Leveling the Playing Field for the Taxi Industry

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As a Massachusetts state legislative committee considers a contentious ridesharing regulation bill, a new Pioneer Institute report urges lawmakers to explore changes to the taxi industry that would modernize service and increase competition in a marketplace that includes innovators like Uber and Lyft.  A recent U.S. District Court ruling ordered the City of Boston to revise its taxi regulations, and cab drivers in Cambridge are suing the city on equal protection grounds.

In Leveling the playing field: the need for taxi reform in the Commonwealth, authors Matt Blackbourn and Gregory Sullivan describe some of the unfair and outdated regulatory restrictions that cab operators face, and recommend that the ride-for-hire task force, to be established by new legislation, consider the feasibility of the following:

  • Shifting the taxi industry away from the municipal fare-setting system in which municipalities set minimum rates that taxi companies must charge.
  • Transferring regulatory oversight of all Greater Boston area taxis to a regional, metropolitan authority that would consolidate high-volume municipal service areas. This would eliminate the problem created by the current regulatory system that prohibits taxis from making street hail pick-ups in communities beyond their licensing municipality.

Transportation Network Companies (TNCs) are not required to abide by minimum municipal rates and therefore enjoy a competitive advantage over taxis on pricing.  Even if taxis accept ride requests through a mobile app, they are still subject to municipal-mandated minimum rates, making it impossible to compete on price with TNCs.

Included in the report is a comparison of hypothetical trips in the Greater Boston area demonstrating extreme differences in rates charged by taxis and TNCs like Uber and Lyft.  The authors also refer to initiatives to reform taxi regulations in other states and municipalities that would be applicable in the Commonwealth. The authors conclude that forcing the taxi industry to conform to onerous restrictions – to which TNCs are not subject – has created an unfair business environment.

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