The District's taxicab system is riddled with unsafe, underinsured vehicles and an "extremely high incidence of overcharging" compared with other cities, according to taxi industry representatives and cabdrivers who appeared at a congressional hearing yesterday.

The two suburban members of Congress at the hearing, Reps. Michael D. Barnes (D-Md.) and Stan Parris (R-Va.), said they would work to change the city's time-honored and congressionally protected zoned-fare system and replace it with the metered cabs used in every other major American city.

"I think the current system is an absolute outrage," said Barnes, chairman of the House District subcommittee on government operations, which held the hearing. "It's almost a game in this city when you get in a taxicab how much they are going to charge."

The hearing was held in the wake of reports last fall on WDVM-TV showing middlemen allegedly taking bribes from cabdrivers to get dangerous cabs through safety inspections.

The representatives pressed Robert Thompson, D.C. transportation systems administrator, who spoke on behalf of Mayor Marion Barry, on what the city has done about the alleged corruption revealed in the television reports.

Thompson responded that more supervisory personnel have been placed at the official inspection stations and that a police investigation into the charges is continuing.

But the hearing focused largely on the more mundane matters of routine overcharging of passengers and a longstanding debate over the desirability of metering D.C. cabs.

District cabdrivers overcharged passengers 36.3 percent of the time during a study conducted in October 1984 by the International Taxicab Association, according to ITA Executive Vice President Alfred LaGasse, who testified at the hearing.

"It is probable that not too many other cities would accept the extremely high incidence of overcharging and trip refusals so prevalent in D.C.," said LaGasse, whose association represents 600 taxi fleets nationwide.

"It is also difficult to call to mind another city that would tolerate vehicles that are an average of nine years old," he said.

Paul Davis, a District cabdriver, said the city's regulation of cabs has been indifferent, and that "the public is at the mercy of the pirates who call themselves cabdrivers."

He and several others at the hearings advocated a metered system that they said would ensure more reliability in charging.

Since 1931 Congress has prohibited meters in District taxicabs. The city has tried unsuccessfully for years to remove the prohibition from the city's annual appropriations bill, which Congress must approve.

Representatives of local taxicab groups were deeply divided over the issues of metering cabs and limiting the number of licensed drivers, which now stands at more than 10,000.

William J. Wright, chairman of the Taxicab Industry Group, said neither the drivers in his group nor the public want metered cabs. Such a system would result in cabs serving only high frequency calling areas and wealthy neighborhoods, he said.

But Daniel Smith of the Eastern Cab Company advocated an official limit on the number of drivers and metered cabs, saying that those opposed are the companies that self-insure their drivers and want to make more money by more drivers making deposits to their funds.