Taxi and Uber prices will likely increase if the West Australian government's proposed reforms of the industry, including a 10 per cent levy on total fare revenue, passes through parliament.
The expected $120 million raised from a four-year levy will be used to fund a voluntary taxi plate buy-back scheme.
Transport Minister Rita Saffioti on Thursday said industry reform was necessary and would reduce fees and registration costs on operators, increase flexibility and boost competition.
The minister admitted customer fees could rise if operators passed on the costs from the levy, but said there was no justification for individual fares to increase significantly.
A percentage levy on the total fare revenue was preferred over a flat fee on individual journeys to prevent shorter trips being heavily affected, Ms Saffioti said.
"(The levy is) not per ride and we are reducing costs in the industry, so I believe in most instances the increases won't be 10 per cent because of the new competition," she told reporters.
The buy-back scheme will be $100,000 for conventional or multi-purpose taxi plates, $40,000 for area restricted plates and $28,000 for peak period plates, all minus the $20,000 transition assistance paid under the former Liberal government.
An Uber spokesman said it was "disappointing to see the government squander the opportunity to embrace reform and drive down the cost of transport".
"(It is) a new tax on transport and it is the highest of its kind in Australia," he said.
"The commercial realities faced by all industry participants will mean consumers ultimately end up footing the bill."
The Labor government needs support from the opposition, Nationals or crossbenchers in the upper house to pass the legislation, which could come into effect late next year.
Deputy opposition leader Liza Harvey could not say whether the Liberal party would support the On-demand Transport Act until all the details were known.
"In principle, our party supports some kind of compensation for those small business owners who have been impacted by the changes in the taxi industry and also the inability of the Department of Transport to respond in a timely fashion to Uber as a disrupter," she told reporters.
Ms Saffioti denied claims from the opposition that the levy was a broken election promise not to introduce new taxes.
