I could not understand why taxi drivers did this until one of my students explained: the drivers sleep in their vehicles, and the seatbelt holders would prevent them from sleeping.
While this does not excuse the practice, it has made me feel sympathetic towards these drivers who eke out such a poor living that they cannot/prefer not to pay for a room to sleep in.
Like many other people, I feel uncomfortable travelling in these vehicles, but I compromise: instead of refusing to travel in them, I choose the front seat where there is always a functioning seatbelt.