Tax on taxi rides could double to fund $200K compo for drivers after Uber’s impact

The Transport Minister wants to pay taxi drivers more in compensation for the impact of Uber on the industry, but a tax on rides might need to double to raise the money needed.

Taxi and ride-share passengers across NSW may be slugged an extra $1 per trip in order to fund extra compensation for cab drivers suffering financial hardship.

The state government is considering increasing compensation payments for taxi ­licence holders from $20,000 to $200,000, potentially funded by an extension to the ­temporary $1 passenger service levy introduced in 2018.

The levy, currently applied to every trip in a taxi or ride-sharing car, would need to be increased to $2.18 per trip and the scheme extended by eight years in order to pay for the $1bn compensation package, according to analysis from NSW Labor.

The passenger charge was initially supposed to be lifted when it had raised $250m, but it was extended in last year’s budget to offer further support to the state’s 5000 taxi licence holders.

A long queue of taxis wait near Blacktown train station to pick up customers. Picture: Damian Shaw

The value of taxi ­licences plummeted when ride-sharing services like Uber entered the market.

As of the start of this year, the levy had raised $230m. Of that, $144m has been paid out in compensation.

Transport Minister David Elliott has told the industry he did not believe the relief measures went far enough.

Labor’s Treasury spokesman Daniel Mookhey accused Mr Elliott of “promising the taxi industry money he doesn’t seem to have”.

“It’s cruel to raise the hopes of licence owners, especially if the government doesn’t have firm financing in place,” Mr Mookhey said.

“Minister Elliott needs to come clean. He owes the ­public an explanation about the future of the passenger ­service levy.”

A general view of the Uber pick up point at Sydney Airport in Mascot. Picture: Jenny Evans

Senior sources have told The Daily Telegraph that any proposal to increase compensation payments to taxi drivers would be unlikely to pass cabinet’s expenditure review committee unless it is offset by extra revenue or budget cuts elsewhere.

NSW Taxi Council chief executive officer Martin Rogers said the industry was “urgently seeking” a meeting with Mr Elliott to be briefed on specifics of the proposed compensation package.

Mr Elliott said getting cab drivers extra compensation was one of his top priorities.

“I’m committed to making sure taxi owners are fairly compensated, given they have paid large sums of money to the government to operate in their heavily regulated industry,” he said.

Transport Minister David Elliott Picture: Jeremy Piper

“My strong view is that taxpayers should not be forced to cover the cost of any payments so I’m hopeful the package will be fair on both owners and taxpayers,” Mr Elliott said.

A spokeswoman for Uber said that, if the government was going to increase the tax on trips, passengers should be told.

“If this tax is to be extended, ride-share and taxi passengers deserve certainty on when it will come to an end,” she said.

“We don’t want to see this by default become a permanent consumer tax on the price of point-to-point transport in NSW.”