WASHINGTON'S CABBIES are on their way to fare increases that are long overdue. The sooner an official decision is made, the quicker the relief for those hackers who work long, hard, courteously and honestly -- they are still in the majority. The last increase was in 1981, and even at the schedule now set for a hearing on Monday, the rates would continue to be lower than those in most other large cities. But there is a price that should be exacted by city officials and the riding public for the fare increases: better service.

If too many riders continue to be bypassed, hassled, stalled, overcharged and misdelivered, more and more of them may think twice before deciding to part with $2.80 plus tip and $1.25 for every extra passenger just to go within one cab zone at evening rush hour. They may decide to take a subway instead of a four-zone rush- hour cab ride that would be $5.75 instead of the current $4.65.

There is no official "merit pay" for cabdrivers, but they know that tips count in the mix. Drivers who don't play by the rules should expect to forfeit this "fringe" from now on. Riders should insist on better service, and follow through by filing legitimate complaints. The city is poised to crack down under a law due to take effect soon.

Dan Smith, who operates the Eastern-Imperial Cab Co. and who, as an industry representative, agreed to the proposed increases, warns that passengers should not expect any major improvements in service if the proposal is approved. He claims that "there won't be any changes in service until they stabilize the industry, limit the number of cabs and limit the number of cab companies." He is, we trust, wrong.

Since when did competition go out of style? What's magic about limiting the number of cabs? What the new law will limit is the entrance of know-nothings into the hacking business. New applicants will undergo a training course and a revised, stiffer examination. There will be more ways to suspend and revoke licenses, and to cite fleets with poor service records. The industry may lose a few other drivers if the city insists on more visible photos and names of cabbies on those hackers' licenses that you are supposed to see clearly from the back seat.

As fares go up, so should the number of inspectors. Today's grand total of four inspectors for roughly 11,000 cabs just doesn't cut it.

So raise the fares -- and raise the standards.