widespread service excellence where competition rules. Imposition of such standards will have the effect of entrance barriers where the real beneficiaries are the travelling public.
This not deregulation. It is responsible civic management of a public utility. The sole focus of attention is on satisfying the paying customer in the back seat.
Going one step further, the standards and residual regulations should be so crafted as to inspire willing, enthusiastic assemply into large homogeneous fleets characterized by unity of command and control. The value (investment) is no longer in the permit, but in shares in the employee owned company.
Go back to basics. What is the permit for? What does it specifically authorize? If by chance the permit fails to define a specific authority, fix it, real quick! A permit's specific authority should not ever be left to random interpretation of anything other than excellence of service to the travelling public in the back seat.
From an InterNet discussion 29 September 1997
Concerns have emerged about apparent regulatory inaction in response to formal complaints filed about inappropriate and perhaps illegal behaviour by others in the industry. Authors of such complaints perceive their safety and job security is suddenly at risk. My response is simply to encourage such people to hang in there, the big wheel does come 'round.
How many of us saw the A&E Special last night on Frank Serpico, who blew the whistle of the corrupt New York City Police Dept of the 60's? He too found himself the focus of high level investigation aimed at discrediting him. But he persevered and eventually "right" prevailed. He never intended to bring the entire force to its knees, but if that's what it takes, then so be it. Very interesting bio.
Nobody likes their failures being exposed. Normal reaction to such action is very defensive deflection of attention to something else, typically the author of the pointed finger. Very hard for authorities to acknowledge their failures, for their careers are on the line, and very often these failures are not of their making, but rather their ancestors or some other agency in the cascading chain of authority.
It takes enormous courage for anybody to publicly acknowledge failure, particularly a regulatory agency. High probability of ruined careers, little chance to emerge victorious. Media folks are real quick to jump on such newsworthy copy. Is it any wonder that unsatisfactory regulatory environments persist and become imbedded over time?
Nobody is immune from this powerful compulsion to shield one's self from public criticism. We all have families, homes, jobs, bank loans, obligations, et al, that need protection from whoever or whatever threatens. It matters not if the target is a regulatory agency, taxi company management, a driver, a bank, or a merciless tax man. All need nourishment far more than attack. Unfortunately, sometimes "attack" is the only way to fix the system.
A critical ingredient is that everybody must have the opportunity to defend in dignity. Infinitely easier to fix the system if dignity is somehow preserved and protected, on all fronts, by all involved.
It may seem at times that all efforts to fix the system take on the characteristic of Don Quixote tilting at windmills, all seemingly to no avail. Have courage, remember that David slew Goliath, and Frank Serpico provoked the political will needed to fix the system. There are underdogs everywhere who, for whatever reason, somehow find themselves in a position of leadership, perhaps unwanted, but follow through to a successful conclusion.
You are not alone Ben. There are many like you, fundamentally sincere about long term survival of our unique industry. Each in our own words, each in our own way, trying to do what we think best to fix the system. One never knows when a positive breakthrough will emerge, but when it does, be ready to seize it enthusiastically with conviction and resolve.
From an InterNet discussion 28 September 1997
In the Fall of 1990, the Canadian federal government proposed the imposition of a 7% Goods & Services Tax to replace a long standing and widely hated 11% Sales Tax. Among other things, it was intended that this tax applied to all vehicles for-hire.
Both industry and regulatory officials across the nation quickly perceived a serious problem in that the people grossing less than $35,000 annually would be exempt having to charge, record, report and submit quarterly their collected proceeds of this new federal tax. This meant that fleet operators, normally exceeding this $35,000 threshold, would be required to charge the 7% GST, while many small single-vehicle owner-operators would be exempt.
Difficult times for general public were perceived with some operators charging and others not charging the 7% GST. As a consequence, as a public convenience, the feds amended the legislation to exempt the taxi and limousine industry from this exemption. Then, all jurisdictions across Canada amended their approved fare schedules to "include" the 7% GST within their locally approved taxi fare schedule.
While that satisfied one problem, it provoked another equally serious problem. It is widely accepted that a significant portion of the industry folks "hide" portions of their revenue in the reasonably secure knowledge they will not likely be audited. Thus, every time a fare is hidden, that is tax evasion in the eyes of the income tax folks, which is bad enough. However, in the eyes of the GST tax collectors, it is much more serious, for a portion of the GST collected is effectively stolen. The 7% GST, nor any portion therefore, does not and did not ever belong to the driver.
Every time a fare is collected off the meter but not reported provokes serious attention not only by two levels of the feds, but also by the local regulatory authority because he is a lawful party to that fare schedule. All 3 sides are offended, not to mention general public when the media sinks its teeth into this scandal.
[From an InterNet discussion 12 August 1997]
Just what business is the company in? Within the phone book yellow pages, what does the company hold itself out to be? What does it say it is on the doors of the vehicle. When a passenger steps into a vehicle that holds itself out to be a taxicab, that passenger has entered into a contract with ABC Taxi for personalized transportation purposes. It follows therefore that the vehicle and the company that owns it are in the taxicab business to provide personalized transportation.
What does the company say about itself when it submits its income tax return at year end? If throughout the year, it holds itself out to the public to be in the business of providing personalized transportation, and then at year end holds itself out to the tax folks as being in the dispatch/leasing business, then which is it? What business are they in?
When the company purchases its annual business permit from the municipality, what does that permit say on it? Does it say that the company is authorized to be in the leasing business, or does it say that the company is authorized to be in the business of providing personalized taxicab transportation to the general public?
Raises some interesting legal questions. For example, if the company holds itself out to the public to be providing personalized taxicab transportation service, then its revenues should bear a direct relationship to the quality and quantity of that service. However, if its revenues are fixed and guaranteed by lease arrangements, then just who is the customer? Just what business are they in? If they hold themselves out to the general public to be in one business, but in fact behave and operate a completely different business, then what are the legal considerations?
Just what business are we in?
From an InterNet discussion 28 July 1997
Within the recent discussion about meter checks and how accomplished, only one participant drew some attention to a fundamental weakness of most meter checking procedures by many, if not most regulatory authorities. In my travels, I've often spoken with industry folk out there on the street, and such street talk often reveals that most meter checks are of little value.
Numerous people have confided to me that a couple hours prior to their scheduled meter check, the owner-operator takes his car to his friendly neighborhood hoist where he can access the bottom of the speedometer cable on the transmission, change a gear back to the proper one, pass successfully through the meter check, return to the same hoist and reinstall the old gear, effectively altering meter performance without ever breaking the seal.
I doubt that such practice would be true of large companies owning their own vehicles, but the exposure is certainly there for most any operator so inclined.
In how many cities are both the meter and its speedometer cable sealed at both ends? If not, why not? Are there contemporary meters out there that do not require a fixed mechanical connection to the transmission?
Are there any companies out there providing metered service without in-car meters; i.e., determining fare payable at base computer based on the flow of GPS data?
Are there any regulators out there who do spontaneous random meter inspections out there on the street?
I recall couple situations some years ago in New York City and Montreal where a number of operators were successfully prosecuted for altering meter performance with the installation of some form of electronic booster physically located nearby the meter in some hidden location. Apparently this booster was/is very easy to make from simple lo-cost Radio Shack parts. Anybody got some background information on this situation? Has it ever been repeated in some form in other cities?
From an InterNet discussion 28 June 1997
From the viewpoints of drivers and regulators, I perceive an "association" to be highly desireable. However, the reality of just what is an independent contractor seriously intrudes into the concept.
An i/c is just that - "independent"; theoretically free to do whatever he/she pleases. Unless there is some incentive for i/c's to willingly, enthusiastically buy into membership, there is little likelyhood of success.
In the good old days leventy-7 years ago, when drivers were employees, regulatory authorities only had to deal with a handful of strong corporate business managers who typically looked after all the licencing and administrative matters for the drivers.
Since the advent of i/c's, regulatory authorities now must deal with thousands of drivers individually, each of whom is "President" of his own one-person company, each correctly perceiving the right to consume the time of the regulator one-on-one on whatever concerns emerge at a moment of time, yet the regulator is typically still staffed and equipped as if the good old days are still in place.
Agenda matters before local regulatory hearings of interest to drivers are typically greeted with silence or crowds of drivers overflowing the hearing room. Each has the right to speak before the Commission, but what is absolutely critical is that in the absence of a representative body, each speaking at the hearing is legally representing only "self". Consequently many drivers do not get to speak at the Hearings, provoking accusations that the regulatory authority has "failed" to consult with drivers. The simple reality is that the regulator cannot possibly "consult" with all drivers individually, no matter how many are contacted.
