To deny the rare display of bipartisanship would be a slap in the face, but to agree to the new taxi bill, a chain of actions could be triggered to hurt the government’s commitment to fiscal health.

With less than two months remaining in office, President Lee Myung-bak is faced with the tough choice of whether to sign a new taxi regulation into law, which will test his finesse for statesmanship one last time.

It was passed in the National Assembly on Jan. 1 with overwhelming bipartisan support. The new bill proposes including taxis within the category of mass public transportation that was previously the exclusive domain of subways, rails and buses.

The bill does so by altering the selection criteria for public transportation. Previously, the necessary requirements to be considered public transportation were an established destination route, fixed time schedule, and being capable of transporting multiple persons.

But the new law drops the requirements for established routes and a time schedule, and instead broadly defines public transportation as that which transports people in a designated area approved for business. 

The new legislation passed with support from 222 lawmakers from both the right-leaning Saenuri Party and the left-leaning Democratic United Party, with five opposed, and 28 abstaining.

The shift in designation from a private business to public transportation would allow the taxi industry to receive hefty government subsidies and other benefits totaling 1.9 trillion won ($1.78 billion), which would add significant stress to the nation’s fragile fiscal health.

Under the new designation, the taxi industry would be eligible to receive fuel subsidies, various tax breaks, guaranteed minimum wage, and reduced transportation fares at toll gates, among other benefits.

“It is unfortunate that the law passed despite the government having taken in the National Assembly’s proposal and offered special legislation entailing a comprehensive solution plan as an alternative to the taxi law,” a senior Cheong Wa Dae official told reporters on Wednesday.

Cheong Wa Dae previously opposed the legislation on the grounds that it would upend public transportation policy and financially burden the government during a time of grim economic prospects. But exercising a veto would also present new problems as the law passed with wide bipartisan support.

“We are in a dilemma as the taxi law was passed under agreement between the ruling and opposition parties,” the senior official was quoted as saying.

The Ministry of Land, Transport, and Maritime Affairs also issued a statement on Tuesday expressing a sense of “despondency” and “regret” over the passage of the law. The Ministry is expected to relay its concerns to the presidential office.

“When the taxi law is considered at the Cabinet meeting this month, we will carefully deal it,” the senior official said, adding that the presidential office has not excluded the possibility of vetoing the law.

Critics of the new law point out that taxis account for only 9 percent of total transport, while buses and rail, including subways and trains, account for 31 and 23 percent, respectively. Given the disparity, it would be unfair to include taxis in the same category of mass transportation and bestow similar benefits as buses and rail.

Furthermore, experts say that the new law would not help resolve the fundamental problems affecting the taxi industry.

“The new law is an incongruous solution because it ignores the issue of oversupply (of taxis), which is the biggest problem, and also attempts to solve the financial difficulties of the taxi industry by legislation designating (taxis) as public transportation, which is unprecedented in the world,” said Seong Nak-moon, a senior researcher at the Korea Transport Institute.

The bus industry had threatened to stage an all-out strike ahead of the Dec. 19 presidential election to oppose the inclusion of taxis as public transportation, but lawmakers greased the standoff by including additional subsidies to bus drivers exceeding 260 billion won ($244 million).

The lawmakers’ spendthrift handling of the nation’s purse subsequently generated criticism and accusations that the lawmakers had kowtowed to populism.

“(The passage of the law) will remain as a bad precedent that condones tantrums thrown ahead of elections for the sake of territorial selfishness,” said Park Ji-soon, a law professor at Korea University.

By Samuel Songhoon Lee (songhoon@heraldcorp.com)