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In this paper we propose an algorithm for taxi telematics system. The paper shows how the central call server, call customer, and an empty taxi co-ordinate with one another. With this algorithm, the central call server works efficiently in response to the customer call as well as for an empty taxi. Location history data is required for the central call server to provide a map display of 'needy' customer spots to an empty taxi. Location tracker tracks the location of the taxi and stores it in a memory structure which provides a history of the locations traveled by the taxi in order to use it in future to generate reports which help in post accident analysis. Other mechanisms such as state tracer and pickup pattern provide further analysis information about the location and the speed of the taxi.