Public warning over price hikes
Many passengers across the UK say they would stop using taxis altogether if fares were to rise by around 20 %, according to a report by Lancs Live.
The story highlights widespread frustration over the potential introduction of a so-called “taxi tax”, which many believe would make short local journeys unaffordable.
The discussion comes amid growing speculation that VAT could soon apply to all private-hire journeys — a move that drivers fear could raise fares dramatically and reduce demand across the trade.
Why fares could jump
As reported by TaxiPoint, the Treasury is considering whether private-hire vehicle (PHV) operators should be classed as the “contracting party” for bookings.
If that happens, they would be liable to collect VAT on every fare — effectively adding 20 % to journey prices. For many passengers, that could turn a £10 trip into £12 overnight.
Industry representatives warn that operators would have little choice but to pass on the cost, as margins are already thin due to rising insurance, licensing and fuel expenses.
Public reaction
Many people on social media have stated that taxi prices are already high, and that a further increase would make them reconsider using cabs for routine trips.
Many described taxis as a convenience they can “no longer justify” if fares rise again, while others worried that rural passengers and those with mobility needs could be left stranded if services decline.
Drivers could also lose out
While some passengers may simply switch to buses or trains, the bigger concern is how demand loss could affect drivers’ earnings.
A sharp drop in trip volumes would mean longer waiting times, more competition and potentially thousands leaving the trade — exactly the opposite of what local authorities and transport planners want.
DM News Commentary
The “taxi tax” debate shows just how fragile the economics of the trade have become. Drivers are already squeezed by operating costs, while passengers are stretched by the cost-of-living crisis. Adding 20 % VAT could tip that balance completely — fewer passengers, fewer drivers, and weaker local services.
If the Treasury wants to modernise the system, it must do so in a way that keeps everyday journeys affordable. For operators, the smartest move now is to emphasise value, transparency, and customer trust — fixed pricing and clear communication will matter more than ever.
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