Israeli Taxi Fares Go Down, Nearly 2 Years After They Were Meant To

After months of delay, rates have been quietly dropped 10.5% – but cabdrivers want to reverse move as soon as possible.

Revelers loading balloons into a taxi in Jerusalem, September 2016.
Olivier Fitoussi

The Transportation Ministry quietly ordered a 10.5% cut in taxi fares last Thursday, long after a government committee recommended the reduction and the finance and transportation ministries signed off on the move.

The basic fare falls to 11 shekels ($2.90), down from 12.30 shekels, with other rates falling accordingly. But the reduction comes long after the price of gasoline began falling more than two years ago – which, under price-setting rules, should have led to a fare cut at the start of 2015.

An interministerial committee approved the fare reduction seven months ago, and Finance Minister Moshe Kahlon and Transportation Minister Yisrael Katz signed off on it six weeks ago. Just for the seven-month period since that initial recommendation, the delays in implementing it cost riders some 200 million shekels, according to one estimate.

Powerful opposition by the umbrella association of taxi owners and drivers explains the delay, as well as why the Transportation Ministry chose to keep such a low profile over imposing the lower fares.

But the taxi association denied yesterday there had been a deal with Katz to stop fighting the fare reduction in exchange for his continuing to block Uber – the global ride-sharing application – from operating in Israel in competition with licensed cabs.

“We don’t like fares being lowered – it’s neither just nor fair – but we decided not to fight the transportation minister, who is working for us and fighting the prime minister not to let Uber into the market,” Yehuda Bar-Or, the association’s chairman, told TheMarker. “Sometimes you have to lose the battle in order to win the war. I told the drivers, ‘Despite all the problems with the [fare] reduction, we’ll get through the crisis.’”

Amendments to the law that would have allowed people with a taxi license to take fares were withdrawn from the Economic Arrangements Bill in September. The supplementary legislation to the budget is now being debated in the Knesset, for approval by the end of the year.

Bar-Or said the cabdrivers were determined to restore fares to the old rates, and said the Transportation Ministry had agreed to convene the interministerial committee by the end of the month to reconsider the reduction.

The drivers’ association is already arranging for an economist to present its case.

“This will be the first time in our history that we’ve ever presented formal research into what the true costs of operating a taxi are,” said Bar-Or. “The Transportation Ministry has promised me that if it’s clear they’ve made a mistake, they will restore fares.”