I would welcome a separate congestion tax levied on certain other kinds of traffic to complete the solution. You want cabs in the city, and you want them running all the time - they're doing the useful work of moving people around, and should certainly be preferred to traffic that congests the city during rush hour just to cram into a parking lot for eight hours.
Even if there are 10,000,000 cabs, if the congestion tax is set appropriately, they won't all be clogging the streets, since they won't be able to make a buck doing it.
I'm deeply suspicious of this kind of reasoning when it's unaccompanied by an explanation of how the tragedy of the commons would be avoided. You're a cab driver with rent and your kid's tuition to pay, are you the one staying home today?
If congestion charge + other expenses > expected revenues, yes. Actually, things should equilibrate roughly at expected revenues - congestion charge - other expenses = average low skill wage.
The real trick is to set the congestion charge somewhat higher for taxis than for regular vehicles, since taxis spend more time on the road. The proper ratio would be (taxi charge/regular charge) = (taxi time on road / regular time on road), presumably this could be estimated using sat photos.
The real trick is to set the congestion charge somewhat higher for taxis than for regular vehicles, since taxis spend more time on the road.
Commuter vehicles deliver less value to the city, though. They spike congestion in the morning and the evening, waste time looking for parking, and take up valuable real estate just sitting around during the day. That's the traffic you want to discourage, not cabs, delivery trucks, and other actual economic contributors.
