The Executive Council on Tuesday approved fare increases for taxis, with the initial charges to be raised by HK$3.

The flagfall for urban taxis will go up from HK$24 to HK$27, while it will be HK$23.5 in the New Territories and HK$22 on Lantau.

The incremental charges will also be raised, with a 20-cent increase per meter jump after flagfall and a 10-cent rise after 9 kilometres.

The new fares are expected to take effect from July 17 after negative vetting by the Legislative Council.

If confirmed, this will be the first fare increase since 2017.

In a statement, a government spokesman said revenue for cabbies has dropped amid the Covid-19 pandemic.

“It is difficult to attract new blood to join the industry and there is a trend of ageing within the trade,” he said.

“Through increasing drivers' income, the trade hopes that new blood will be attracted to join the industry and the trade will be encouraged to improve their service and invest more in new facilities, so as to enhance the overall taxi service quality."

The government also noted that the approved increases are lower than the levels proposed by the taxi trade after taking into consideration higher expenses incurred by passengers.

The administration added that it has proposed a series of measures to improve the service quality of taxis, including the introduction of a taxi fleet management regime, increasing the maximum number of passengers from five to six and putting in place a penalty system for taxi drivers.

In response, the Hong Kong Taxi and Public Light Bus Association said it's disappointed with the HK$3 fare increase, as it was expecting twice as much to cover surging operational costs.

"In the past two years, a lot of costs increased, especially the insurance and maintenance costs. Even the car price increased because they changed the model," said the group's spokesperson Godwin Ching.

He said the association would apply for another fare increase later this month.