Victoria Should Reject the Taxi Bailout Tax

On Monday, taxi drivers blocked traffic throughout Melbourne’s CBD to demand a bigger bailout funded by a $2 tax slug on consumers using Uber (the highest such tax in the world).  This demand is little more than an attempt to subsidise inefficient industries that have failed to respond to consumer demand and keep up with the times, while penalising consumers and innovative businesses like Uber.  Uber should not be punished for providing consumers with more affordable and efficient transport than the Victorian Taxi cartel can provide.

The protest was over the size of the consumer-funded compensation handout, during the process of the Victorian government legalising Uber. Given that taxi licenses are heavily intertwined with government policy, it should be recognised by taxi drivers that ‘taxi licences are financial assets.’ Therefore, there would have been no guarantee of returning purchased assets. As noted by Darcy Allan writing in the Herald Sun suggests, Uber should not be punished for providing better, more affordable and higher-quality transport. Allan highlights the importance of industry progress when he states:

‘We should be extremely wary of the precedent that taxi licence compensation might set. Imagine paying every time governments wanted to make public policy changes.’

Every day, new technologies enter and enrich our lives by disrupting old businesses. Good public policy understands that Australians are better off when governments adapt to new technologies. A tax on Uber customers would only be of real benefit to corporations such as Cabcharge, a multi-million dollar company with a history of a failure to respond to allegations of overcharging, and cab drivers sexually assaulting, customers.

The taxi protests held in Melbourne on Monday were unjustified, given both the unsurprising nature of the taxi industry’s decline and the mass inconvenience caused by the protest. The protest affected Bolte, a main thoroughfare connecting suburbs to the city was blocked in both directions. This chaos was then extended to Spring St and the steps of the Victorian State Parliament House. To make matters worse, empty cars were left on the street as taxi drivers marched to Premier Daniel Andrews’ office.

Premier Andrews should not succumb to stifling taxation and bureaucracy to appease a group that should have known that their industry and system of licensing would eventually become a waste of tax payers’ dollars. A single commercialised licensing system in Victoria would be much more sensible and less costly to the taxpayer. The packages taxi drivers receive are already generous, especially compared to that of other states. But the protesters, and taxi licence-holders in Victoria, must accept the fact that the system of licensing in Victoria is a bad investment. This current system is a prime example of the type of crippling red tape that costs the economy $176 billion each year. Premier Andrews should remember, in confronting the protesters, that parliament should not exist to serve special interests. It should consider the impact of taxation and regulation on consumers and constituents alike, as well as promote progress in rapidly changing industries.

 

Marija Polic is a Research Associate at the Australian Taxpayers' Alliance

 

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