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Unless you're Uber or one its lightly regulated drivers, you would probably think twice about getting into the taxi business these days. The company behind the near-ubiquitous ride-sharing app did not come to be valued at more than $60-billion (U.S.) by going easy on the competition.

Somehow, that has not deterred Montreal serial entrepreneur Alexandre Taillefer – best known locally for selling an early tech startup to Quebecor and starring in the Quebec version of Dragon's Den – from choosing as his next act the intrepid challenge of running Uber out of the province.

He means to do it in the purest way possible – by outcompeting Uber, albeit with an assist from the provincial government. Mr. Taillefer is calling for a tax or fee of $1.10 to be slapped on every Uber ride in Quebec. The proceeds would flow into a fund to compensate the owners of traditional taxi plates, who have seen the value of their permits plummet with Uber's entry.

"Not compensating these owners would amount to the pure and simple confiscation of their asset by the state," Mr. Taillefer's company, Taxelco, charged in a submission last week to the National Assembly's transportation committee. It is holding special hearings into Uber in response to rising anti-Uber protests, including one that last month shut off traffic into Montreal's airport.

All signs point to the provincial government, which took over primary responsibility for regulation of the taxi industry from municipalities in 1973, imposing some kind of new levy on Uber fares. Whether it will go as far as the Montreal Board of Trade's recommendation that the government itself put up the money to buy out the owners of taxi plates remains to be seen.

The board reasons that since the government set up the current quota system for taxi plates, it should bear the cost of unwinding that system. That does not mean plate holders should get full market value for their plates – which currently hover at around $160,000 in Montreal, down from more than $200,000 pre-Uber. Despite the drop stemming from Uber's arrival, most plate owners have seen the value of their investment increase substantially over what they paid for it.

The Australian state of New South Wales recently adopted this approach, with a scaled compensation model. Long-time plate owners will get much less than recent purchasers. The package will be paid for by a five-year tax of $1 per ride slapped on regular taxis and Uber alike.

Mr. Taillefer, however, is not waiting for the government to act before taking on Uber. In November, he launched Téo, a French acronym for "optimized ecological transportation," an all-electric taxi fleet replete with its own app and in-car WiFi and computer tablets. The new service's highly publicized launch drew a who's who of the Montreal business community and ended with a parade of Téo's distinctive green and white Kia Souls and Nissan Leafs through downtown. Mr. Taillefer went so far as to predict Uber's demise, in Montreal and everywhere else, within five years.

Since Téo's launch, however, its cars have been hard to spot, while Uber only seems to have grown more popular. On the eve of the parliamentary hearing, a pro-Uber petition drew 50,000 signatures in two days – and an enthusiastic shout-out on Twitter from local tennis star Eugenie Bouchard.

That has not stopped Mr. Taillefer from thinking big. He sees Téo's fleet growing to 1,000 cars by 2017 and 2,000 by 2019. (The province currently has about 8,500 traditional taxis, while Uber claims to have 8,000 Quebec drivers, although many of them are occasional.) Mr. Taillefer also plans an upscale fleet of Tesla limousines.

Unlike Uber's self-employed part-timers, Téo's drivers are full-time salaried employees, earning $15 an hour plus benefits, including employer contributions to the Quebec Pension Plan. Téo rents existing taxi plates for $260 a week, a cost that comes out to about $1.85 a ride. (Hence, charging $1.10 per Uber ride is only fair, he reckons.)

Mr. Taillefer is banking on Téo's triple bottom-line objective of "economic, social and environmental profitability" to give it an edge with eco-conscious Quebeckers. But he will still likely need help from the provincial government by way of a crackdown on Uber.

That may be on its way. Transport Minister Jacques Daoust spent most of Uber's appearance before the parliamentary committee attacking the company and its representatives, accusing them of operating illegally and evading taxes. He ordered Uber Quebec to open its books and provide him with a list of its Quebec drivers and how much it has paid each of them, to verify compliance with tax laws.

"You're not the one who is going to impose the [regulatory] model. We're going to impose the model," Mr. Daoust told Uber. "And I'm not sure you're going to like it."

Follow Konrad Yakabuski on Twitter: @konradyakabuskiOpens in a new window

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