Taxi fare increase will soon hit Canberra starting next month.

An increase of 2.48 per cent of taxi fare in Canberra will be implemented starting in July 1, 2010.

The flag rate for standard hiring will increase to $4.50 while the rate per kilometre from 6 a.m. Until 9 p.m during weekends will rise to $1.80.

At other times, the kilometer rate will be at $2.07.

However, the waiting time of $49.50 an hour and a $4.70 pay of using baby capsules will not be increased.

John Stanhope, Australian Capital Territory (ACT) Chief Minister said the rise in taxi fares was approved by the Government through a submission by the Canberra Taxi Industry Association (CTIA).

Mr. Stanhope said the taxi fare increase was verifed from an independent consultant.

"Taxi fares have historically increased from 1 July each year, covering the rise in the everyday expenses of running taxi services," he said.

"The increase in fares allows taxi operators to earn a reasonable income and sufficient revenue to cover their costs, without increasing taxi fares to the point where use of the service is discouraged."

Last month, the Australian Hotels Association urged the ACT government to intervene on problems of taxi cabs picking up passengers from Canberra airport and not earning enough money.

''Given this information, it seems obvious that market failure exists and the Government should step in and permit taxis to charge an additional flag-fare to make this route profitable,” the AHA said.