Should The Fines and Penalties Be Income Tested in Australia?

A couple of weeks ago, I saw a Roll Royce was parked near Opera House in Sydney in a No Stopping area.

I parked in commercial paid parking near by to attend a social event at the Opera bar and was walking back to my car nearly two hours later and saw that car was still there. (Not sure if it was moved and was returned to the same spot, but looking at the way it was parked I don't believe that was the case)

When I first saw the car I thought driver must have been in a hurry (not that it was an acceptable reason to do this), then when I saw the car in the same place nearly two hours later, I thought the owner of the car doesn't care about the fine. More over there was plenty of available parking where I parked my car and also at the Opera House car park. It was so obvious that the owner of this car didn't care about money and has no respect for the rules.

So, I remember reading an article on a news website a while back where a driver copped a massive fine driving well over speed limit in a foreign country (can't remember which one) where fines are income tested.

I know this scenario doesn't exactly fit as above (as that was speeding related fine) but thought what our fellow ozbagainer's think of income testing fines.

Edit 1: All scenarios will have a min fine (so people who don't earn money e.g. some students, get to break the law for free)

PS: Yes, there is another argument about many people dodging tax including major corporations. Let's talk about that in an another thread.

Edit 2: 29/01/2016 I think this thread has served its purpose in getting opinion of fellow Ozbargainers.

At the time of writing 105 people are against the idea to 292 who are in favour of charging more to those who earn more. Though I acknowledge that enforcing this idea might be hard but I strongly believe that law doesn't affect everyone the same, in the end law makers need to consider what it is that they are trying to achieve when they write the law. Is it the behavioural change or is it just a money grab. May be it should be a balancing act which is not quite balanced.

Thanks for all the opinions to date.

Poll Options

  • 95
    Yes - all types of fine
  • 1
    Yes - only the traffic related (including parking)
  • 203
    Yes - only for repeat offenders
  • 16
    No - because they already pay more tax
  • 74
    No - It's not their fault they earn more
  • 15
    No - because any other reason

Comments

  • +7

    From an economics point of view, the reason why we have fines are to internalise externalities (i.e. a Pigouvian tax, for all the economists). If you were to income test fines, that would be, essentially, a subsidy on poorer people doing the wrong thing. This will lead to more poor people doing the wrong thing and, ultimately, we won't be any better off than before because the point of a Pigouvian tax is to reimburse society for harms caused. It doesn't matter if a rich guy or a poor guy is parked there, it's still the same disruption to traffic flow or whatever.

    Yes, it is an income redistribution problem and yes, I hate rich (profanity) who think they can do what they want because they're rich. Yes, I want to punch them in the face. However, economically speaking, it doesn't make much sense to do so. Socially, you might have a point in that it acts as more of a deterrent, but that's a different issue, in my opinion.

    • Economists don't punch people in the face, my economics lecturer was the tamest person I've ever met (unless you supported the Chicago school of economics, supported austerity or you are Tony Abbott, he might punch you then =P).

    • +1

      You can see it as rich people providing a subsidy to the poor doing the wrong thing. That's one way.

      The idea of a fine however, is to deter people from doing the wrong thing. A penalty may seem like a slap on the wrist for rich people, but for the poorer people, it can be seen a taking their dinner for a week. But of course, there is statistics which shows that poorer people do break the law more often, if that is adequate though, is a different story.

      • +1

        Yeah, but that's not an economic argument. Fines aren't meant to be a deterrent, they're meant to be a fair payment for harm that has been caused. On the one hand, you don't want to make fines $1,000,000 because then nobody would commit the offence and hence, no fine revenue will be raised. You want a level that maximises net social benefit, i.e. in simple language, achieves somewhat of a compromise between putting up with inconvenience and making fine revenue.

        • +1

          They're primarily a deterrent, and only secondarily a payment for harm caused. Your $1m argument confirms this (i.e. it shows that such a large fine is a huge deterrent).

          You're looking at it only from an economic perspective, and committing the fallacy of "making the reality fit the model". Fines don't exist because society needs $81 dollars for each time a loading zone is occupied by a non-loading zone vehicle - they exist to stop people from parking in such places. That's also how they work.

        • @Meconium: If you don't believe that society needs the $81, you're mistaken. Fine revenue makes up a reasonable amount of income in the state budget.

        • @paulsterio: Please reread my comment. I didn't claim that the community doesn't need the income from fines, I said that the purpose of them is to deter people from (e.g.) parking where they're not supposed to.

