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Taxi fares in Beijing could be set to rise by 25 percent.

The city's development and reform commission has received the proposal from the Beijing Transportation Bureau.

Charges could increase from the existing 1.6 yuan (US$20 cents) per kilometre to 2 yuan (US$25 cents) to offset the rise in costs from recent oil price hikes, the proposal said.

Published on the commission's website on Tuesday evening, the proposal estimated that about 80 percent of taxi passengers would have to pay an additional 1 yuan (US$12 cents) to 5 yuan (US$62 cents) on fares because of the price change.

In addition to the fare readjustment, the proposal also suggests establishing a mechanism to allow taxi fares to "float" with fuel price changes.

If the price of oil rises above 5.2 yuan (US$64 cents) a litre, taxi companies should offer drivers a certain amount of petrol subsidies; if it rises above 5.5 yuan (US$68 cents), a fuel surcharge of 0.5 yuan (US$6 cents) to 1 yuan (US$12 cents) would be collected from passengers; if it rises above 6.1 yuan (US$75 cents), there would be another round of taxi fare hikes, the proposal suggests.

A public hearing on the proposal will be held on April 26. Twenty-five main participants have been chosen already from taxi companies, schools, research institutions, consumers' associations and factories.

Bureau figures show that the fare readjustment would affect about 63,600 taxis in the city, while the existing 3,000 taxis that charge 1.2 yuan (US$15 cents) per kilometre would no longer be in use by the end of this year.

Taxi fares in Beijing have stayed fixed for more than five years, but oil prices have increased from 3.2 yuan (US$40 cents) a litre in late 2000 to the existing 4.65 yuan (US$57 cents).

The government and taxi companies started to give drivers a monthly petrol subsidy of 300 yuan (US$ 37) last year to cover the cost increase. And after oil prices had another jump at the end of last month, taxi drivers have started to have an additional monthly subsidy of 150 yuan (US$18).

But the proposal said the subsidies would not be available if the fare re-adjustment came into effect.

While taxi companies are hailing the possible fare rise, China Daily's random survey yesterday on six taxi drivers from six different companies showed that none of them would be happy with the increase.

"A price rise will mean a fall in customers," said Han Baozhu with the Yuyang Passenger Transport Company. "I figure I will lose at least 20 percent of my customers."

He said a cut in drivers' management fees that have to be given to the taxi companies would be a better way to offset the cost increase. He said his company collects a monthly management fee of 5,800 yuan (US$716) per car, while new taxi only costs 90,000 yuan (US$11,100).

"They need only 15 months to take back the cost, but each car can be used for eight years."

A telephone survey by China's Social Survey Institute on 200 Beijing residents shows that 72 percent of them are against the possible fare rise. About 68 percent of the respondents considered 1.2 yuan (US$15 cents) per kilometre rate to be a reasonable price.

Wang Meng, an IT company employee in Beijing, said she would consider reducing her use of taxis if the fares increase. "If taxi fares rise, I may not travel by taxi as often as I do, or I will choose taxis without licences which charge much more cheaply."

It is estimated that there are at least 70,000 unlicensed taxis running in the city. Drivers with regular companies worry that the fare rise may push more passengers into illegal taxis.

(China Daily April 20, 2006)