Tuesday, March 26, 2013

Speeding Tickets- Promote Safety or Revenue?

Decreasing tax bases are putting pressure on local and state governments to find additional sources of revenue to fund the services they provide. The general public’s opposition to any sort of tax increase has put additional strain on governments on where to look for more revenue. As a result, governments have made huge increases in traffic violation fines, especially speeding tickets in recent years.

No one is sure how many traffic tickets are given out, because local governments often keep that information confidential in order to avoid sharing revenues with state governments. It is estimated that between 25 and 50 million traffic violation tickets are given out each year. The cost of the tickets varies by offense and by state, although the average cost for a speeding ticket is $150. But the total cost of speeding tickets can fluctuate depending on how fast the driver was actually going and other assorted court costs and fees. At the average cost, local governments around the nation make between $3.75 to 7.5 billion in profits each year off of traffic tickets.

A study in North Carolina found that as the number of traffic citations issued will go up the year after a decrease in government revenues. The study showed that a one percent decrease in local government revenues will result in a 0.32 percentage point increase in the number of traffic citations given out the next year. It seems that when governments see decreases in their current revenue streams, they look elsewhere to fill the gaps. One of the easiest places is traffic tickets because there are no restrictions as to how high they can be raised, unlike other revenue options. This is evidence that governments utilize traffic tickets as a source of revenue. But during years when revenues increase, the following year does not see a significant decrease in the number of tickets given out.

 Other studies with data from economic downturns show that a 10% decrease in revenue growth will result in an increase of 6.4% in the growth of traffic citations. More studies have been conducted to determine whether traffic tickets are still mainly an attempt to improve safety for drivers on the road, or if they have become mainly a revenue tool for local governments, especially with the increase in red-light cameras installed at intersections. Governments maintain that the red-light cameras are there to improve safety. These red-lights have cut down on drivers running red-lights but rear-end collisions have increased at these intersections, making some question whether the cameras are there more so to collect revenue instead of actually improving safety. Governments often share ticket revenue with the manufacturers of the cameras.

The United States is not the only country that has seen high speeding ticket costs, and in fact some might be glad the US does not follow suit with some European countries that calculate the amount of fines based on reported income. This practice has led to the highest fine in history to happen in Finland, where a driver going 50 mph in a 25 mph received a $200,000 fine because he earned $11.5 million in 2002

Finally here is a link that shows how different traffic violations can affect your car insurance rates.

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