This blog post examines the possibility of recognizing Korean taxis as public transportation, focusing on their public nature, efficiency, and alignment with national transportation policy.
On January 1, 2013, the Korean National Assembly passed an amendment to the ‘Public Transportation Promotion Act’ recognizing taxis as public transportation, sparking significant controversy between the taxi and bus industries. According to this amendment, the government planned to provide over 1 trillion won in annual subsidies to the taxi industry. This included benefits already applied to the bus industry, such as transfer discounts, loss compensation under the quasi-public system, income tax deductions, and vehicle purchase subsidies.
This controversy stemmed from the complex role taxis play as a transportation mode in Korea and the resulting economic issues. Taxis have long been an essential mode of transportation for diverse social classes, providing convenience to residents through 24-hour operation and unrestricted access to all areas. However, the role of taxis had been diminishing recently due to the spread of designated driver services and car-sharing services. Therefore, the taxi industry supported the amendment, aiming to secure government subsidies by gaining public transportation status to alleviate their financial difficulties.
In response, the bus industry protested and went on strike. After former President Lee Myung-bak exercised his veto power against the amendment to the ‘Public Transportation Promotion Act’ that would recognize taxis as public transportation, the National Assembly attempted to reconsider the bill. However, as public opinion at the time largely opposed recognizing taxis as public transportation, the government prepared a taxi development bill aiming to achieve three major goals: resolving the oversupply of taxis, raising fares, and increasing workers’ income. Yet, due to fierce opposition from the taxi industry, these goals have not been properly implemented.
The debate over whether taxis should be viewed as public transportation with a public service role or as a premium transportation option has persisted for a long time. Taxis are difficult to classify as personal transportation like private cars or motorcycles, yet they are also hard to categorize as public transportation. This is because taxis operate without fixed routes or schedules, and their fares are more than twice as expensive as buses or subways.
As of 2023, Korea’s transportation mode share is approximately 56.8% for private cars, 8.6% for taxis, 24.6% for buses, and 15.9% for rail. This indicates that taxi usage is relatively low to be considered a significant part of public transportation, while dependence on private cars remains high. Furthermore, taxi fares have been subject to fare regulation comparable to public transit, remaining frozen from 2009 to 2013 despite high oil prices and inflation. Proponents of recognizing taxis as public transportation argue that while taxis possess many characteristics of a public transport mode, government support for this role remains inadequate.
Recognizing taxis as public transportation would improve drivers’ welfare and working conditions, leading to higher-quality service and lower fares, making them more accessible to ordinary citizens. There is also the expectation that improved working conditions and treatment for taxi industry workers would enhance service quality in the long term. On the other hand, some argue this discussion is also intertwined with the issue of an aging taxi driver population. With the average age of current drivers reaching their 60s, improving working conditions is urgently needed, even just to attract new talent.
However, even if taxis possess characteristics of a public transportation mode, they cannot be considered mass transit. Looking at overseas examples, it is difficult to find any country, such as the US or the UK, that recognizes taxis as public transportation. Overseas, taxis are less classified as public transportation and more as a premium transportation service characterized by high fares, targeting the upper class and tourists. Such examples suggest that taxis are far from emphasizing mass appeal, and the reality in Korea is not significantly different.
Furthermore, treating taxis as public transportation would significantly impact national transportation policy. Currently, South Korea suffers from severe traffic congestion and parking shortages due to excessive private car usage. Consequently, the government is implementing policies to increase the transport share of public transportation, such as expanding express bus routes and introducing late-night bus routes in Seoul. The purpose of these policies is to reduce private car demand, the root cause of traffic congestion and parking shortages.
In this context, treating taxis—which are similar to private cars—as public transportation would cause national transportation policy to lose its direction. Proponents of classifying taxis as public transportation argue that lowering taxi fares will encourage private car users to switch to taxis, thereby alleviating traffic congestion. However, unlike other public transportation modes such as buses and subways, taxis can only accommodate up to four passengers. Furthermore, passengers choose taxis primarily because they offer greater comfort compared to other public transportation options.
In fact, the assumption that private car users will switch to taxis due to the aforementioned fare reduction is uncertain. While classifying taxis as public transport would likely lead to fare reductions, the current base fare of 4,800 won as of 2024 remains a significant burden for ordinary citizens even if reduced.
Meanwhile, there is significant debate over whether taxis should be included, considering the universal characteristics of public transportation: efficiency and affordability. For example, in Japan, taxis emphasize service convenience while maintaining high fares distinct from public transportation. Furthermore, public transportation is strongly characterized by providing welfare to the public rather than pursuing profit; even buses and subways, which run annual deficits, are maintained through government subsidies. Therefore, reducing taxi fares would likely also be funded by government subsidies, i.e., taxpayers’ money.
Finally, those arguing that taxis should be treated as public transportation point out that while taxi supply and fares are regulated by the state, taxi drivers’ incomes fall below half of Seoul city bus drivers’ earnings, and their working conditions are poor due to high work intensity. However, the fundamental problem lies in excessive taxi supply. According to an analysis by the Korea Transport Institute, taxi demand has recently decreased by about 10% due to the rise in private car ownership and the increase in designated driver services.
However, the number of taxis only decreased slightly, from approximately 240,000 in 2022 to about 238,000. Consequently, despite the significant drop in demand, the number of taxis has only decreased marginally, leading to increasingly poor working conditions for drivers. Considering the structural issues within the taxi industry, unless the imbalance between supply and demand is resolved, whether taxis are designated as public transportation may not significantly impact the actual improvement of drivers’ working conditions.
Those advocating for taxis to be recognized as public transportation argue that their widespread use should be acknowledged and supported with subsidies. However, taxis currently do not align with the direction of national transportation policy, and even if designated as public transportation, there would be no economic benefits for the general public. Furthermore, the fundamental reason for taxi drivers’ poor welfare lies in excessive taxi supply. Therefore, to improve taxi drivers’ welfare, policy measures such as government-level regulations to control taxi supply according to demand are necessary, rather than classifying taxis as public transportation.
