Taxi Industry Reforms in Aruba

In last week’s column, we delved into the chaotic taxi protests that rocked Aruba. In response to the Minister of Transport’s new decrees, taxi drivers engaged in disruptive demonstrations that were as much a display of their frustrations as they were a breach of public order. This week, it’s time to shift the focus from the protests to the much-needed reforms that can help restore the taxi industry’s role as a crucial public service, not just a personal profit center.

Elevating Standards for Taxi Services

It’s undeniable that taxis play a vital role in Aruba’s transportation ecosystem. However, to ensure they meet the expectations of both locals and tourists, there needs to be a consistent standard of service. Most of my friends feel that taxis are not interested in providing service to the locals but rather only want to transport the tourists and get the mighty US Dollar. Introducing new requirements for all taxi permits is a logical step toward achieving this goal. These requirements should focus on providing adequate and dependable service, being available to cope with the market’s demand, and that operators contribute their fair share in taxes.

One key reform that should be introduced is a mandate for yearly checks on taxis to ensure they are fully compliant with tax obligations. It’s baffling to hear that taxi representatives openly admitted to not paying taxes for decades during last week’s events. This is a failure of responsibility and blatant disregard for the law. The tax department should take immediate action by auditing all current taxi permits and ensuring compliance before transferring licenses or issuing new ones.

Embracing Entrepreneurial Responsibility

Taxi drivers are, after all, entrepreneurs. It’s time they fully embrace this role. Owning a taxi permit should involve managing one’s business, including planning for retirement. Relying on the sale of a taxi permit as a form of pension is not sustainable. Instead, taxi drivers should be encouraged to set up their pensions independently, much like other small business owners.

Moreover, taxi drivers should be expected to commit to working full-time – at least eight hours a day – ensuring that the public receives adequate and reliable service throughout the day, not just during peak tourist hours. Those unwilling to meet these minimum hours or comply with stricter requirements have a ready alternative: they can switch to ride-sharing services, which allow them the flexibility to work when they want. This would free up taxi permits for those committed to providing consistent service.

Additionally, a taxi permit should not be considered an asset that can be passed down as part of an inheritance. This practice only perpetuates a closed market, blocking new entrants and stifling competition. Instead, there should be a fair chance for the next generation of taxi drivers to enter the industry, ensuring the system remains open and accessible. To further support this goal, implementing an age limit – such as 60 years – could help keep the pool of taxi drivers young and vibrant, preventing older drivers from being subjected to the physical demands of long hours and heavy work.

Reinforcing Compliance and Transparency

Stringent monitoring should be implemented to avoid scenarios where taxi permits are underutilized or held hostage by part-time drivers. Taxi operators should be required to log their hours or track their rides with GPS monitors, with penalties for those who fail to meet the minimum working hours. By ensuring that taxi permits are used effectively, the public transport system will better serve the needs of the local community and tourists. Obtaining a taxi permit should be transparent and accessible. Establishing an online portal where qualified applicants can apply, track the progress of their applications, and see their standing in line for future permits would be a significant step forward. This would increase transparency and help eliminate any unfair advantages in the permit allocation process.

A Level Playing Field for All Businesses

Taxis enjoy importing vehicles duty-free, saving 50% in taxes because their vehicles are deemed work tools. While this benefit was initially intended to support the taxi industry, it raises the question of fairness. If taxis are exempt from import duties because their vehicles are work tools, then delivery vehicles and those used for other commercial purposes should be treated the same way. Let’s start with duty-free for our friendly tour buses like De Palm and Fofoti. How about duty-free car rentals? But wait, why stop there? It is duty-free for all wholesalers, distributors, and food suppliers. I can’t get to court without a car, so my car should also be a working tool and be exempted from import duties. Extending duty-free import benefits to all businesses that use vehicles as essential work tools would create a fairer tax system and could have a positive ripple effect across the economy. Car dealers, I am sure, would love to sell more duty-free cars. In today’s world, I can’t exclude the fact that the privilege given to taxis on import duties and not other businesses qualifies as harmful taxation and does not align with the prohibition for ring-fencing in fiscal terms. Such ring-fencing could affect Aruba’s complaint status regarding OECD requirements. 

If this benefit is a form of harmful taxation, it should be stopped immediately. If it is not a harmful taxation practice, it should only be extended to taxi operators who have met their tax obligations. Only those with a clean tax compliance bill should be allowed to import vehicles duty-free. This would ensure the privilege is reserved for those who contribute somewhat to the tax system, aligning with broader economic goals.

Expert Advice and Future Directions

In light of the recent developments, the Minister of Transport must seek expert advice in refining these new policies. Engaging with organizations like the AAA (Aruba Airport Authority), which has extensive experience dealing with tourists and taxis, could provide valuable insights into optimizing the taxi industry’s contribution to the island’s economy.

The recent meeting between taxi representatives and the Minister of Transport highlighted an important shift. After initially opposing the minister’s decrees, the taxi drivers and their lawyers acknowledged the validity of the minister’s arguments, even repeating his words when explaining the new policies to their members. This raises a significant question: Were the initial protests a justified reaction, or were they an emotional overreaction that, in hindsight, wasn’t warranted?

Conclusion: A Call to Action for Sustainable Reform

The past week’s events underscore the urgent need for reform in Aruba’s taxi industry. It’s not just about regulating the number of passengers a taxi can carry or who can transfer a permit. It’s about ensuring that the taxi industry operates in a way that is fair, transparent, and beneficial to the entire community. The time for change is now. The Minister of Transport must push forward with these reforms, and taxi operators must step up to meet these new standards. By doing so, they will improve their service and secure their industry’s future.

To our readers, let’s keep the conversation going. Share your thoughts on these proposed changes, and don’t forget to visit www.lincolngomez.com for more updates and insights. Connect with me on LinkedIn. Together, we can work towards a transportation system that truly serves everyone.

Until next time: Stay informed and stay engaged.