        • +2

          @Meconium: Okay, so why not make the fines $10,000,000 or why not start throwing people in jail for parking illegally, because you know, that'd be an even bigger deterrent. That's not really the way things work though - fines aren't really a deterrent, they're a payment to society for causing inconvenience. When you park illegally, you disrupt traffic flow, you cause other people to waste their time, you force inspectors to walk around and make sure you're not parked there,…etc. These things need to be paid for and that's what fines do.

          Whether fines are a deterrent or not is based upon how you view them - that's an opinion, which has nothing to do with the actual economics of the issue.

          If you make the price of the fine too high, people simply will not park illegally, which isn't necessarily what you want, because that means that you won't be making any revenue and guess what that means, it means normal people like you and me have to pay higher taxes to make up for the loss in revenue.

          Alternatively, if you make the price of the fine too low, the opposite will occur, people will park there too much and cause too much of a disruption that the amount paid in fines do not recuperate.

          Of course, in practice, it's not that simple, but that's what is happening in theory. It's a simple Pigouvian tax to internalize externalities caused by people doing the wrong thing - it's not a "punishment" per se, you can view it as one, but it isn't - it's just a fair payment for doing something. E.g. a fair payment for parking illegally and disrupting traffic flow.

  • +3

    It comes down to a question of what we have the fines for. Are fines merely a regulation or are they meant to change behaviour?

    I personally believe in the latter and therefore it makes sense to charge each an amount that will make them reconsider such behaviour in the future.

  • +1

    Make all do equal community service time. Works for all incomes.

    • Not everyone might be able to do community service. They might be too old, for example.

      But everyone has money.

  • +1

    Lose demerit points for shitty parking. That would be more of a deterrent, regardless of income, and easier and cheaper to enforce.

    • DPs are already being rorted…

      • No doubt, and that is also criminal and should be prosecuted accordingly.

  • +9

    I would like to see a process I call ramping. Akin to a financial credit score, your fine is determined by your history. We want to encourage drivers to be better drivers don't we? Then why not lower fines for first time offenders and then ramp up subsequent offences by 50%, 100%, 200%… for example?

    The guy in the rolls who parks willy nilly could be paying tens of thousands in fines for every offence. This can add up very quickly without the need for means testing.

    The one time offender is cut a break, after all we are all human and we all make mistakes, with an opportunity a learn a lesson, be given credit for a good driving record and hopefully if they are of good character better their "credit score".

    • Apart from the logistical issues, I do like the concept behind this idea. It would depend on the application.

    • +1

      This concept is very intuitive indeed. But I think there is still a loop hole in this system. If I were rich, I would pay for others to take the offend for me. Demerit point selling is an actual thing, so I don't see why there won't be a black market to support the rich should your concept becomes reality. They would still be paying a lot, but no where near tens of thousands.

      This concept however, is very supportive of the lower income. Like many people, I have made a few offences in my Ps, and I wish the fines were lower than what I had paid.

  • -1

    While we're at it, why not charge the rich higher prices for the same item at the supermarket.

    Higher income earners are already taxed different rates. This would simply be an additional tax on those who contribute more tax.

    In my opinion, we need less disincentives for higher income earners.

  • +1

    Before the fines are reviewed on these traffic offences, they should actually review the laws itself!

  • A couple of weeks ago I saw a Hummer taking up two handicapped car spaces. Should the owner get two parking tickets? How do you change the behaviour of someone that thinks they are entitled to park anywhere because they are wealthy enough not to care about the fine.

    • +4

      Maybe they had a hummerload full of disabled people?

    • +5

      Having a small ….. is considered a handicap. Give the guy a break.

  • -4

    Seriously this may have been my father. Not even joking.
    If it was, then it wasn't what you think and he had a reason to park there which I won't disclose.

    • +1

      Parking in a disabled space without displaying a disabled permit?

      Sorry, but no excuse will cut it. That's just pathetic. There are many, many eligible drivers in need of disabled spaces, and who rightfully have a permit to park there.

      Advantageous motorists who are too lazy to find parking elsewhere and who deprive the needy need to be thrown the book at.

  • What a ridiculous idea. Yeah, lets punish people more because they work hard and earn good money. The tax system is enough of a punishment for working hard and earning good money.

    • +1

      How about we actually punish them for breaking the law. If someone earns millions of dollars a year they don't give a damn about a $100 parking fine and will just do whatever the hell they want. It isn't punishing them for having money because if they weren't breaking the law they wouldn't be fined. That's like saying speeding fines are punishing people just for having cars.