As a consequence, regulatory authorities everywhere would welcome with enthusiasm the ability to deal with a truly representative body. However, just what is "representative"? Regulatory authorities often see small groups appearing before them claiming they "represent" local industry segments. Upon close examination, this new "association" is found to be composed of a President, his brother as Vice-President, and his wife as Secretary-Treasurer, no Charter and no paid-up membership.
So, is such a group a legitimate representative of a segment of the industry? In the eyes of the regulatory authority - no. In the eyes of local media - don't care, so long as quotable quotes emerge from John Doe, holding himself up to be President of the City Taxi Association.
As a career civil servant, I was required to become a full paid-up member of the Manitoba Government Employees Association as a condition of employment. I had no choice. If I wanted to work for the Manitoba Government, I had to belong to the MGEA.
Would such a requirement work for taxi drivers? Suppose the issue of a Taxi Driver Licence is made conditional upon display of proof of paid-up membership in a bona-fide association representing drivers (and regulators for the most part do have the legal authority to do so).
What is a bona-fide association? That is something that the association would have to satisfy the regulator by filing of its charter, its credentials, its officers, and proof of paid-up membership. Thereafter the regulator does not ordinarily deal with individual drivers, but rather with a designated spokesperson for that association.
The weakness in mandatory membership in such an association is just that. It is mandatory. If drivers do not willingly, enthusiastically buy into the concept of becoming represented by a bona-fide association, it will have little success. So what is needed for drivers to buy into the concept? What kind of a lure would attract drivers into active participation?
This issue also touches on the lament expressed by many drivers that they have no "say" in matters before the regulatory board. A demand for representation on such a Board is often expressed. The reality is that such representation is typically declined on the simple principle of conflict of interest. What is really needed is an Advisory Board where industry representatives have the ability to participate in Board affairs in a democratic fashion. A bona-fide driver association must have a seat on such an Advisory Board.
Trust is an important element in the development of an Advisory Committee. As noted in the Toronto Board of Trade report released a few weeks ago, "An industry advisory group, The Taxi Advisory Committee, ostensibly provides an industry perspective for policy development, but does not appear to have much influence." This is a tragic situation, for in the absence of regulatory committment, trust is the inevitable casualty.
So, while it is legally possible for a regulator to impose mandatory membership in a driver association, it cannot impose mandatory willing and enthusiastic participation. That must come from within the heart of each and every driver member. So what is the lure? How do we inspire drivers to buy into such a concept?
From an InterNet discussion 13 April 1997
Concerns have emerged that regulatory authorities tend to prosecute licenced drivers before attempting to prosecute gypsy operators. This surfaces in many facets of government regulation, largely because of shrinking budgets and downsizing of government bureaucracies. The difficult cases get left behind in favour of the easy cases to investigate, audit, prosecute, etc.
In Winnipeg, the Manitoba Taxicab Act only gives the Manitoba Taxicab Board authority over holders of licences it issues. What that translates into is that the Board is essentially powerless to take meaningful action against unlicenced gypsies, simply because it has no legal jurisdiction over them.
As in most cities, gypsies do operate in Winnipeg, largely at supermarkets as they solicit elderly shoppers with their bags of groceries. The best the Board has been able to do is negotiate with the City Police for occasional joint efforts to show the flag and provoke them into evaporation. Not terribly effective.
It's tough to get the needed legislation into place, a long drawn out process that often gets shoved aside and dies on the order paper when the House convenes for yet another break. Perhaps Gord can comment on other optional courses of action.
I agree with John Lanigan's observations about a course of action aimed at recovery of the legal taxi industry in London, but have some concerns about the ability of the industry to pull itself together and harness its collective energies. In those countries were the i/c tends be dominant, the industry has become so highly atomized as to make such an effort all but impossible.
From an InterNet discussion 31 March 1997
The San Francisco Police Department's Taxicab Detail is proposing changes to the regulations, recommending that cabs be equipped with GPS and interior video cameras, and with front and rear emergency lights. A police spokesman said that San Francisco only needs two citywide dispatch services. and that the productivity of each cab needs to be increased.
This suggests an extraordinary widening of the regulatory net, such that the Police Department could easily find itself in the unenviable role of becoming not only the personnel department for the industry, but also its manager.
This is way beyond what fundamental regulatory activities and powers should embrace. This expansion of regulatory power has a high probabilility of eventual disaster. They (the Police) appear to be assuming responsibility for clear industry management responsibilities.
The Police Department decision to mandate specific equipment aimed at protecting drivers - GPS and interior video cameras, and with front and rear emergency lights - will in fact put in place an environment which will undeniably protect some drivers. The raw reality is though that by mandating specifics, they have accepted a measure of responsibility and companion liability in the event these specific measures do not protect a driver one day. And that day will happen.
Regulatory authorities do have a minimum duty and an obligation to ensure local industry management do implement safety programs and equipment on the fundamental principle of reasonable accomodation. Industry management has the responsibility to implement a specific safety program and specific equipment, and then convince regulatory authorities and the courts that indeed what they have done is well within the principles of reasonable accomodation.
The specifics could include any or all of the cashless taxi, safety training, GPS, in-car videos, and a host of other possibilities in diminishing significance. The analyses and implementation decisions for such specifics are best imposed on industry management who are in a far better position to make good, informed decisions.
From an InterNet discussion 1 March 1997
From time to time, taxi drivers are charged with criminal offenses and concerns emerge about what regulatory action might be prudent and appropriate. Depending on the severity of the charge, I believe most regulatory authorities have the power to temporarily suspend a taxi driver licence, and call for a Hearing where the driver can be required to appear and show cause why his licence should not be suspended or revoked.
If his taxi driver licence is suspended or revoked, then the regulatory authorities then have the power to call a hearing where the taxicab business licence holder is required to appear and show cause why his taxicab business licence should not be suspended or revoked.
In either case, if the accused fails to appear before the Hearing, the regulatory authority would then have the power to make a decision based on the evidence in hand. Failure to appear would likely be perceived to be an admission of guilt.
I am aware of a case where a driver pursued a "runner" into a convenience store where an altercation occurred, the customer was attacked with a knife and subsequently died a few hours later. The driver was ultimately found guilty of murder and served time in jail. At the time of the crime, however, the regulatory authority determined that the charge was of such severity that it had a duty and an obligation to temporarily suspend his taxi driver licence immediately, a Show Cause Hearing was called, and his taxi driver licence was subsequently revoked.
From an InterNet discussion 19 February 1997
The Winnipeg Airport will soon be equipped with a controlled access system for commercial vehicles such as taxis, limos, etc. It's been a long time coming. Perhaps it has something to do with the transfer of responsibility just a few days ago from the federal Transport Department to a local Winnipeg Airport Authority. Makes it a whole lot easier to develop leading edge systems with the freedom of multi-year budgeting.
I was involved with the management of the airport as far back as 6 years ago, and to help facilitate migration into a controlled access system, the Manitoba Taxicab Driver Licence was to be the trigger, using the mag stripe on its back side.
One the critical considerations was to facilitate fairness when a driver is faced with a short trip to any one of several hotels within the range of a $4 fare, after having waited an hour or so in the corral. The intent was to make it possible for a driver to re-enter the queue at the head of the line if within 15-20 minutes of having exited from the airport property. I'm hopeful the new system will facilitate a fix to this long standing service problem.
The system suggests individual accounts for each taxicab owner-operator. If that be the case, does this mean that the current exclusive use of the airport property by a single taxicab dispatch service will be changed into an open entry system?
As with most airports, Winnipeg has significant peak periods with, among others, large fully loaded jumbo jets on charter flights both coming and going. Hopefully, this new system within it some form of dispatch capability where additional vehicles can be called for from all service providers.
From an InterNet discussion 8 January 1997
I have become aware of many cities where someone declares himself to be the leader of the local taxicab owners or drivers, sometimes with good results, but often with negative results. The difficulties emerge when such people claim to "represent" large numbers of local industry people, express highly quotable quotes to media representatives who repeat them in our local newspapers, such that they end up with the ring of truth.
Unfortunately, the media reps often do not verify the authority of these people to express these statements. If they did, they would learn that such "associations" are all too often just someone who declares himself to be President, his brother Vice-President, and his wife to be Treasurer, with no paid-up membership at all.
Regulatory authorities welcome responsible representation out of which emerges good progress. Without it, a situation emerges where the regulatory authorities find themselves having to deal with virtually every owner or driver individually. The recent Seattle "Peer Review" quite properly characterized that situation as being highly "atomized".
In such situations, where there is no responsible representation, the regulatory authorities quite properly liase and review with as many industry representatives as realistically possible. However, in the absence of a solid association, it is absolutely inevitable that the regulatory authority will be on the receiving end of highly public accusations they have "... failed to consult with us...".
