Minneapolis Taxi Reform Knocks Down Three Hurdles

Published January 1, 2007

Until the reform law’s passage, three nearly insurmountable government-imposed hurdles stood in the way of operating any taxi business in the City of Minneapolis:

1) the “taxi vehicle” license cap, by which the city arbitrarily limited to 343 the number of cabs that could provide service;

2) the requirement to join an existing taxi company as a precondition of holding any existing taxi vehicle license; and

3) the restricted issuance of new, reissued, or temporary taxi vehicle licenses to existing taxi service companies.

The first hurdle blocked entry to anyone who could not afford to pay $25,000 for a taxicab vehicle license from an existing license holder on the secondary market. The second and third hurdles further blocked competition because the laws were interpreted by the city as requiring entrepreneurs to join existing taxi companies before they could obtain a taxi vehicle license.

Market Access Opened

The newly enacted taxi reforms not only gradually eliminate the license cap, but they also make the second and third hurdles much easier to cross by allowing entrepreneurs to apply for taxi vehicle licenses without being required first to join an existing taxi company.

“We invite other entrepreneurs to join us in challenging irrational barriers to entry, and we urge the legislative, executive, and judicial branches to protect economic liberty by reviewing new and existing occupational licensing schemes with an appropriately skeptical eye,” said Lee McGrath, executive director of the Institute for Justice’s Minnesota Chapter.

Opened in 2005, the Minnesota chapter is one of three state chapters of the Institute for Justice, a public interest law firm headquartered in Arlington, Virginia and founded in 1991 to advance free speech, property rights, educational choice, and economic liberty.

Nick Dranias