    • -1

      "what a riduculous idea" should have been followed by ":" you think it's ok to punish people less because they work hard and earn good money…

      it might be lets punish people with an equal effect.

      If i earn 1000 and the speed ticket is 500, it will impact me a lot more than if i earned 10000.

      please don't answer duuh to me, but the scandinavian idea is based on equity (fairness) not equality (simply identical).

      you seem to forget a lot of people working hard earning good money might simply be screwing others over or had a better start in life, but i like to think that when our parents go to hospital they get good treatment regardless of their income, and thats where the tax money goes to (well i like to think so rather than incompetant lobby-subsidised politicians). Nobody would like a US health system.

    • I see we have a lot of temporarily embarrassed millionaires in this thread.

  • no becuase people like palmer pay prob less tax than me through all their schemes.

    • +2

      Palmer stores all his cash inside him.

      = No tax.

    • Does Palmer earn any money these days? Excellent scheme that one, paying less tax by turning a profitable business into a loss making one.

  • +1

    I wonder if they register the car to a foreign company, headquartered in cayman islands for instance. And whatever fines the car receive is assigned to a driver earning just under $30k a year. How will the law response to this?

    • Lol doesn't even need to be that complex, just set up a corporate entity, buy the car under that and 'lease' the car as a work vehicle.

      Since corporation is a seperate legal entity, it's not your car. No need for Cayman Island BS because it's not the same as tax evasion.

      • Lol just for fun. I thought if the car is still own by an aussie corporate, someone might say the law will look at how rich the business is instead of the drivers income hahaha so might as well go somewhere where income is invisible.

        But the main point is, as you have emphasized one more time, that there are always many loopholes for the rich to take.

  • +1

    From a deterrent point of view it makes sense that fines are relative to peoples income/wealth but it would be very hard to implement.

    • Very and the states with end up losing more money than they make as more and more of these infringement cases clog up the courts.

      Will probably force state govt to set up a traffic infringement tribunal. Only people i see making money from this scheme are lawyers.

  • Fines are not much of a deterrent to really poor people either. I have met young people often with thousands of dollars of train fare fines which doesn't bother them because they just pay it out of their benefits and they are resigned to the fact they will never completely pay them off.

  • +1

    How can this be enforced ? A rich one can hire a poor one to testify that s/he committed the offence to pay a small fee.

  • Only seriel offenders.

    In the OPs given scenario, if it were really such an inconvenience, they will just tow the vehicle. Money for everyone.

    Penalising the occasional offenders who earn more will just deepen the resentment between the social classes. Furthermore, the wealthy are likely business owners or service providers. If we increase the "cost" of living for them, that cost gets passed down. Certainly not a win win situation here.

  • So if I'm on unpaid leave and I break a law I get a discount on the fine?

    I'm happy for rich people to break the law and pay fines, as that's money the Government gets to use to improve the roads that isn't taken from me.

  • -1

    malcolm turnbull get out about in sydeny i see.

  • I think the best system would be to move away from monetary fines altogether and impose community service style punishments for these sorts of offences.

    In this way, you can have a unified and standardised system of punishment for everyone, and, also you can negotiate when the person performs their time.

    EG: a financially poorer person, who needs to work during the week can perform their community service on weekends, when they have free time. A financially richer person can perform their service during the week, when they might have more time, or vice versa, and, times can be negotiated.

    Some people might try and say that they're always busy, so, you give them an opportunity to do their time, say six months, and if they haven't done a certain amount within that time, or started at all, then either more time is added on and or they lose some type of driving privileges.

    Nobody wants to be seen doing community service, so this would be a good alternative, I think.

    • -1

      Would be a good initiative, unfortunately no chance of being implemented as it would cost too much (lost fine revenue + people to supervise community service)

    • Lol this would be crazy hard to enforce. I can think of many existing ways the rich use to get out of community service already, incl:

      • Court is not going to assign a person to watch you do the community service. Failing to comply with the order is contempt of the court, pay that fine as well and off you go. State doesn't have resources to keep pushing for this.

      • have company write a letter stating not having you will be disruption to their usual business, courts apply heftier fine, pay and go.

      • dispute on medical grounds, physical / mental disability / injury.

      • contest the order and delay until it goes away.

      Only people this will affect are the poor to middle class, who lack the funds to dispute this. Ppl on lower income esp might lose their job due to not being able to go work / get evicted / become homeless.

      Good idea but won't work out.

    • I appreciate both the responses; I think that they're both valid points.

      I don't think the current system is working.

      On the other hand, I can't see someone in Australia being fined $1,000,000.00, for example, for some form of traffic infringement.