That the regulatory authority did indeed "consult" with as many as possible gets lost in the emotionally charged rhetoric through the pages and images of the media ever alert to quotable quotes.
From an InterNet discussion 11 September 1996
Regulatory authorities are frequently on the receiving end of complaints of inaction. But when hard data is sought upon which to take initiatives and resolve concerns, similar complaints emerge from same sources that "..you're going data mad...".
All too often, all the regulatory gets is anecdotal evidence laced with powerful doses of emotional anguish, followed years later by complaints that the regulator isn't doing anything. Yet governments cannot take decisive action in the absence of hard data, else they risk severe criticism. Dammed if they do, dammed if they don't.
Similar situation with customer complaints where the regulatory authority can only act in the presence of a signed statement of complaint. All too often, the complaint is nothing more than a brief phone call with a failure to follow-up with a signed statement as requested. Years later accusations are hurled at the regulator through the pen of some overworked and underpaid reporter - "I complained to the Taxicab Board, but they did nothing about it!".
Documentation is absolutely critical. In its absence, it is highly probable that decisive action will at best be severely delayed if indeed at all. Efforts to gather meaningful data must be supported, else they are doomed to failure. All efforts to gather needed hard data are so important they must not be allowed to fail. How many lives and broken bodies does it take?
From an InterNet discussion 29 August 1996
All too often, a service or regulatory agency (like the police dept, or a taxicab regulatory authority) is not truly independent, but rather very much dependent upon other central agencies for other needed services, one of them being the dreaded 'accounting dept' with their sharp pencils and busy budget erasers.
Often these central agency folks, driven by brutally different objectives, deliverables, and success indicators, aggressively impose cost recovery in an aggressive, almost zealous manner, without regard to unique conditions, environment, and situations at point of delivery. Often a command comes down from on-high to charge a fee for this or for that without regard for the consequences which only those on the front line can appreciate, but are never heard in opposition.
I've always held that cost recovery is a principle, not a law, to be applied with discretion and good judgement, a difficult balancing act where opposing forces are at work. All too often, the central agency wishes prevail over the front-line voices in common sense opposition.
Some taxicab regulatory agencies are encased in a rigid by-law that forces them to recover all their costs from the local industry, a situation which IMHO, is only one tiny baby step away from a potential disaster. Under such conditions, the local industry develops an understandable perception that if they 'fund' the agency, then they 'own' the agency, and have a right to debate their budget and control their costs. Such are the basic ingredients of regulatory capture.
I firmly believe that a regulatory agency cannot and must not ever be in a position of being legally bound to be totally funded from the industry it regulates. A substantial portion of the costs of any such agency are dedicated to the public good, convenience and necessity, and should therefore be supported out of general tax revenues. And from the simple bookkeeping viewpoint, all regulatory revenues should be identified as such, but should flow into general revenues.
It is very much in the interests of a police department to help other agencies, whether they be public or private, by providing needed information which may ultimately result in lower crime rates. To impose an impediment in this process by charging an onerous fee for gathering and photocopying that information is clearly counter-productive.
The Public Service Commission should not have to intervene in such matters, simply to impose a generous dose of common sense to overrule an arguably stupid bureaucratic barrier.
From an InterNet discussion 7 August 1996
An InterNet discussion focused on a requirement whereby each driver must go to the State Police to be fingerprinted.
I've been following this thread for several days now, and with each new message, a growing concern emerges ever more ominous. How many other service industry occupations require similar fingerprinting and checks for criminal records. What's happening here?
I'm wondering in how many other jurisdictions there are similar requirements for other service industry applicants. Are taxi driver applicants being singled out, and if so, for what reason? Are we detecting an ominous trend here? Or are my fears groundless?
From an InterNet discussion 15 July 1996
A Snapshot Overview
The Taxicab Board emerged in 1935 as a Manitoba Government initiative to resolve significant difficulties within the taxicab industry caused by jurisdictional disputes between the various independent cities and communities making up what is now Winnipeg. Notwithstanding numerous attempts to migrate regulation of the local taxicab industry to the City where it should properly reside, the situation remains unchanged. The Province continues to be responsible for regulation of a municipal industry.
In 1947, the current quota of 400 cabs was established, and it continues to this day. At that time, the government failed to perceive a fundamental fact of licence economics and failed to simultaneously prohibit licence transfers. From that moment forward, these licences promptly acquired a scarcity value out there on the street, now approximately $48,000.
Up to the mid 60's, the industry was basically organized along traditional corporate organizational lines. The companies owned the vehicles, employed the drivers, measured the demand, marketed the service, and had control.
Throughout this time, the industry basically regulated itself and there was little need for the Taxicab Board to have Inspectors on staff. If there was a problem, the Board simply dealt with one of a handful of strong company managers who imposed control and disciplinary measures. However, in the early 70's, as a consequence of fundamental changes in the Income Tax laws, the industry started migrating into the "independent owner-operator" organizational structure, and major long term problems with the industry emerged which persist to this day.
In 1970, under Order-In-Council 1132/70, the Manitoba Taxicab Inquiry Commission was established "...to examine, study, and inquire into all aspects of the operation of the taxicab industry in the Province of Manitoba." In December 1972 it brought down its report within which these major, long term problems were recognized and documented.
However, in 20/20 hindsight, it is clear that this Commission not only failed to foresee the long term consequences of these problems, but actually inadvertently nourished and contributed to the growth and perpetuation of these problems to this day. The need was seen, but the opportunity was lost.
By 1973, it was clear that the Winnipeg taxi industry was failing to regulate itself adequately, and the Government stepped in with the appointment of the first part-time taxi inspector to protect the rights of the taxi using public. To this day, the taxicab industry continues to fail to regulate and supervise itself.
In 1988, the damaging ill-conceived Touch Ross Report, which recommended a huge increase to the 1947 quota of 400 taxicab licences, was tabled, and it provoked substantial industry hostility that exists to this day.
In 1992, Cabinet directed that the Taxicab Board migrate itself into full cost recovery by end fiscal 94/95, an ominous task considering that for some 50+ years through to 1986, all of the Board's fees were only $1.00 each. This Cabinet direction ultimately resulted in Bill 24, an Act to Amend The Taxicab Act, which when passing through Law Amendments Committee Hearings, met with stiff, successful industry resistance. Their filibuster successfully stayed proclamation of all but one minor clause of the Bill although it did receive Royal Assent.
To this day, the Board is unable to achieve full cost recovery because because it may only charge 6 kinds of fees, all imbeded in the Act, with amounts by regulation. As fees must bear a reasonable relationship to their companion administrative costs, it is now impossible for the Board to achieve cost recovery. Bill 24 provided for repeal of the 6 specific fees, and substitution of a single permissive clause authorizing the Board to set fees by regulation.
The Industry Organizational Structure
Regrettably, the authors of The old 1935 Taxicab Act never foresaw the ultimate formation of shareholder companies to provide dispatch services. As a consequence, the legislation only provides jurisdiction over "holders of licences issued by the Taxicab Board".
Approximately 18 years ago, the federal government published its guidelines for employee/employer relationships, and out of these, the independent contractor emerged.
Two large groups of these independent contractors banded together to form 2 large taxi dispatch services - Unicity Taxi and Duffy's Taxi.
These dispatch services are not ever licenced by the Taxicab Board because the envelope of its authority extends only to the "care and control of a taxicab" by a holder of a taxicab business licence issued by the Taxicab Board. As a consequence an organizational structure has emerged that defys common sense.
Because the dispatch services do not hold licences from the Taxicab Board, they are outside its authority and jurisdiction, and the Board is powerless to influence or direct their operations and behavior. The issue is further complicated by the widespread perception that all industry participants are independent contractors.
Both of the dispatch companies have their own employees and manager who reports to a Board of Directors. However, as the companies are owned by all shareholders, the manger really has hundreds of bosses who routinely appear on the premises daily, and while there often informally try to influence company operations. The Taxicab Board can no longer appeal to the manager to discipline a holder of a taxi business licence, for to do so would mean asking him to discipline his own boss.
The Independent Contractor
In antiquity, Winnipeg's taxi industry was organized in a traditional corporate manner where the companies owned the licences, employed the drivers, measured the demand and customer satisfaction, and had full managerial control over service excellence. The industry was characterized by pride and honour.
Then along came the federal changes in the tax laws, out of which emerged changes in the guidelines on employee/employer relationships. The critical ingredient is the absence or presence of control. Where control is shown to be present, then the feds declare there to be an employee/employer relationship. This means the employer is liable for all the employee overheads prescribed by law, such as sick leave, worker's compensation, pensions, tax withholding, etc.
To avoid these overhead expenses, control was consciously removed and the independent contractor emerged. The bulk of Winnipeg's taxi industry, not unlike most of Canada, is composed of people perceiving themselves to be independent contractors accountable only to themselves, and are free to act independently as they wish. Each is a "President" of his own company.
