NYC Introduces "Crash Tax"

The last time we discussed the idea of “crash taxes,” it kicked off quite the debate. After all, it’s a question that cuts to the core of political philosophy: to what extent should individuals take responsibility for using public resources? As motorists, would we rather know that we’ll be taken care of in case of a crash, or would we rather have financial incentives to take care to not crash? Well, New York City has decided that, philosophy aside, it simply doesn’t have the money to send emergency responders to car crashes without charging some kind of fee. The WSJ reports

The FDNY plans to start sending out bills July 1. A vehicle fire or any other incident with injuries will cost $490. A vehicle fire without injuries will cost $415. And incidents without fire or injuries will cost $365. These charges apply to every vehicle involved in the incident.

Except, of course, when they don’t…

One of the major criticisms of “crash taxes” is that sometimes nobody is at fault for an accident. Why charge a taxpayer for an accident that he or she didn’t cause but couldn’t avoid? A FDNY spokesman clarifies

If we’re talking about an act of God situation, a tree falls on car, then we have discretion, obviously not to bill in those cases. If the accident is exceedingly minor, we show up on scene and nobody needs medical assistance and there’s no fire or anything like that, then, we have discretion.

But how much discretion? How will first responders be able to judge whether a motorist is at-fault or not? If city employees are found to be unevenly enforcing these fees, there will be lawsuits. And that’s not the only issue:

New York City officials project this policy will generate $1 million in annual revenue. Insurance officials said many auto insurance policies don’t cover these types of charges, and if companies are mandated to cover the charges, premiums will increase.

If you’re going to charge fees for first responders, the last thing you should do is force insurers to pay them: you lose the added incentive to not crash, and simply transfer the cost to every motorist by increasing the rates for mandatory car insurance. In any case, we’ll be watching NYC’s experiment with crash taxation with interest…