Passenger service Uber may halt its New Zealand expansion if a government proposal for the company to operate under the same regulations as taxis goes ahead.

"We would stay in Auckland and Wellington with our current products but we wouldn't expand our current product in any way and we wouldn't introduce new products," said Brad Kitschke, Uber public policy director for Australia and New Zealand.

The review of regulations covering small passenger services began at the start of the year, and has outlined five options and recommended one with fewer rules that apply to all operators in the sector. That includes taxis, private hire cars, shuttles, dial-a-driver and ride-sharing services. The proposal suggested the cost of licensing be dropped from $1,500 to $800 but Kitschke said the cost and time was still too high, and was a step backwards for the company.

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"If the current proposal goes ahead we won't be able to offer other products being offered elsewhere and that's a real shame," Kitschke said.

"This review was supposed to achieve a more innovative and different outcome for New Zealand and it certainly hasn't done that - in some ways it's gone backwards so we're pretty disappointed."

Uber, a mobile app service that lets people book rides, has been resisted by taxi operators, who have to function under tougher regulations that impose extra costs.

Uber has argued it is not a taxi service, it links passengers with drivers who are private contractors. The app is already available in Auckland and Wellington and more of its products and services, including a car-pooling service, were expected to be launched in New Zealand, but Kitschke said under current regulations this was unlikely to happen.

"We'd love to introduce the ride sharing product into New Zealand, but for that to be effective and to work it means that we need to have the basics in place," Kitschke said.

"So we need to have a background check for criminal history and we need to have a drivers issue check and a vehicle inspection, but how those things can cost $800, I don't know and why they're going to take 8 weeks is beyond me."

Taxi Federation chief Roger Heale said he welcomed the release of the paper although the "devil is in the detail".

The paper says Uber should check drivers' log books and vehicle safety and limit drivers to the seven-hour time limits applied to taxi drivers.

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The current requirement for taxis to install security cameras could be waived under some circumstances.

Panic alarms would no longer be required.

The rules on pricing would also change. Before the trip starts, drivers or the company at the time of booking would have to agree the basis of the fare with passengers, either a set fare or per kilometre rate rather than the fixed price or meter presently used in taxis.

The Ministry of Transport also suggests removing requirements for drivers to be able to speak English as the Transport Agency says few taxi drivers are tested for this requirement anyway.

It also suggests removing an area knowledge test in urban areas, designed to ensure drivers use the most direct route, because new technology such as GPS systems mean passengers can track this themselves.

The review acknowledges rules developed in the 1980s haven't kept pace with changes in technology or customer expectations.

It says the Government wants to mitigate the safety risks that exist because drivers and passengers have little information about each other.

Public submissions on the consultation paper are open until February 12.