Our predecessors had only to deal with the managers of approximately 8 taxi companies. When there was a problem with a driver, the Board Secretary spoke with the relevant manager, and as if by magic the problem was resolved. These managers were driven by service excellence, and the drivers were obedient employees.
As the "independent contractors" emerged and gained strength, the old traditional companies evaporated one by one as the licences were acquired by ever larger groups of shareholders that continue to this day to escape the Board's jurisdiction and regulatory net. The industry is now dominated by 2 such companies that are really only dispatch services that sell their services exclusively to their shareholders.
Consequently, the customers of these 2 shareholder companies are also their employers. They are not in the taxicab business, they are in the dispatch business. Their revenues are unrelated to customer service, but rather are fixed by weekly assessment against each shareholder.
The huge majority of these independent contractors are single vehicle, single owner companies, few with the skills and talents necessary to successfully run a company. They generally enter into loose arrangements with some 1200+ of drivers who also see themselves as independent contractors. This makes for a confusing array of day to day contacts and business dealings with an industry that consistently fails to recognize and accept that it is a regulated industry, and rarely misses an opportunity to publicly flay the Board for "intruding" into its rightful exercise of "free enterprise". "Who's in charge?" is a daily mystery.
The organizational disarray of the current industry is a phenomena that the Board is powerless to deal with, as it is outside their jurisdiction. By their own admission, through a public statement by a self-proclaimed industry spokesman, "Winnipeg's taxi industry is incapable of fixing its own problems, principally because of the hopelessly fragmented organizational structure."
This situation is further aggravated by the industry's inability to organize a single "voice" for itself. The Board has no option but to deal as best it can with limited resources with the huge tangled array of independent owner-operators, and independent drivers.
The Issue of "Consultation"
Now when a problem emerges with a driver, or an owner driver, the Board Secretary can no longer deal with a single company manager, for to do so would be asking that manager to discipline his boss, or discipline a driver owner whom he has no control. As a consequence, the Board Secretary must now deal individually with some 600+ independent owner operators and some 1700+ drivers, who tend to perceive themselves to be independent and accountable only to themselves.
That's some 2,000+ one-to-one contacts, where once there were only 8!
These "independent" people, each a "President" of his own company, sincerely believe they have the right to consume the Secretary's time, one on one, personally, privately, at their convenience, on whatever is important to them at a moment of time.
With so many "independent" people out there, it is simply not possible for the Chairman and/or Secretary to speak with all of them, so as a consequence there are many who claim the Board "fails" to consult with the industry. Notwithstanding that the Board has consulted extensively with industry folk since 1988, the public outcry of this "failure" continues to this day, however erroneous and unfounded.
Of the 2,500 "independent" people in the local Winnipeg industry, the Chairman and General Manager may "consult" with several hundred on a wide variety of issues. However, in the absence of a single "voice", that means there are some 2,000 people who don't get to talk to the Chairman or General Manager personally, privately, on whatever is important to each at a moment of time. As a consequence, a large number of industry members observe to the media and political opposition that the Board does not consult with them.
There is no single unified voice that speaks for the industry. Every once in a while, someone surfaces claiming to be President of an Association (e.g, Winnipeg Taxi Association), which the media glorifies with frequent published quotes without verifying the accuracy of these quotes, nor of the authority behind them. Only much later do we learn that the "Association" was really only a 3 person association - the President, his wife, and his brother, or some similar limited member relationship. Because so many perceive themselves to be "independent", there is great difficulty in pulling enough people together of like mind to form a unified voice.
Consultation does occur, and opportunities are provided in open public hearings for the industry to file their concerns in a rational and business like manner. The absence of a single, coordinated industry
voice virtually guarantees heartburn and aggravation. The Board is
placed in a classic no-win "Catch-22" situation.
However, the critical issue here is that the quantity and type of Board staff today is no different than "the good old days" when the industry was peaceful and quiet. Attention to the changing environment was lacking, and the Board was not equipped with sufficient and properly qualified staff to deal effectively with the changing environment.
The Ethnic Migration into the Taxicab Industry
Starting sometime in the early '70s, the image and character of the taxicab industry throughout North America took on a new image as it became populated by newcomers from far away lands. Winnipeg's taxi industry is no different than elsewhere throughout the continent. It is now dominated by a strong community posing a requirement for special skills and talents to deal effectively with day to day contact, administration, compliance, investigation, and inspections.
They have come countries and cultures where intimidation and confrontation are often commonplace, and a matter of simple daily survival in their homelands. This situation was well defined in the Board's March 1990 Strategic Plan "Winnipeg Taxicab Service & Regulation".
The Touche-Ross Debacle
In mid-1986, taxi industry relationships with the Board were characterized by heartburn and controversy. Reluctantly, the Board agreed to enter into a contract with a professional consulting firm "...to identify and delineate the range of problems faced by the taxicab industry in the City of Winnipeg and to determine what changes in mandate or scope of operations of the Board, if any, be required for the effective regulation of the industry."
In mid-December 1987, an agreement was signed with Touche- Ross to perform consulting services. That study commenced in January 1988, and their report was tabled in May of 1988. That report was received by the taxi industry with anger and dismay. Ultimately, the validity of the Touche Ross assumptions were summarily rejected in the unacceptable absence of an empirical study, but the integrity of the Board was severely compromised in the eyes of the industry.
The recovery and planning process led inescapably to a series of prominent important public hearings in Jan 1989, out of which emerged an environment of industry intimidation that has persisted to this day, making all jobs in the Taxicab Board unusually stressful and unusually demanding.
The Litigious Environment
In March of 1990, the continuing process of planning for recovery supported the release of a major Strategic Plan, "Winnipeg Taxicab Service & Regulation", which planned the actions of the Board into the foreseeable future. It's release provoked mob violence inflicted not only on the staff of the Taxicab Board, but also the on Chairman and the Minister, and set a negative tone for all future industry negotiations, adding yet another level of daily difficulties to Board staff.
In September 1990, the Board commenced a major element of its strategic plan by releasing "Superior Class of Taxi Service", as a public release of its decision to issue up to 60 new licences to provide for a "luxury sedan" type taxi service. In November 1990, the Board released a report proposing that taxicab service at the airport be opened up to all taxi companies, and Unicity's monopoly be terminated. In February 1991, London Limo proposed to the Board an intermediate level of luxury taxi service, using older stretch limousines, and requesting an innovative zone fare structure under a maximum rate umbrella. In July 1991, the Board issued a Call for Applications seeking applications for additional premium class and accessible taxi class licences.
In January 1992, the Board held public hearings for the 3rd time relative to the issues of public convenience and necessity, and subsequently issued their decision in February 1992, to award 32 premium taxi licences and 8 accessible taxi licence to a new company, Tuxedo Taxi. Ultimately, Tuxedo Taxi was unable to fulfill the terms of the award and voluntarily relinquished their licences. This led to another series of public hearings in 1993 wherein these new licences were again awarded, this time jointly to Blueline Premium Taxi and Classic Cab.
In response to this lawful 1992 decision of a properly constituted Taxicab Board, Unicity filed a court action against the Taxicab Board seeking to have its decision declared invalid. On 24 July 1992, Judge J.A. Scollin, after hearing the case, delivered his judgment, within which he observed:
Notwithstanding Judge Scollin's decision, Unicity Taxi launched an appeal through the Manitoba Court of Appeal. On 17 December 1992, the Appeal's Court heard the case, and mid-way through, interrupted the proceedings, retired briefly, returned and stated their decision (paraphrased):
"lhis Court is unanimous in finding that Unicity Taxi's appeal has no merit, and their action is therefore dismissed. In an extremely rare set of circumstances, the Court declares its reasons to be those of the trial judge. "
Each of these initiatives provoked adverse reactions ranging from mob violence inflicted on the Chairman and the Minister, to defamation of the Chairman, the Board and its staff, and ultimately to a number of court actions against the Board seeking to prevent the Board from issuing new licences, and frustrate its lawful decision making powers.
From the viewpoint of the independent licence holders, it is a relatively simple matter to band together, and several hundred equal assessments of only a few hundred dollars each can quickly amount to a formidable war chest for legal expenses. The Board does not have this luxury and must pay for comparable awesome legal costs from out of its budget.
These incidents serve to illustrate the increasingly more hostile and litigious environment in which the Taxicab Bonrd staff must now work. This is likely to continue into the foreseeable future as more elements of the March 90 Strategic Plan are pursued and implementation attempted. It seems likely that each will be received by vigorous rejection and companion court action. With each comes a companion huge diversion of time and effort from the critical job at hand into non-productive damage control and defensive reaction, none of which appear as a measurable workload item. Positive pro-active activities are put on hold, inflicting more delays and a need for ever more resources.