  • You can recover money lost. But you can't recover lost time.

  • Switzerland has a law similar to that which is not bad idea. That RRoyce driver is happy to get a fine as it is probably still cheaper than vallet parking around opera house.

  • -1

    Before the negs come in… revolutionary idea - cost of damage done to an expensive car > damage done to cheaper car. Repeat offenders get their back tyres punctured ho ho ho. This'll also make people want to spend less on cars, thereby reducing their materialism and moving towards more reasonable forms of transportation.

  • +1

    When you work hard and earn good money you should be able to get out of fines or pay small fines, right?

    Like this guy:

    A mother and daughter-in-law who were injured when Salim Mehajer lost control of his $300,000 Ferrari are suing the Auburn deputy mayor for damages.

    deputy mayor of Auburn, Mr Mehajer was convicted of negligent driving in the Local Court and sentenced to 150 hours' community service and banned from driving for a year. But the conviction was overturned on appeal to the District Court.

    Mr Mehajer's lavish wedding party in August - with four helicopters, a fleet of stretch limousines and a squad of motorbikes - sparked renewed interest in his business dealings. He was fined $220 for illegally blocking Frances Street, Lidcombe, during filming of the festivities.

    He is now facing legal action by the NSW Office of Local Government over allegations he voted on council rezoning plans without making a full disclosure of his property interests.

    Mr Mehajer has previously locked horns with the Department of Fair Trading, after it refused to renew his building contractor licence in June 2014 on the grounds he was "not a fit and proper person".

    Fair Trading's decision was overturned by the NSW Civil and Administrative Tribunal, which found Mr Mehajer was "an individual of considerable standing in the community".

    http://www.smh.com.au/nsw/auburn-deputy-mayor-salim-mehajer-…

    Mehajer accuses police of victimising him after he was issued with two penalty notices, then stopped 25 minutes later for ignoring police instructions:

    Auburn's controversial deputy mayor Salim Mehajer has lashed out at police and told them 'target real criminals' after he was stopped twice in one night for driving an unregistered Ferrari without a licence.

    Police stopped Cr Mehajer on Canterbury Rd in Punchbowl, in Sydney's south-west, after they saw a white Ferrari driving erratically about 11pm on Saturday in his latest run-in with the law.

    Despite being told not to drive the vehicle, less than 30 minutes later different officers observed him continuing to drive the car

    http://www.dailymail.co.uk/news/article-3288699/What-don-t-d…

    • +1

      That Selim guy is a massive, massive tosser.

      • This guy is a good case for a new way of penalising wealthy repeat offenders.

        Imagine if anyone else tried to block a busy city street, would we get fined $220 because of our position in the community or would we be spending some time in jail with a massive fine? Then he feels entitled to not register his Ferrari, not have a driving licence and ignore police warnings.

  • No thanks. More bureaucracy just means more reasons to have a council (taxes) and more abuses of power.

  • +1

    I'm really struggling lately and a fine would push me over the edge and have an enormous impact on my life, probably missing rent/food (food would be more likely). Bit different to someone on 120k+ a year who would laugh it off. Doesn't seem quite fair. Of course I drive like a granny to suit our nanny state.

    • I drive like a granny to suit our nanny state.

      That's actually a very responsible way of driving.

    • Apart from the fact that a fine may also push someone on 120k+ a year over the edge :P

  • -4

    Forcing rich folk to pay higher fines isn't enough. The government should confiscate all their wealth and redistribute it to the poor. After all, they got rich by exploiting the poor in the first place. Ever wonder why everything is so expensive in this country? It's because the chardonnay swilling, opera going, caviar chewing oligarchal elite are ripping you off, overcharging for everything.

    Socialism 101.

  • +2

    Poor people who will never be rich think rich people pay more tax !

  • Damn… Just realized No Standing zones disappeared in 2008 lol

    • ??

      • NSW used to have no standing, no stopping and no parking.

        They removed no standing in 2008 to match the Australian Road Rules, I just never noticed until now (googled).

  • I remembered copping a $500 + 3 demerit point when I was in my red P and a student. I was helping a friend move his house uptil 1 am, we were all tired and everyone forgot that I was on my reds and was past the curfew limit of 11pm. And I'm not gonna leave my friend to train it home from Minto at 1am. Nek minit, 3 police men slabs a $500 fine + 3 demerit on us.

    Keep in mind, none of us was intoxicated and there were two green-P platers as passangers. And when one of the green-P plater offered to continue driving back, the police said it was fine that the red-P plater continued to drive us back. Pretty much revenue raising.

