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Toronto cab driver Irfan Bhangu didn't have to wait long to find out what would happen to the 20-per-cent fare increase the city announced this week. Even before his meter had been reprogrammed, the garage he rents his car from told him that the weekly rate would be jacked up from $450 to $525.

"That's the way it is for us," he said as he resigned himself to yet another raw deal. "We get something, then they steal it away."

Since coming to Canada from Pakistan three years ago, Mr. Bhangu has learned first-hand the cruel reality of the Toronto taxi business, which has netted millions for behind-the-scenes players at the expense of working drivers and the fare-paying public.

"It's an evil system," says Eugene Meikle, a driver who spent close to a decade fighting a quixotic battle against entrenched interests that control the industry. "What you're looking at is a system of slavery."

At the root of the problem is the practice of plate-leasing, whereby people who hold city-issued cab plates rent them out instead of using them to operate a taxi. Among those who hold Toronto taxi plates are dentists, airline pilots and cab tycoons such as Royal Taxi's Mitch Grossman, a former neighbour of Toronto Mayor Mel Lastman.

Mr. Grossman, whose family rose from rags to riches in a single generation, has been referred to as the "King of Cabs." His fortunes are largely based on his family's collection of taxi plates, which once peaked at more than 100. This holding produced millions in rental income -- and unprecedented control over working drivers, who are forced to rent a plate since no new standard plates have been issued for years.

Leasing has turned Toronto cab licences into valuable commodities. Although the official price of a licence is $5,000, they sell on the street for up to $100,000. The huge amounts of money at stake have produced a bloodthirsty, behind-the-scenes battle for control that has, by all accounts, been won by the plate holders.

It is estimated that up to 90 per cent of Toronto's 3,477 cab licences are now leased out instead of being used to operate a taxi. Taxi plates rent for up to $1,400 a month. Their value is based on the industry's artificially controlled levels of supply and demand.

"There are a lot more drivers than plates," Mr. Meikle says. "So if you don't pay the price, the next guy will. And if he won't, there's another guy standing behind him. And there's no new plates."

Given this history, Toronto cab industry observers have little doubt that much of the 20-per-cent fare increase enacted by the city this week will be absorbed by plate holders.

"I'm making more money this week, but it won't last," says Faisal Sultan, a 25-year-old driver who operates a cab that costs him $65 for a 12-hour shift. (A percentage of that rent goes to the plate holder.)

On an average day, Mr. Sultan nets about $80 after he pays for the car and his fuel. He knows all too well that the plate holders have the upper hand in the battle for the money that he collects in fares. After the fare increase was enacted this week, Mr. Sultan took it as a given that his car rental cost would rise soon, wiping out any gains in his income.

"There's nothing you can do about it," he says. "If more money comes in, they take it. That's just the way it is."

City officials tell a similar story.

"To tell you the truth, there's not a lot we can do to prevent it," says Pam Coburn, executive director of Metro Licencing and Standards, the body that oversees the industry. "It's an unfortunate situation."

Ms. Coburn, a well-regarded career bureaucrat, has inherited a complex system created by a peculiar combination of politics and backroom dealing. After a 1998 Toronto Star exposé, the city tried to reform the taxi licensing system, only to come up against a concerted lobbying campaign on the part of plate holders, who succeeded in watering down proposed changes.

In the end, the city came up with a compromise, by issuing 562 "Ambassador" cab plates, which can only be used by the driver they were issued to. Although the Ambassador plates have benefited the drivers who have received them, they have not succeeded in devaluing the existing plates. Observers estimate that at least 2,000 more Ambassador plates would have to be given out to make a dent in the plate-leasing market, but the plate holders have lobbied vociferously against new issues.

Ms. Coburn finds it ironic that the city is forced to deal with a situation that was never supposed to exist. Plate leasing is strictly forbidden under the city bylaws, but plate holders circumvent the rules by forcing drivers to sign ownership of their cars over to them.

Ms. Coburn says the current situation is the result of scheming and ineptitude that took place over decades -- plate holders found a loophole, and city bureaucrats failed to enforce the rules as they were written.

"The administration never exercised its authority," Ms. Coburn says. "Plate leasing was always against the law, but they looked the other way . . . A market got created, and the cat was out of the bag."

Ms. Coburn, who oversees countless meetings involving the taxi industry, has been amazed at what she sees: "The problems are very complicated, and very long-standing," she says. "Every time I walk out of one of these meetings, I just scratch my head."

Sajid Mughal, a Toronto cab driver who has been appointed to the city's Taxi Advisory Committee, says the plate leasing fiasco developed because so few people understand the industry's complex regulatory structure, or care about the fate of cab drivers.

"No one outside the business knows how this works. They just get in the cab and pay the money. If they understood, they wouldn't like it. Basically, the drivers have been turned into middlemen -- they take the money from the customer, and hand it over to the plate holder."

Where the money comes from and where it goes

The majority of Toronto's cab drivers rent their cars by the 12-hour shift. Here's a rough breakdown of their income and expenses:

Gross revenues: $150 to $200 a day. (On an exceptional day, $300.)

Costs: $65 to $95 for rental of car for 12-hour shift. Night shifts cost more. $30 for fuel.

On average, $40 of this fee goes to the holder of the cab licence or "plate" attached to the car. Many plates are handled by agents, who take a cut.

This allows the plate holder to make money without doing anything associated with the taxi that bears their name.

Net pretax income: $25 to $175 a day.

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