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Monday 15 September 2014

Taxpayer faces €400m bill over taxi driver case

Published 14/08/2014 | 00:00

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Pascal Donohoe
Pascal Donohoe

The State will be faced with a bill of at least €400m if the High Court rules taxi drivers can be compensated for deregulation.

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The potential liability was revealed in a briefing document prepared for new Transport Minister Paschal Donohoe.

More than 1,100 taxi drivers have lodged claims that the value of their taxi plates were wiped out overnight when the sector was deregulated in 2000.

A High Court ruling is currently awaited on three test cases.

In a note marked "confidential", officials warned Mr Donohoe, who became minister last month, that "if established legal principal was to be overturned, the State could be faced with claims in excess of €400m".

The State has not previously revealed how much the cases could cost the taxpayer if the taxi drivers are successful.

The drivers who brought the test cases bought licences valued at IR£80,000 (€101,600) before deregulation.

Following deregulation, new taxi plates could be purchased for just IR£5,000 (€6,350).

They initiated legal proceedings against the Minister for the Environment, the Attorney General, Dublin City Council and Ennis Town Council, alleging deregulation breached their property rights under the Constitution.

The drivers said the value of their licences was wiped out "overnight".

Although a refund scheme was set up by some local authorities and a law was passed giving allowances to drivers who bought taxi licences prior to November 2001, the drivers claimed these measures were inadequate.

Increase

They also claimed the Government breached EU competition laws when the industry was liberalised.

Mr Justice Michael Peart heard the cases between October and December last year and has yet to issue his judgment.

Deregulation heralded a major increase in the number of taxis operating around the country, addressing a historic shortage.

However, it led to a situation where the market was oversupplied, with a report by consultants Indecon estimating in 2011 that the taxi fleet was up to 22pc larger than it needed to be.

Department officials told Mr Donohoe the oversupply problem had now subsided without the need for State imposed restrictions.

The number of drivers licenced to drive taxis, hackney cabs and limousines now stands at 29,975, down 37pc from its peak of 47,529 in 2009.

The number of licenced vehicles has also slumped from a high of 27,429 at the end of 2008 to 21,644 in May of this year.

Officials said the decline was down to a number of factors, including the introduction of mandatory door signage and doing away with the practice of plate rental.

Meanwhile, the National Transport Authority has beefed up its team working in the taxi sector, with 15 new staff bringing its cohort of compliance officers to 23.

Officials said continuous tax compliance checks were now being made, while arrangements had also been put in place to share data on taxi drivers with the Garda Siochana, the Revenue and the Department of Social Protection.

Irish Independent

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