City councillor Jim Karygiannis tweets, “PAN AM GAMES VISITORS BEWARE”, stating that both the drivers and users can be fined up to $20,000 for using Uber. However, why are some members of the city council making this a personal matter?
Canada operates under mixed economic system that allows a level of private economic freedom but allows government to interfere to establish regulations and restrictions in order to achieve social aims.
However, the arguments made by the government and the taxi industry’s war on Uber seems to have other agendas than the much needed improvement in the transportation sector. First, Toronto consumers need and want Uber, a cheaper and faster alternative to inefficient taxis. Secondly, Uber is just as safe as taking a cab, if not safer because of the extensive background check and automotive safety regulation they have established. The only reason the media portrays Uber under bad light is because it is the controversial topic of the year. Incident that take place in Uber cars have occurred and still occur in taxi cabs since its inception, regardless of the regulations forced by the government.
Let’s look in to the back door deals made between the City of Toronto and the taxi businesses. Peter Cheney, a reporter for The Globe and Mail, reports, “I discovered that almost none of Toronto’s city-issued taxi licenses – known as “plates” – were in the hands of working cab drivers. Instead, they were held by people who made others pay to use them. Among the key players was Mitch Grossman, a businessman whose family had collected more than 100 plates. These plates gave Grossman a pharaoh’s power.
If a driver wanted to use one of his family’s plates, Grossman could force him to buy an overpriced car from his sales operation, finance it through a family firm called Symposium Finance (where rates reached 28 per cent) then join Royal Taxi – the Grossman family’s taxi brokerage.
To get around the municipal bylaw against plate leasing, Grossman forced the driver to put the car he had just purchased in the name of one Grossman’s companies, so the names on the plate and the car matched. Not one of the licenses held by Grossman and his family were in their own names. Instead, they were held by companies, most of them numbered. (By doing more than 1,500 corporate searches we determined who was actually behind Toronto’s taxi licenses.)
Other taxi plate holders included an airline pilot, a dentist, investors who lived in Florida and Israel, and estates that had inherited the licenses after the holder died. The problems created by the plate system were mind-boggling. At least 30 per cent of the industry’s revenues went to people who did nothing but milk income from their licenses.
After my stories ran, the city decided it was time to do something about the problem. Politicians looked at abolishing the system, but the plate holders threatened to sue city hall for the value of their licenses, arguing that Toronto bureaucrats had allowed the system to develop, even though it was technically against the rules. The potential settlement could have run to more than half a billion dollars at the time.”
Uber takes 20 percent of the revenue per ride from drivers, while cab drivers rent their car for average $90 per day. Cab drivers are working as Uber drivers just to pay off their fixed cost on their down days.
From a personal experience, the cost of taking Uber is slightly cheaper than a cab, and I take advantage of their referral and delivery programs. Also, when hailing a ride using UberX, I’m fortunate enough to be driven in a Mercedes-Benz, BMW, and other cars who had superior interior conditions. Meanwhile, most taxis are run-down Chevrolet or Toyota cars dating back to pre-2010 models.
The ruling against Uber is corrupt, as the City of Toronto is forced against its back by investors who own the “plates”. Investors are saying that Uber is illegally operating in Toronto, while they themselves are leasing out their plates illegally.
Cheney clarifies, “Toronto’s taxi plate system is anything but free enterprise. Instead, it is based on the artificial restriction of a natural market, and the granting of licences to a fixed number of participants.”