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To reboot Italy's economy, Monti takes on the cabbies

Italian Prime Minister Mario Monti has made liberalizing the service sector a key economic initiative, but the taxi industry is resisting.

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“Drivers don’t recover their initial investment. They are basically investing money to have a job,” he explains. The resale value of the license is considered drivers’ severance pay. In a good month, they make up to €1,300 ($1,750), working up to 12 hours a day, according to taxi unions.

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The industry opposes allowing a national body to set license numbers because “each city is a different case,” Bestente says. In more than 100 cities, the number of taxis is lower today than 30 years ago, and licenses remain unused. Cities don’t know what to do with the excess licenses – no one wants them.

Fares too are set by city councils. Taxi unions argue that Italian fares are among the lowest in Europe –  a taxi ride in Rome starts at €2.80 ($3.68), Turin at €3.50 ($4.59) – especially when compared to cities where the industry was deregulated, such as Stockholm, Sweden (€5.08, or $6.67); and Geneva (€5.22, or $6.85).

“Italy would suffer the same fate as the countries where liberalization was approved: price increases, low quality of the service, and poor labor conditions,” said UN.I.CA leader Maggiolo.  

Confartigianato Taxi union vice president Alessandro Nordio says the only way to lower fares is to reduce operating costs. Cab drivers have asked the government to consider tax breaks and subsidies like the ones they give to public transportation. Taxi drivers pay gasoline’s full price, which recently hit a record of €6.90 ($9.05) per gallon.

The problem goes beyond the industry

Some argue that the taxi industry struggles because Italy’s car-centric society has little need for taxis. The country has nearly 61 privately owned vehicles for every 100 people, according to the Italian Automobile Club. 

It’s no surprise that only two of every 100 residents use taxis, says Christian Iaione, a professor of institutional communication at LUISS Guido Carli University in Rome. According to the Association of Artisans and Small Business Mestre CGIA, while Italians spend an average of €48 ($63) a year on cab services, their biggest expense is fuel: €897 ($1,177) a year. 

What the country needs to be talking about is alternatives to privately owned vehicles, which clog up the narrow streets of Italian city centers and require inefficient traffic restrictions, and improvements to public transportation, Mr. Iaione says.

Monti’s administration has vowed to move forward with the “Grow Italy” proposal, regardless of its unpopularity and obstacles thrown up by key political parties. 

According to the version approved by the senate, the newly created National Transport Authority will monitor the taxi industry, but the number of licenses awarded will remain up to the city councils. The lower house has yet to discuss and vote on the proposal, the last step before signing it into law. 

Davide Avanzi, president of URItaxi Piedmont’s union chapter, said his union would embrace the senate’s version, even though it does not answer their demands and drivers remain concerned about the impact of liberalization. “There is no powerful lobby behind us as the consumer associations say, we are just defending our jobs,” Mr. Avanzi said.

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