  • +1

    It's quite ironic that most of the things you guys are suggesting already are applied in a lot of ways.

    The inequality being discussed is really only applicable to offences being dealt with by penalty notices.

    If a matter is taken the court however this is where the judge or magistrate looks at the circumstances of the offence and applies a fine or punishment that is appropriate for those circumstances.

    A magistrate will not impose a fine on an individual on welfare benefits who has no capacity to pay it. They may likewise impose community service where they view it to be suitable.

    Unfortunately it would be far too complicated if all fines required the careful weighing of individual circumstances for this reason the government fixes certain financial penalties that apply across the board to attempt to strike a reasonable middle ground

  • I think all fines should be means tested and they should be sufficient enough to hurt the person having to pay them, so as to make the person not want to do with wrong thing in the first place.

    $200-400 would hurt me.
    Someone earning a couple of mill a year isn't going to give a flying f about a couple of hundred … so charge them what will hurt - make it 20-40k - and then watch the road stats come down quick smart.

  • A couple of demerit points along with the fine for the car owner (irregardless who drove the car) will be ideal. Rich people hate losing things that money cant buy…

  • -1

    Alright I'm gonna say most people don't drive their Rolls Royce themselves. Especially the big ones.

    The owner was likely dropped off for an event and then was picked up.

    With fines based on income (the country is somewhere like Germany or Sweden) I disagree. That would just mean that people on a low income could park where they want and get away with a $10 parking fine…

    Also no towing company in their right mind would tow a Rolls Royce. If they scratched it the owner would waste no time in suing them (I certainly would sue)

    • You are missing the point (as many other people here). Low income earners would not pay $10 fine, the idea is to have base rate for fines (let say at the level they are now) so that cost of enforcing the fine is feasible and that fine has it's desired effect. No one would pay less then this nominal base rate that would still be nothing to sneeze at by Joe Average. But then for higher income earners the fines would progressively increase and be income/means/assets tested.

  • I don't agree. I don't know about you guys but I don't know anyone who upon seeing a fine genuinely does not care because they earn way too much money. People that I know, even those on good 6 figure incomes, still get annoyed at getting fines. They got a fine typically because they made an honest mistake or they flout it for non-monetary reasons, not because they don't care because theyre so rich.

    So what ends up happening is that honest mistakes like leaving your foot on the pedal a bit longer, missing a change in speed limit sign, or misreading a parking sign ends up costing higher income earners more despite them making the same honest mistake that a lower income person did. Fair? Not really I dont think.

    And the uber rich people with stinking attitudes you were trying to target (because believe it or not, a lot of uber rich people in this country still like to live within the law)? Seriously, have you considered how many people you are actually trying to target?

    There are better ways to target deliberate intentions or repeat offenders, such as higher fines for multiple infringements (like the lost passport fee), and/or maybe the other way like discounts on your fine for periods of good behaviour. And you target the real nuisances in society.

    Under the income based fine system, imagine having a situation where you had a repeat high range speeding offender who is a welfare recipient being fined say $500, whilst a very wealthy person who overstayed their parking meter because he genuinely lost track of time being fined say $600. Fair?

    • Oh and another thing, % of income fines don't affect people equally.
      Say you have 2 ppl each earning $200k.
      Person 1 is the sole breadwinner, has committed to a mortgage and other living costs, has a partner and 3 kids to support.
      Person 2 is single, no dependants, lives in parents basement (its a super nice basement, and he's cheap).
      A $500 fine does not affect each of them the same way. So what then? Make another adjustment for disposable income?

    • Your example of a high range speeding, poor, welfare person that cannot afford to repeat offend, but they do in your example (unless they are rich) and the genuinely lost track of time, overstayed parking, poor rich person does not really work for me, when I think of fairness.

      I do not know why it is such a worry to some people. I have managed to never get a parking ticket, and only the odd, well deserved speeding fine years ago, when I was driving my Ford Cobra, but that is another story :) Are some people getting fined on a regular basis?

  • A fine for parking in a no standing zone would be cheaper than a door ding from parking in a car park I suspect.

  • As someone who works in the public service, this idea (while theoretically possible) terrifies me just thinking how much of a bureaucratic nightmare this would be to implement, likely requiring 3737975437799 more public servants to administer.

    Also the rich would no doubt be crying discrimination.

  • -1

    What a ridiculous idea. While we're at it, lets do the same for jail sentences. An 80 year old should probably only be sentenced to a week or 2 for murder because they have so little time left and juvenile offenders should be given years for littering because they have so much time left and don't value it at all.

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