The Environment of Intimidation
Overlaid on this situation is a dominant population of newcomers to Canada and to this industry who tend to be quick to perceive the Board's actions as discriminatory, and many with significant language difficulties. They, along with a large segment of the rest of the industry, show little hesitation in harassing Board staff, provoking a situation bordering perilously close to a need for risk pay.
Board staff daily face unique hazards totally unforeseen by our regulatory ancestors, and beyond the comprehension of central management responsible for supporting the Board. It is becoming abundantly clear that the Winnipeg taxi industry is determined to maintain at any cost, and into perpetuity, their present level of service and licence quota, without regard for the needs and wishes of the citizens of Winnipeg, or the consequences to themselves.
The industry is also characterized by its clear reluctance to market its services. It is fundamentally driven today by how often the phone rings, but nothing is being to make the phone ring more often. "Demand" is perceived to be a flat fixed commodity, not a consequence of marketing and service levels. Drivers often sit in their cars for hours waiting for a dispatch, and while there they can do little to make the phone ring. Only a market driven management team can do that, and such a force is noticeable by its absence. since the early 70's.
If their course of action persists, their user base will continue to shrink, "demand" will continue ever flatter, and in reaction their anxiety level will continue to rise, and their frustrations will continue to focus erroneously, but ever more sharply on the Taxicab Board staff who will be held responsible for their misfortunes.
The Media Environment
No other agency, in the whole of thc Manitoba Government and its crown agencies, has received anywhere near the public media exposure as has had the Taxicab Board, most of it with negative "spin" against the Board. As a consequence, media representatives have become unwelcome and the staff "gun-shy" of any media contact under any circumstances.
The media, by their aggressive affection for the taxi industry, makes a contribution to the stressful environment. A review of news items throughout the continent frequently reveals a furious array of "news" items focusing on safety immediately following a tragedy somewhere. Curiously, there is no companion array of news items following a similar tragedy involving a gas bar attendant or a convenience store clerk. Why this apparent journalist imbalance is a mystery.
It may have a relationship to the wall of silence that emerges from the taxi industry immediately following a tragedy. There is a very real fear, based in part on historical precedence, that publicity of a tragedy will provoke "copy cats" to repeat the tragedy on some other taxi driver. Certainly in other high crime cities like New York and Washington, there are ample indicators to support this industry perception.
Encountering that wall of silence, the media turn aggressively to other sources of information, sornetimes entering into a "badger and bait" technique to provoke quotable quotes from whomever, that perhaps might be inappropriate. The "wall of silence" is not the only provocation for this behavior. It seems that most any lawful decision of the Board is faii game for controversial media attention.
It appears anyone in the industry need only express an accusatory statement to the media, and it gets published or aired with the glowing mantle of truth. The media appears to consistently fail to check the veracity of such public statements, or the authority of the authors to make such statements.
However, once published, the damage is done and there is little the Board can do to control the damage. There is no "watchdog" agency controlling and regulating journalistic professionalism. As a consequence, many media reps tend to feel they are bullet proof and free to say and publish whatever it takes to sell newspapers or air time without regard to the public good, convenience and necessity.
This abuse of editorial licence is extended through to some industry representatives publishing a newsletter claiming they represent the views, feelings and voice of the majority. Unfortunately, such newsletters contain many statements "flaming" the Board and its staff, that border perilously on libel, carrying the image of provocational confrontation and intimidation, and appear to serve no other purpose than to discredit and defame the Board.
The Stress Factor
Thc stress imposed by the industry is in itself cause for substantial anxiety and aggravation, leading to absenteeism and sub-standard performance. Add to that the stress imposed by the media, and an intolerable situation emerges. The staff have neither the skills, talents, training or inclination to continue subjecting themselves to this abuse. The pressure is becoming intolerable.
In a relatively short period, the Taxicab Board and the taxicab industry have jointly migrated from a relatively comfortable environment where life was easy, to an increasingly more difficult, more sophisticated environmcnt requiring significant improvements in skill, talents, knowledge, training, and performance. In this new litigious, corrosive environment, administrative and investigative processes must be flawless, but this is precisely the environment that will provoke and nourish exactly the opposite.
The Contest of Wills
The Taxicab Board Inspectors conduct some 3,000 vehicle inspections annually, of which about half are associated with vehicle damage of some sort. Guidelines for the conduct of such inspections are somewhat general in nature, leaving room for some discretion on the part of the Inspector. It is not likely that these guidelines will ever be truly definitive.
The Taxicab Regulation 209/91 has a number of provisions relative to vehicle condition. Generally, these provisions relate to what a vehicle's condition should be, not what it should not. By interpretation, a damaged vehicle does not meet the requirements of vehicle condition, and consequently should be removed from service or be repaired within a specified time period.
The first responsibility for removing a vehicle out of service rests with the licence holder, who is expected to voluntarily do so upon receiving damage. However, a vehicle removed from service is not generating revenue, so fundamentally, a licence holder is emotionally torn between voluntarily removing the vehicle from service or having it suspended by an Inspector. As "revenue" rather than "service" customarily wins out in day to day practice, few vehicles are voluntarily removed from service.
As a consequence, a contest of wills all too frequently emerges, relative to a licence holder's interpretation of damage vs the fear of interrupting revenue, and an Inspector's interpretation of the same damage vs service excellence and regulatory compliance. One is driven by revenue, and the other is driven by service and the requirements of the Regulation. Borderline damage is the most frequent cause of tense moments that often escalate into full blown confrontations.
Taxicab Inspectors are further inhibited from doing their job by an informal, but nevertheless effective technique known as "swarming". The Taxicab Board has no facilities for indoor inspections, so all must be done outdoors in the building parking lot. One of the 2 major taxicab dispatch services also rents their main office space in the same building, immediately in front of the parking lot area where vehicle inspections are carried out. It is commonplace for a number of taxi owners and drivers to suddenly appear as if by magic, surround the lone Inspector, and inflict critical comments from all sides as the inspection progresses. Such inspections are often terminated prematurely, leading to Inspector downtime for "hypertension" and other related ailments.
The Public Environment
The Board receives several hundred complaints annually, with the vast majority received by telephone. With each, an Inspector tries hard to convince the complainant to follow it up with a written statement. Less than 5% do indeed follow-up with a written statement upon which we can respond with a formal investigation that may lead to a reprimand or to a Show Cause hearing. Of those that do, even fewer are prepared to appear before the Board to testify, most expressing fear of bodily harm or at very least some form of harassment or intimidation.
Unfortunately, of the large number of complainants who do not follow-up with a written statement, many have been known to make public statements to the effect that, "I complained to the Taxicab Board, and they did nothing about it!". What is particularly aggravating is that the media picks up on these statements, challenges the Board to defend perceived inaction, and contribute to yet another sizable diversion of staff time on damage control.
With these tough economic times, the Board is experiencing a large number of inquiries from the unemployed, wanting to become a taxi driver. An unusually large number of these people are down and out, and perceive the industry as the employer of last resort. When told the requirements to become a taxi driver, they tend to immediately become angry, perceiving our requirements to be an intrusion into their rightful exercise of simply driving a taxi. "What do I need to take a course for, just to drive a hack!?"
These encounters are typically 2-4 times daily, and usually consume about 30-45 minutes on the phone or across the counter. It matters not that we have a handout of requirements that we are prepared to mail, that is not good enough. This huge consumption of time is extremely difficult to prevent, and it often leads to confrontations because some of these unemployed are desperate, and enraged at our "bureaucratic nonsense".
Less stressful, but nonetheless a huge consumer of staff time are commercial suppliers who are trying to sell something to the taxicab industry. They generally do not understand the independent contractor organizational structure, and are frustrated at having to negotiate with each owner-operator individually. So they turn to us to act as a gathering point to make contact with the industry. We of course cannot do this because it is not within our mandate or authority, something else they, as entrepreneurs, do not understand.
Our "public" includes representatives of the industry and of disability groups. The most difficult to deal with are representatives of industry groups because in their eyes, the Taxicab Board is the all powerful bureaucratic agency that controls their lives. In their perception, the Board is responsible for everything that controls them, and routinely publicly blame us for whatever are their aggravations.
The most flagrant of these accusations is that the Taxicab Board refuses to allow taxicabs to use "bus-only" traffic lanes, refuses to let them pick up or let off passengers in no-stopping zones, refuses to admonish Commissionaires for picking on them downtown or at the Airport, refuses to ensure a minimum wage, refuses to direct the police to resolve fare disputes, etc,
That all of these concerns are outside the Board's jurisdiction is beyond their comprehension and acceptance. So, every time some of these issues emerge, the media is manipulated to side with them, and the Board ends up being the focus of unjustified condemnation, and yet another contribution to the stress factor, and diversion of scare resources into damage control.
