How are taxi premiums calculated?
The way taxi premiums are calculated has changed from 1 April 2018.
Taxis can currently choose to pay either a fixed annual premium or opt in for installment payments.
Installment payments are based on forecast kilometres travelled that are subsequently adjusted based on actual kilometres. Whereas the fixed annual premium is based on average annual kilometres for taxis.
Having a usage based calculation of Green Slips for taxis is fairer when setting premium prices across all point-to-point services.
How do taxi premiums compare to ride share?
Ride sharing companies have the technology that enables them to readily identify when the vehicle is being used for ride sharing purposes only and how many fare paying kilometres are travelled.
Taxis have a combination of booked fares and ‘rank and hail’ fares and at this point in time they cannot efficiently distinguish between all kilometres travelled and fare paying kilometres.
Ride sharing vehicle owners pay a Class 1 premium like other passenger vehicles but they also pay a 10 cents-per-kilometre CTP component for fare paying kilometres travelled or 6.6 cents per kilometre if the journey started in a country region.
Taxis also pay cents-per-kilometre for CTP but this is for all kilometres travelled. This includes the kilometres travelled between fares and while driving around looking for passengers.
Taxis therefore pay a lower cents-per-kilometre than ride share – 5 cents for metro taxis and 3.3 cents for country taxis.
The above arrangements have been in place since April 2018.
Introducing the cents-per-kilometre premiums for ride share and taxis is a step towards a fairer setting of premiums across all point-to-point services.
In 2019, the way taxi CTP premiums are calculated will change to be on the same basis as other comparable point to point hire vehicles, such as rideshare. This means that no premium cap will apply to either taxi or hire vehicle CTP premiums, with premiums calculated on the basis of fare paying kilometres travelled. This change to CTP premium calculation is anticipated to commence during the first half of 2019 to allow time for taxi operators to install fare-tracking technology.