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Sat, May 26 2012
Sofia intent on imposing caps on cab fares
Photo: Nadezhda Chipeva
Sofia city hall planned to introduce ceilings on the amounts that taxi companies were allowed to charge customers, deputy mayor in charge of transport Lyubomir Hristov said on July 26, as quoted by Bulgarian news agency BTA.
The price caps would be made possible by amendments put forward by the Transport Ministry to the Automobile Transportation Act. Any limits would be put in place with the consent of the big cab companies in Sofia, he said.
The amendments envision price limits being imposed by the local authorities, who also license cab companies, and would have to be updated at least once a year or at the request of the Transport Minister.
Hristov said that the price would be determined using a formula that would include vehicle ammortisation, an average weighted price of fuel and even driver salary. The Sofia city hall was already working on drafting several such formulas that could be presented to taxi companies as soon as Parliament passes the amendments, he said.
According to city hall statistics, about 5000 cabs in Sofia had valid licences. The amendments envision fines of 3000 leva for cabs charging more than the ceiling imposed by the local authorities.
In June, the country's competition watchdog rejected the Transport Ministry's proposal on cab price caps, saying that it would only serve as an excuse for taxi companies to institute a price cartel, stifling competition and innovation.
Cab companies charging exorbitant amounts as fare have been repeatedly criticised as creating a poor first impression of Bulgaria among foreign travellers, who are the most likely to be stung by them.
The price caps would be made possible by amendments put forward by the Transport Ministry to the Automobile Transportation Act. Any limits would be put in place with the consent of the big cab companies in Sofia, he said.
The amendments envision price limits being imposed by the local authorities, who also license cab companies, and would have to be updated at least once a year or at the request of the Transport Minister.
Hristov said that the price would be determined using a formula that would include vehicle ammortisation, an average weighted price of fuel and even driver salary. The Sofia city hall was already working on drafting several such formulas that could be presented to taxi companies as soon as Parliament passes the amendments, he said.
According to city hall statistics, about 5000 cabs in Sofia had valid licences. The amendments envision fines of 3000 leva for cabs charging more than the ceiling imposed by the local authorities.
In June, the country's competition watchdog rejected the Transport Ministry's proposal on cab price caps, saying that it would only serve as an excuse for taxi companies to institute a price cartel, stifling competition and innovation.
Cab companies charging exorbitant amounts as fare have been repeatedly criticised as creating a poor first impression of Bulgaria among foreign travellers, who are the most likely to be stung by them.
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Bulgaria presses ahead with plan to put ceilings on taxi fares
Against a background of numerous complaints about exorbitant fares charged by some taxi firms, Bulgaria’s Cabinet has asked Parliament to approve legislation that would empower local authorities to set limits on taxi tariffs – a move that already has come in for criticism from the competition watchdog.
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It really is important that this issue is tackled as it leaves such a bad impression for visitors to Bulgaria, I have been charged the following prices for the same journey between Sofia Airport and the bus staion in Sofia, 11 lev (4am), 12 lev(6pm, 20 lev(4am), 50 lev (3am) and 80 lev (9.30am) by one taxi driver who refused to open the doors when I refused to pay the 80 lev as he was quite clearly trying to fleece me.
Dear Frankx
installing something like business ethics is common in all developed economies. for example in central europe there is a law for several hundered years which says (valid for any business) if someone is charging more than double of the "average market price" it is conceived as "Wucher" - which can be translated as unethical and therefore not valid. this is part of the civil act and in general valid for everyone (and every business). as simple as that !
ad rene: I agree, Bulgaria has a very long and burdensome [...]
Read the full comment road ahead to become a developed economy. Good luck
interesting thing that the municipality thinks it can do what the competition watchdog has told the ministry it can't...
how would the municipality's solution not cause the same problems of price cartel forming, stifling competition and innovation ?
@frankx, bulgaria is not a market economy. never has been and does not have the inclination to become one any time soon.
Its a good thing, they should also be made to give change because most claim that they never have change for the passenger.
Taxi fares need to be capped through out the whole of the country. A fare that would be 5lv in Sofia would cost around 40lv plus in Nessebar. These prices can only be described as criminal. Tourists not only feel robbed but feel extremly angry that the drivers are allowed to get away with it year after year.
the point, frank, is that the market can be held hostage by cartel activity. since your post hints at some understanding of economics, you will no doubt recall that not all markets operate as pure competition; there are still monopoly, olygopoly, and complex monopoly markets.
in this instance, the market is highjacked by a cartel misrepresenting the end user. the state, and this is where a brief ezcursion into constitutionalism might do as some good, has full powers to intervene, as a sovereign entity handling its domestic affair. the brief answer to your question where the madate comes [...]
Read the full comment from lies in the common vote and the constitutional provisions.
do not forget that the state has a duty to protect the rights of its citizens.
as to the measure conteplated, you may very well be right that they represent a certain paucity of ideas.
Hair-brained. No other word for it. Since when did municipal authorities in a supposed market economy have a mandate - or the acumen - to decide on taxi fares? Either Bulgaria is a market economy or it isn't. If it is, the market should determine what taxi operators can charge. It's obviously working at the moment, with taxi fares in Sofia one of the world's great bargains.