Employment in the Taxicab Board has become increasingly stressful with exceptional demands on all staft. As attrition takes its toll, recruitment will risk becoming an exercise bordering on futility to attract people both well qualified and willing to voluntarily step into this hostile environment
Since the independent owner-operator organizational structure materialized, the skills and talents needed to regulate the taxicab industry have become dramatically more demanding. Yet throughout that time, there has been a naive perception in place that existing staff, coming from a time and place that was relatively peaceful, quiet, and obedient, could respond to the changing climate and adapt to these changing requirements without appropriate training and support. The Board today is paying a stiff penalty for many years of deferred maintenancc.
The recent Internal Audit of the Taxicab Board, with its focus on traditional management expectations, regrettably did not embrace a companion audit of weaknesses and impediments in the 1935 legislation, did not analyze the environment of intimidation and confrontation, did not review the changing staff requirements, and did not review the consequences of years of deferred maintenance. This audit would have been an fine opportunity to recognize these more profound fundamental shortcomings over which the Board has little control.
Notwithstanding these impediments to progress, the Board has enjoyed some very positive achievements. In response to its initiatives, taxicab operators have substantially improved the quality of their service, premium quality taxicab service will soon be implemented, and the community of persons with disabilities is beginning to be provided for the first time ever accessible taxicab service at regular taxi fares.
Taxicab driver training has improved dramatically, producing a new generation of drivers oriented to service excellence. Unfortunately, this training is being provided under fragile legislative circumstances, for nowhere in the Taxicab Act and its companion Regulations is there authority to engage in driver training, something that in 1935 through to the early 70's was a company responsibility. There is no legislative authority for a budget line item, nor authority to charge a fee for training.
The industry now has, for the first time ever, a comprehensive set of regulations that clearly establish licence holder responsibilities, and improvements have been made in the fairness and effectiveness of Board disciplinary processes.
During their annual budget exercise, most taxicab regulatory authorities are directed to review all revenue sources to either adjust existing fee schedules, and identify activities for which no fees are charged. The objective is to attain and sustain full cost recovery on the fundamental principle that a regulated industry, being a protected industry, must bear the full cost of that regulation.
Care must be taken in establishing a viable fee structure, for if the objective is simply to generate additional revenue, there is a risk of a successful court challenge. If the objective is to recover costs, as it should be, it is important that all costs be carefully considered, as it is easy to overlook significant contributors.
By custom and usage over the years, most jurisdictions now have a policy in place that agencies responsible for regulating an industry, should have a fee structure providing for full cost recovery. In common law, all fees, under whatever label they are carried on the books, must bear a reasonable relationship to the cost of related administration, regulatory, inspection, investigation, and enforcement activities. The costs need not necessarily be carried in the budget of the regulatory agency. i.e., vehicles inspections conducted another government fleet vehicle agency.
All fees must have their roots in legislation. Typically, enabling legislation establishes the continuing existance of the regulatory agency, establishes its fundamental regulatory authority, provides authority to make regulations, and includes a single permissive clause authorizing the agency to establish fees by regulation. The enabling legislation rarely includes the words "full cost recovery" because this is a fundamental element of common law.
Some jurisdictions have enabling legislation from antiquity that establishes in law only the types of fees that may be charged, with authority to set the amount of those fees by regulation. Such jurisdictions are severely hobbled in their ability to attain full cost recovery, for the few fees they are allowed to charge would have to be so high as to preclude their survival in a court challenge, because they would no longer bear a reasonable relationship to their companion administrative and other actual costs.
No fee may be charged for which there is no enabling authority in law. i.e.:
These are frequently encountered situations as a consequence of historic oversight. Of course hindsight is always 20/20.
Fundamentally, a "fee" is simply a charge for official government permission to do something for a fixed period of time. The document that emerges from payment of that fee is only proof that a required fee has been paid. It in itself is not an item of saleable property as it may be revoked at any time for cause, and in any case will always expire at some defined future date with no imbedded right of continuance, no guarantee that the same licence will be issued to the same person in subsequent years, nor any guarantee that the regulatory environment may change at some unknown future date.
As a consequence of historic oversight, most jurisdictions allow a transfer of licences from one person to another. This, coupled with a fixed quota of licences, creates a "scarcity value". As a consequence of this phenomena, licences acquire a real estate value of their own, commonly referred to as "street value". That a licence is not a legally saleable item of property seems to consistently elude the attention and realization of both vendors and purchasers, and some lenders are known to take back the licence as collateral. This could be particularly hazardous for a lender as the Goverment has the authority to revoke a licence at any time for cause, or if a licensee allows it to lapse for simple failure to renew.
It is arguable that not all activities of a regulatory agency are directed to regulation of a target industry. It is entirely possible that some activities may well have no relationship to regulation. Caution must be exercised in identifying costs for which fees may be charged to the regulated industry.
In the zeal of cost recovery imposition, an often overlooked consequence is an industry perception that if they are to bear the full cost of regulation, then they have a right to vet the authority's annual budget. An extremely sensitive situation then emerges provoking tense public hearings that need never happen given a modicum of simple foresight.
There is a legitimate need for a separation of revenues from expenses, such that the regulatory authority is proportionatly funded from the industry through fees, charges, fines, etc., and partly funded through general tax revenues as it is a undeniably a public utility. It is a balancing act that recognizes the need for some tax support relative to public safety, convenience and service.
Additional guidance may be gleaned from "Rogers, The Law of Canadian Municipal Corporations, section 132.4 Fees", (there is likely companion guidance in some similar U.S. publication) wherein in part it states:
on page 730:
Re: Falardeau v. Hinton (1983) 24 M.P.L.R. 85, 29 Alta. L.R. (2d) 83, 50 A.R. 120, 3 D.L.R. (4th) 259 (Q.B.), affirmed 40 Alta. L.R. (2d) 311, 21 D.L.R. (4th) 477, 65 A.R. 387 (C.A.). Leave to appeal refused without reasons 34 A.C.W.S. (2d) 279 (S.C.C.)."
Re: Coquitlam v. LaFarge Concrete Ltd.,  1 W.W.R. 681, 32 D.L.R. (3d) 459 (B.C.C.A.). See also C.R. Aggregate Sales Ltd. v. Squamish (1980) 115 D.L.R. (3d) 81, affirmed on other grounds 49 B.C.L.R. 196, 8 D.L.R. (4th) 88 (C.A.)."
and on page 735:
Re: Sharlmark Hotels v. Metro Toronto (1981) 32 O.R. (2d) 129, 14 M.P.L.R. 260, 121 D.L.R. (3d) 415 (Div. Ct.)
Most jurisdictions have their enabling legislation out of antiquity before leasing became imbedded following changes in the tax laws in the early 70's. As a consequence of the emergence of the 'independent contractor', many agencies are now faced with a need for regulation over a segment of the industry for which there is no legislative authority.
It is arguable that leasing a taxicab, or even worse, leasing just the licence, is not in the public interest nor even legal. In law, a licence to conduct a public utility (i.e., transportation of people), may only be issued to the person who has 'care and control' of the vehicle. In antiquity, that was true when taxicab companies were organized along traditional corporate structures, owned the vehicles, employed the drivers, and properly held the taxicab licences (medallions) in their own names because they properly had 'care and control'.
Unfortunately, regulatory authorities are now all too often still issuing taxicab licences to the same licence holders, but they are no longer in the taxicab business. They are in the car rental business, and often go to extraordinary lengths to ensure with absolute legal clarity that they (the lessor) do not in any way exercise any care and control over either the driver (lessee) or the vehicle.
In such conditions, we now have a situation where the person who has care and control of the vehicle and the public utility service, does not hold a licence to do so. The licence to do so is now held by someone who does not prive the service nor has care and control.
As a consequence of historical oversight, the regulatory authority is caught in a dilemma. The leasing environment is inconsistent with fundamental common law, but by long standing custom and usage, could be argued has now migrated into legality by virtue of the regulatory authority's failure to deal with this situation when it first emerged in antiquity. Any attempt now to establish associated fees and bring the leasing environment under the regulatory net will infect leasing with the aura of respectability, expose embarrasing historic failures, and ensure perpetuation of this unhappy situation into perpetuity.
Some jurisdictions do not now embrace taxicab dispatch companies because they evolved subsequent to and outside the initial perception of enabling legislation. They are not regulated and no fees are charged because there is no authority to do so.
In these instances, there is considerable concern because the quality of service is directly affected by these critical elements in the provision of a public transportation utility. These companies, through which independent owner/operators function, and their companion dispatch system, not necessarily under the same management, should be the focus of ultimate regulatory control.
