Jalopy of a Taxi System Taking D.C. for a Ride
By Steven Pearlstein
Friday, May 28, 2004; Page E01
One of life's little pleasures is hailing a District taxi operated by one of the industry's old pros. Invariably he's someone who knows exactly where you're going and how to get there. His vehicle is comfortable and well-maintained, with news or jazz playing softly on the radio. And if you inquire, he'll likely share with you a bit of Washington history you didn't know. He never cheats you on the fare, always has change for your $20 bill, and if you ask for one, will fill out the receipt with the kind of penmanship you don't see much anymore.
Unfortunately, such cabs are now a rarity. This reflects not only changing demographics, but also the failure of city regulation to produce a healthy industry. Instead of a collection of independent entrepreneurs, we now have mostly poorly trained part-timers operating an aging and under-maintained fleet. Service is reliably poor. And thanks to a zone-based fare system that nobody can figure out, local or tourist, you rarely get charged the same fare for the same trip.
This isn't a business -- it's a hustle.
Let's start with the fares. You'd don't have to have a PhD in economics to see the problems in a system in which the cost of providing a service is unconnected to the prices charged. But that's exactly what a zoned system does -- ignoring the key variable, which is amount of time it takes car and driver to make a trip. And because the zones are deliberately structured to "undercharge" for trips to outlying neighborhoods, residents now find they can't get a taxi to come to their homes when they really need them because it's not worth the drivers' time to respond.
People have known about these problems at least since 1931, when the old Public Utilities Commission ruled that the zone system was "entirely unsuitable" and ordered that meters be installed. But members of Congress who benefited greatly from the zoned system stepped in and decreed that District taxis would remain meterless. They relented only in 1986.
Now, however, it is the city's 6,695 licensed taxi drivers -- only half of whom are District residents -- whose determined opposition has thwarted several attempts to switch to meters. They throw up all sorts of silly arguments about how the cost of the meters ($300) will drive them out of business, or how regular customers will no longer be able to afford to get to work. But what you never hear spoken is the real reason the drivers hate meters -- because meters will make it riskier to underreport their income to the tax man.
That's not just a hunch. Of the half-dozen city officials and industry experts I canvassed, every one acknowledged that taxi tax avoidance was commonplace. And when I brought the subject up with a number of otherwise talkative drivers and fleet operators, not one was willing to discuss it.
Switching fare structures, however, is only the first step toward a healthy industry. The larger problem, as Mayor Anthony A. Williams correctly argues, is that because there are no limits on the number of cabs or drivers, the District has too many cabs chasing too few fares. As a result, nobody makes enough money to justify investment in new vehicles or even a new set of shock absorbers, let alone up-to-date communications equipment that would allow taxis to be dispatched where they are needed. And nobody makes enough money to make driving a taxi a career.
Under a "medallion" system, by contrast, revenue per taxi would increase even without a fare increase and taxi owners would finally have a valuable asset -- a license that could be sold on the open market -- that would justify investment and could be used as collateral to finance it. It would be easier to find a cab because there would be an incentive to operate vehicles around the clock. And when it came time to retire, owners would have something to show for their efforts other than a run-down Crown Victoria.
If its taxi service were world class, there might be a reason for Washington to remain the oddball among major cities that control hack licenses or require metered fares. Unfortunately, that's not the case. It's time for Plan B.
Steven Pearlstein can be reached at email@example.com.
© 2004 The Washington Post Company