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At present 127 vehicles are operating through taxi businesses in the resort - Queenstown Taxis has 71, Green Cabs, 45 and Corporate Cabs, 11.
Queenstown Taxis managing director Grant Scannell estimated more than 50 independent operators had set up in the resort since the legislation change in October 2017, and there was ''no room on the stands''.
''All of these extra players are affecting everyone else.''
He believed the permits - which could be revoked on a single, verifiable breach - would help to ensure compliance by all.
''Because the plan is for the permit to be attached to a vehicle and because vehicles have multiple drivers, it is a deterrent [against non-compliance].
''I fully support that the council's intending to do something - everyone else has been lobbying the government to no avail.
''Our cab drivers are ambassadors for our community.
''There are a lot of people that come in to New Zealand through Queenstown Airport.
''The first person they speak to is a cab driver.
''They want clarity, local knowledge [and] to travel in a safe, well-priced manner, plain and simple.''
Green Cabs South Island operations manager Martin Amott said permits ''can only be seen as a positive'' and commended the council for ''taking the lead''.
''Since the changes to the legislation Queenstown has become a preying ground with some independent operators taking advantage of both holidaymakers and locals with regular reports of inflated prices and/or refusing to leave a taxi rank for less than $25.
''The industry has also become saturated, which naturally has a knock-on effect on to congestion and parking in central Queenstown.''
The proposed $500 fee per permit would be subject to public consultation and the council was planning informal drop-in sessions for drivers and owners before the planned introduction on July 1.
A transition period would apply before enforcement begins on October 1.