Caleche (Horse Drawn Carriage)
The regulatory concerns here must focus not only on the vehicle and its safety and stability, but also on the skill and knowledge of the driver, and the care, health and treatment of the animal. In most jurisdictions, only a few of these vehicles appear from time to time seasonally, typically in summer.
However, all it takes is one accident emerging from out of "spooking" of the horse by some innocent unforeseen incident, and the local regulator will be the focus of enormous "heat" from the media, animal rights groups, from City Hall, and from wherever else you can imagine.
These are undeniably vehicles for-hire, and as such the general public has a fundamental right to expect they be regulated if for no other reason than for public safety.
A phenomena of contemporary marketing, emerging from out of Far Eastern antiquity, pedicabs (aka rickshaws) have in recent years started appearing in ever increasing abundance on our crowded downtown streets during high tourist season in mid-summer. They are clearly vehicles for-hire for the transportation of people, they do so on city streets, and their numbers are not likely to shrink. The actual numbers on the street are unknown, for these vehicles are often unlicenced. While it may be true that their numbers may be considered modest, the risk and liability they present would seem to warrant full regulatory attention.
Theoretically, because water taxis do not operate on roads and city streets, there is a perception that local taxicab authorities do not have jurisdiction. Notwithstanding the desire to let someone else do it, like perhaps the Coast Guard, the fundamental purpose of water taxis is a vehicle for hire for the transportation of people as a public utility.
The expertise for regulating water taxis best lies with the taxicab regulatory authority. Perhaps a joint responsibility can be negotiated in most jurisdictions. The critical issue is of course public safety, and water taxis should be regulated no differently than any other taxi services. The cost of the regulatory effort should be reflected in an oppropriate fee structure.
Small Sightseeing Vehicles
These are fundamentally vehicles for hire for the transportation of people. Many taxi regulators do not now embrace them within their regulatory net, but they should be. If these services are currently regulated no more profoundly than a simple business licence from City Hall, consider for a moment the impact of a single accident and outcome of a public inquiry that will emerge with absolute certainty.
For a taxicab to be in business on city streets, their meters should be periodically inspected for accuracy against locally approved fares. This is a service that does have a cost and imposes considerable consumption of resources. A reasonable fee should be charged. It is interesting to note that scheduled meter inspections typically reveal few discrepancies, and one wonders how many would emerge if the process was switched from predictable scheduled inspections, to unpredictable random on-street inspections.
Vehicle Safety Inspections
Many, if not most jurisdictions require all taxicabs to a pass a rigorous safety inspection, hopefully in well equipped facilities independent of the industry and of required repairs. This is a costly process, and an appropriate fee should be charged even if the inspection is conducted by some other government agency.
In most jurisdictions, transfer of a taxicab business licence from one to another is permitted. Typically, such transfer applications must be submitted to the regulator for approval in a scheduled public hearing, where formal opposition if any may be filed. Full disclosure of financial details are typically required as part of the documentation.
Care must be exercised here to make it absolutely clear that what is approved is the simple transfer to someone who passes a 'fitness' test. While the amount paid is revealed in the companion financial documentation, the approval process does not and cannot embrace the "street value". The "street" or real estate value that a taxi licence acquires is the result of a vendor and a buyer striking a deal totally independent of and external to the regulator. The regulator must not and cannot comment in any way on the merits or otherwise of the amount paid.
It must also be made abundantly clear that the regulator has no responsibility to recognize, protect, or nourish that street value in any way. Part of the buyer's decision making process must be in recognition that there is no guarantee into perpetuity that conditions out of which street values emerged will be maintained in legislation, regulations, by-laws, ordinances, etc.
Returned N.S.F. Cheques
The banking system does not look kindly upon NSF checks, and many banks are merciless in their own fee structure. There is no reason why a regulator should not only pass on bank charges, but also add an appropriate fee to cover the cost of its own administration.
Periodic Licence Auction
The issue of additional new taxi business licences has been the focus of considerable attention over the past 3 years. Notwithstanding that an independent market survey may confirm that public convenience and necessity would be served by additional licences, the industry continues with its course of litigious confrontation in its efforts to prevent the issuance of new licences. A potential method of dealing with this situation is to transfer the initiative to the large array of independent owner operators within the taxi industry by periodically offering a limited number of new licences at a public auction.
This is undeniably a controversial consideration as it does not generate any benefits for the industry, although substantial sums of money are involved. Vancouver's experience is interesting as there is a basic expectation that anyone wishing to voluntarily bid on one or more of these new licences has done considerable market research and is knowledgeable not only of the current real estate value of a licence, but also the revenue potential. At time of the last auction in Vancouver, real estate values hovered around $95,000-100,000; and currently trading on the streets at approximately $120,000.
A major concern about the auction process is that a new owner will inflict upon himself a debt load so huge as to leave no room for service improvements. Furthermore, all the monies paid to the city for these licences go directly into general revenues, and do not contribute in any way to taxi service improvements. While there is recognition that a public auction is a revenue source, the disadvantages are so ominous as to preclude this as a serious consideration.
Notwithstanding that an auction carries with it a voluntary payment, that which is being bought - a taxi business licence - is not a legally saleable product, particularly at these very high prices. In common law, a licence is ordinarily only a permission to do something for a specified period of time. The fee paid for that permission (the licence) must in law bear a reasonable relationship to the true cost of administration, compliance, investigation, enforcement, and regulatory attention. The amounts of monies voluntarily bid clearly exceed these costs by a wide margin, and would not likely stand the test of a court challenge. In any case, the licence is not a piece of collateral property and its disposition, including revokation, is solely within the purvue of the regulator.
A fundamental requirement of issuing new licences by whatever method, including public auction, is that the numbers of additional new licences must be determined in accordance with public convenience and necessity. A recent landmark legal decision by the Massachusetts Supreme Court upheld the authority of the Boston Hackney Bureau to issue additional licences, but cautioned the Bureau to determine the actual number of new licences in accordance with public convenience and necessity by the use of some reasonably reliable formula emerging out of qualified research and analysis.
A review of a number of other jurisdictions reveals that most establish their fee structure and operate under the principle that "A regulated industry, being a protected industry, shall bear the full cost of its regulation." Most jurisdictions operate on full cost recovery aiming for zero balance, a few are free to earn well in excess of their costs through a generous fee schedule.
Because each determines and establishes fee structures unique to their situation, the variations in fees are totally lacking in consistency as to type and description, but are consistent as to their cost recovery objective. Only Anchorage in addition to Winnipeg, publishes pro-rata part year fees.
All municipalities in Ontario are guided by the provisions of the Ontario Municipal Act and Rogers, The Law of Canadian Municipal Corporations. Municipalities may set fees to raise revenues and these fees shall be comensurate with associated costs. This is interpreted to mean full cost recovery. The same applies to other Ontario municipalities contacted in this survey - Ottawa, Brampton, Toronto, Hamilton, and St. Catherines.
Section 305(1) of the Nova Scotia Motor Vehicle Act limits fee to licences only in the amounts of $50 for cities, and $25 for towns and municipalities. As a consequence, revenues are quite modest compared to budget. The Halifax Taxi Commission has recently directed the Police Department (their host) to conduct a study of costs vs revenues to determine the feasibility of migrating to a full cost recovery situation.
Regina's fee schedule provides for modest fees that come nowhere near full cost recovery. City Council has demonstrated a remarkable reluctance to raise fees more than simple inflationary increases. Provincial legislation is in place that prohibits costs of licences and fees from exceeding direct regulatory costs. What City Council has done is to direct that a study be done to determine the feasibility of establishing an independent Taxi Commission, modeled somewhat on the Calgary Taxi Commission. The Commission would be required to fund itself totally from licences and fees.
Saskatoon receives only $14,000 in revenue from taxi related fees, representing a cost recovery of less than 10%. No revenue/cost analysis has been done and none is contemplated.
The City of Montreal requires that the Taxicab Board recover not less than 100% of its costs, is currently running about 105% revenue over budget, earning about $60,000 for the city's consolidated revenue fund.
Until recently, the Calgary Taxi Business By-Law contained the following provision:
This has been generally interpreted to mean that the Calgary Taxi Commission must be totally self-sufficient, working solely with funds received through the sale of licences and related fees. However, lest there be any doubt, Calgary City Council recently passed:
The yearly capital and operating budget of the Calgary Taxi Commission established pursuant to this By-Law shall be funded solely and exclusively from the fees, charges, fines and levies imposed, levied, collected and charged by the Calgary Taxi Commission in licencing, regulating, regulating and controlling the taxi business in the City of Calgary.
