Exactly how much more passengers pay will depend on factors including the time and day of travel and the distance.

The rises are expected to be in place within six weeks.

The greatest rise will be for short trips and at times of high demand such as Friday and Saturday nights.

This is a bid to tackle chronic problems for passengers — short fare refusal by drivers and a shortage of taxis on those nights.

It is hoped raising night-time fares on Fridays and Saturdays will encourage more drivers to work then.

The increase follows a review by the Essential Services Commission, delivered to the state government last month.

The government has accepted all of the rev-iew recommendations.

Transport Minister Terry Mulder said the rise would lift the inc-ome of drivers and operators, and, in turn, improve customer service.

“We want to support the industry in transforming and we realise that if we want better drivers and better services, we need to fairly compensate those providing these services,’’ Mr Mulder said.

There will be three tariffs — day (9am-5pm); overnight (5pm-9am), and peak (10pm-4am, Friday and Saturday).

The taxi flagfall — the cost of starting the meter — will rise from $3.20 to $4.20 (day), $5.20 (overnight) and $6.20 (peak).

The cost of a trip less than five kilometres in the Friday or Saturday peak will increase by about 28 per cent, a 40-kilometre trip during the day just 1.5 per cent — about $1.23.

Taxi Services Commission chairman Graeme Samuel said the changes would “address fundamental flaws in the pricing system”.

“Higher rates at peak times will provide more incentive for cars to be on the roads when they are needed,” he said.

“Drivers will stand to earn more, which is important for keeping experienced people in the industry and also attracting new drivers.

“Combined with our new knowledge test and a fairer driver agreement, these changes mean better drivers.”

The industry has called for a fare rise for more than two years, arg- uing the six-year freeze on fares had made operating a cab less viable.

In its submission to the Essential Services Commission, the Victorian Taxi Association called for a minimum fare to cut short fare refusal, and also for the flagfall to be raised to $10 — much higher than what the amount the government has approved.

It opposed a new driver agreement that gives drivers 55 per cent of the fare box, which is due to come into effect from July 1. The the fare box is now split 50-50 in most agreements.