11 December 2012

Charging Victorian taxi license holders a stiff annual fee as Prof Allan Fels proposes should be welcomed by every citizen and immediately enacted by government, says Prosper Australia.

“TaxiLink director Harry Katsianabis manages 160 taxi licenses worth around $80 million. He could spend $79,999,999 on lobbyists and public relations defending his businesses’ economic interests and still be ahead – provided he successfully defeated Professor Fels’ reforms,” David Collyer Campaign Manager Prosper Australia said today.

“While there are many small players holding one or two licenses, this is not a cottage industry.

“Taxi licenses are pure economic rent, capitalized. This revenue – around $100 million a year – properly belongs to government, which could then reduce other taxes or improve services.

Licenses are valuable because of the large margin between costs and taxi income. That gap comes about because government sets fares and rations taxi licenses, conferring monopoly benefits on holders.

Currently, taxi licenses are issued in perpetuity, like a land title. Many were offered years ago for a nominal charge. Time and Victoria’s growth has transformed them into valuable properties.

“The Victorian Taxi Industry Inquiry makes many useful industry recommendations. We regard government capture of the economic rents it created as the single most important of these. Victoria’s failure to use this non-behavior distorting revenue source obliges it to impose other damaging taxes on wages and business.

“Moving tax bases to economic rents is the great fiscal reform that would transform Australia. Citizens have a right to expect government to tax fairly and equitably. Taxi industry reform is simply one example of what this nation requires.

*Amended at 2130 on 11 December to reflect the fact that Mr Katsianabis manages not owns 160 licenses.

Media comment: David Collyer 0413 248 193

About Prosper: Prosper Australia is a tax reform lobby group and think tank that is now 120 years old. It seeks to move the base of government revenues from taxing individuals and enterprise and capture the economic rents of the natural endowment, notably through Land Value Tax and Mining Tax.