D.C. Taxicab Commission Chairman Arrington Dixon did not challenge the new 40-cents-a-ride fare increase as expected at a rate panel meeting yesterday, thus opening the way for the controversial fare raise to go into effect March 1.

The bitterly disputed vote for a flat surcharge by the five-member panel on Jan. 27 angered many of the city's cabdrivers and cab company owners who maintained that a much larger increase was needed on a per-zone basis.

Dixon had endorsed the recommendation of an independent accounting firm hired to analyze five competing fare increase proposals. The firm favored a 23 percent increase per zone, which was supported by a number of cab company owners.

Dixon and Commissioner Yale P. Lewis were outvoted 3 to 2 in January. Three commissioners who often vote as a bloc -- Lucille Johnson, Joseph Becker and John Jessamy -- dictated the outcome.

Dixon had said he would ask the rate panel to reconsider its vote, but changed his mind yesterday, citing procedural problems. A bill is pending in the D.C. Council that would give final authority on taxi rates and rules to the full commission.

"Barring an extraordinary action such as a vote by the full commission or some court action, the increase will go into effect as scheduled on March 1st," Dixon said.

Dixon tried to add a dissenting opinion to the order making the 40-cent increase official, but said he was discouraged from doing that by Commissioners Becker, Johnson and Jessamy. Instead his dissent will be part of the minutes of yesterday's meeting.

In his dissent signed by Commissioner Lewis, Dixon said, "The 40 cents per drop approved by the panel will exacerbate further the problem of taxicab operators not providing service to all quadrants and neighborhoods of the District."

During its meetings, the rate panel voted 3 to 2 to exclude the press and public from its next work session on increasing the cost of licenses and permits for cabdrivers, a move called "ridiculous" by Dixon.

Meanwhile in another room, the commission's adjudication panel was meeting to hear complaints against taxi drivers. Former corporation counsel Inez Smith Reid testified yesterday that a "foreign" cabdriver refused to take her home last August.

She said he told her he could not take her to her destination until he obtained gas several blocks away.

"I protested and then he said he would charge me for the ride starting from the gas station at 22nd and M streets," she said. When she complained about the charges starting at the gas station, he responded with a racial slur, she said.

Reid identified the driver by the name that appeared on his hacker's license as A. Khan and said he was driving an Empire cab.

Akhtar Khan testified that he was not driving a cab on Aug. 14. He said he had stopped hacking in June when he opened a carryout restaurant and had not started to drive again until September.

"I have never had any complaints before," said Khan, who said he is now a U.S. citizen but had been a lawyer in his native Pakistan. "I have been driving for seven years. I do not even talk in the way she said."

The three-member panel voted to suspend Khan's license for 30 days and fine him $300 for failure to transport.

Khan, who said he depended on income from his taxi work to help pay for his new carryout shop, said he would appeal the decision. Reid, who left the hearing after testifying, could not be reached for comment.