Should traffic fines be based on your income?

If you think traffic fines in Australia are expensive, be grateful you don’t live in Finland or Switzerland – at least if you are a high-income earner!

Traffic fines are not a fixed amount in those countries, but rather take into account how much money a person earns. This means that the more you earn, the more you pay – and you can pay a lot as one Finnish millionaire found out last week when he was hit with a $77,000 traffic fine for driving at 103 km/h in an 80 km/h zone.

Under the Finnish traffic law system, once a person has been caught speeding, authorities will use the information from their latest tax return to determine the amount they will have to pay as a fine. This system has, unsurprisingly, caused numerous complaints from wealthy Finnish drivers who resent having to pay tens of thousands of dollars in speeding fines, many of them for what would be considered relatively minor transgressions.

This system makes our traffic fines look insignificant in comparison, especially for those who earn higher than the average wage. While in Finland the price for a traffic violation depends on a complex calculation based on your income, living expenses, severity of violation, and how many dependents you have, in Australia the rates that are imposed are set and are usually no more than a few hundred dollars.

What is the logic behind Finland’s system?

The system in Finland is based on the idea that fines are an alternative to a custodial prison sentence and for the average working person, spending time in prison would have a significant impact on their earning potential and income. The loss of income incurred as a result of a prison sentence would be proportional to the amount the person was earning, so fines should follow the same principle.

There is also a common belief that small fines won’t act as any kind of deterrent to high-income earners and they should be penalised just as much as lower income earners when they incur traffic violations. A few hundred dollars can be considered pocket change to someone who has an income of several million, while for a student or an unemployed person, a few hundred dollars could cause them to suffer serious financial difficulties.

Finland is not the only country to implement this system; Switzerland also has a similar system and fined one motorist more than $1 million for speeding in 2010.

Should we have a similar system here in Australia?

Some Australians believe that it would be fairer for fines to be based on income rather than a set figure for everyone. This is because the current system of flat rate fines imposes far more difficulties on low-income earners than it does for the wealthy.

The system of going by a person’s taxable income, or even their income after tax, does have a number of disadvantages though, which could result in unfair treatment, especially for those who may be income rich but asset poor, as opposed to those with a lower income but higher assets.

People who fall into the former category could end up with a much higher fine than those who fall into the latter category, even though those with a lower income and more assets may be just as wealthy as those with a higher taxable income.

It would also be difficult under the current system for the federal government to gain ready access to people’s tax returns, which could lead to administrative headaches and increased costs and time required to obtain the necessary income information to make an informed decision.

If the law was changed we could also expect to see a lot more people choosing to challenge or appeal speeding fines in NSW and across Australia, rather than just paying the fine and moving on. If hundreds of thousands of dollars are at stake, people are far more likely to seek legal advice and defend themselves from having to pay. This could in turn lead to slower case processing times in courts, and increased workloads for everyone, leading to a less effective system.

Although there are positives to the idea of making traffic fines income-based, there are also potential pitfalls, which would need to be addressed to make sure the system worked fairly and didn’t lead to further problems or unfair penalties.

Ugur Nedim

Ugur Nedim

Ugur Nedim is an Accredited Criminal Law Specialist and Principal at Sydney Criminal Lawyers®, Australia's leading team of criminal and traffic defence lawyers.