Vancouver's fee schedule does not by itself recover the full cost of its taxi regulatory and enforcement activities. However, its Vehicles For Hire By-Law was amended in 1984 so that the city "...may issue each year, until there are 1.2 taxicabs per 1000 population, 10 additional taxicab licences.". Since then, the average new licences per year has been 10, although in some years none have been issued.
These new licences are offered at public auction, and sold to the highest bidder. The last auction was in 1989, at which time 20 new licences were auctioned off at an average price of $92,000, netting to the City of Vancouver a revenue of $1.8 million into its consolidated revenue fund. Some 82 people offered bids ranging from $32,503 to $96,107, reflecting the then "street" value of taxi licences of approximately $85,000.
At this time, Vancouver's taxi licences have acquired a street value of approximately $120,000. Another public auction may be offered for late 1991, but no firm decision has yet been made. On the average, the annual contribution of these auctions earns revenues substantially greater than the cost of regulation and enforcement.
Florida State Statutes (below) limit the fees that a municipality may charge to "reasonable" charges necessary for the conduct of government.
A policy interpretation emerging from this legislation requires that taxi industry fees should come as close as reasonably possible to a zero balance. An internal cost accounting system tracks not only the actual budget costs of the taxi regulatory unit, but also additional contributory costs such as his own time when so applied. In FY 89/90, taxi related fee revenues were $165,000 versus taxi regulatory expenses of $147,000, netting a ratio of 112%.
Nevada has a statewide Taxicab Authority that regulates the taxi industry throughout the State. It is governed by a single piece of legislation aimed at "For-Hire Vehicles" that includes anything from public service trucking to taxicabs.
That legislation established a unique "Taxicab Authority Fund" under the jurisdiction of the State Treasurer. The full cost of operating the Nevada Taxicab Authority must be borne within the revenues deposited into that fund. Relevant clauses in their legislation:
To make such a fee structure feasible, the Nevada legislation has built into it a comprehensive accounting system that must be adhered to by all taxicab operators, along with companion periodic performance and financial reporting to the Taxicab Authority. The base for all files, records and reports is mandatory meter reading at shift and period ends.
From this legislation, the Nevada Taxicab Authority is under a full cost recovery system in such a manner that its elderly citizens are the beneficiaries. They may purchase "taxi script" at $.50 on the dollar from the Taxicab Authority which reimburses taxi operators on the difference to the full dollar.
Section 11.10.160 (Fees) of the Anchorage Taxicab By-Law provides for an array of fees, and includes the following clause:
This clause has been interpreted for many, many years to mean "full cost recovery", and the Anchorage Transportation Office is currently operating at approximately 105%.
The Dallas Department of Transportation is required maintain a full cost recovery revenue position. While its revenues flow into general revenues, they are identified as to source and appropriate credit entries maintained. Their approach to determining fees as related to budgets emerges from a 1984 legal opinion as follows:
However, according to the Texas Supreme Court in Brown v. City of Galveston, 97 Tex, 75 S.W. 488 (1903), the fact that a regulatory fee imposed under a city's police power results in producing some revenue does not preclude the fee from being characterized as a police regulation instead of a licence tax; nor is the character of the regulatory fee impaired by the fact that the monies collected under a police regulation are placed in a fund other than one specifically dedicated to covering the expenses of the police regulation. Expenses of enforcing a police regulation must be paid by the city., but it does not matter from which fund the expenses are paid."
I have been advised that in Dallas, the expression "police regulation" does not refer to regulations associated with the Dallas City Police, but rather more broadly embraces the full array of administrative, regulatory, and enforcement activities required to support the regulation of an industry, business or occupation. Dallas and Fort Worth jointly administer ground transportation at DFW International Airport. This is a large 24 hour/day operation employing 28 full time staff with a total expense budget in excess of $1 million. DFW has its own fee structure entirely separate from those of the two cities, and it too is required to maintain a full cost recovery position. By chance and extentuating circumstances, it is currently in a modest surplus position.
Falardeau & Parklane Trailer Court (Hinton) Ltd. v. Town of Hinton. CCH DRS 1984 P80-568, A., Alberta (Q.B.), October 20, 1983. Hinton By-Law 463 imposed a $100 per year business licence fee on each developed stall of a mobile home park occupied by a mobile unit, such fee being payable monthly. The fee was passed on by trailer park owners through increased lot rental charges. Plaintiff applied to the court to have By-Law 463 quashed for illegality as it constituted a tax under s. 108 of the Alberta Municipal Government Act, R.S.A. 1980.
The Town had previously imposed a tax on mobile home owners under s. 236 of the MG Act, which provides for the imposition of the fees based on the value of the mobile home, assessed in accordance with a formula provided. It was only practical to calculate the tax using the previous year's mill rate, and limits were imposed on the amount of fees which could be collected. Without conducting a study or survey of the cost of providing services, Town Council concluded that due to the one year lag in mill rates, mobile home owners contributed proportionately less to town revenues than did owners of other types of residential property, although equal services were supplied to all. S. 16(a) of By-Law 463 was passed to reduce the disparity between taxes paid by mobile home owners and other property owners, and from failure to find another resolution to the problem.
The application was dismissed. A municipality is authorized to impose a business licence fee by s. 224 of the M.G. Act. The Court's jurisdiction is strictly limited to consideration of issues of good faith, unfair dicrimination, or a confiscatory or prohibitive effect. The choice of the scheme of taxation is entirely within the discretion of the Council, irrespective of whether the scheme is founded on sound economic principles. The absence of a supporting cost study did not make the fee imposed unreasonable, as Council acted on its own knowledge and best information available in reaching that conclusion.
The Court refused to hold that the increase in fees was so great as to be unreasonable, as it is not the funcyion of the Court to place a limit on the amount by which Council may increase taxes or actual revenues. Business licence fees need not be related to actual administrative costs of a licencing scheme, but they may be imposed in order to raise an amount of revenue determined by Council. A Court may only find an amount of tax unreasonable if it is prohibitive or confiscatory, and in this case, there is no evidence that this tax placed such a burdon on mobile park operators or mobile home owners.
C.R. Aggregate Sales Ltd. v. District of Squamish, CCH DRS 1981 P27-873, B.C., (1980) 115 D.L.R. (3d) 81 British Columbia (S.C.) 1980. By By-Law 605, the District of Squamish raised to 7.65 cents from 2 cents, a permit fee to remove soil. The Plaintiff challenged the validity of the By-Law on 3 grounds and demanded return of the fees paid:
The action was dismissed. There was no duplication of provincial legislation. Although the By-Law dealt with some of the same subjects as the provincial legislation, the fields were different and the provisions could co-exist. The increase in the fee from 2 cents to 7.65 cents per cubic yard was not simply a colourable attempt to impose a tax. Although substantial, the increase could be explained by inflation and was not so great as to transform the the p[ayment from a licence fee to a tax.
Considered as a whole, the By-Law did establish a regulatory scheme. The required "approval" of the building inspector was merely an administrative matter and not a delegation of authority which would invalidate the By-Law. In any event, since the Plaintiff had not shown that payment was made under protest, the claim for return of fees could not be allowed.
Teamsters Housing, Inc v. City of East Cleveland, 521 N.E.2d 4 (Ohio App. 1987). The City amended its ordinance of requiring $5.00 per dwelling unit in apartments to $10.00 per dwelling unit. The plaintiff paid this amount for the years 1982-1986 under protest, and then filed a declaratory judgment. The trial court found in favor of the plaintiff by ruling that the fee that the City could charge had to bear a reasonable relationship to the burden imposed by the activity being licensed and by the licencing process itself upon the governmental entity involved. The evidence presented showed that the increased fees were charged solely to raise general revenue, and not related to the regulatory costs.
A&H Vending Services v. Village of Schaumburg, 522 N.2d 188 (Ill. App. 1 Dist. 1988). The court upheld a regulatory fee on vending machines as being reasonably related to the cost of regulation, even though the evidence showed that the cost resulted in a 5 to 1 ratio of revenue to cost of enforcement. The court based this on a broad interpretation of "reasonable relation" of previous cases and broad powers given to home-rule cities in Illinois. The court also found it important that the ordinance look like a regulatory, as opposed to a revenue ordinance, and was being enforced.
Talley v. Commonwealth, 553 A.2d 518 (Pa.Cmwlth. 1989). An automotive repair shop was prosecuted for doing business without obtaining a license. He was convicted, and on appeal argued that the $100 yearly license fee was invalid because it was not commensurate with the expense incurred by the City in connection with issuing and supervision of the license. The Court agreed and invalidated the ordinance finding that proof was not shown that the $100 cost was commensurate with the cost of administration and enforcement.
Originally published in the July 1991 issue of The REGULATOR, journal of the International Association of Transportation Regulators.
Back to Short Essays Index