Leges Dubiae
Where you don't look for legal advice, because I'm not a lawyer
Tuesday, October 02, 2007:
A new way to beat traffic fines
Decisions of the High Court of Australia, while not saying so in as many words, have clearly implied that stamp duties imposed on new cars by State governments are unconstitutional (that means super-illegal, so illegal that no parliament can legalize them). So if you have ever paid stamp duty on the purchase or registration of a new car, you have a stick to beat the State with — e.g. if the State is unreasonably demanding, in the form of a fine, money that you have already paid in the form of stamp duty.
Contents
(a) New cars, not used cars
(b) State fines, not council fines
(c) The importance of plausible deniability
(d) Not only traffic fines, but all State fines
(e) Territories included
A matter of principle
Why am I writing this? Certainly not to excuse traffic offences, especially those that endanger life and limb. Unfortunately however, a wide range of traffic offences are punishable by fines. That raises five problems:
- As the fines are not apportioned to capacity to pay, they punish the poor more harshly than the rich for the same offence. For the rich, a fine may represent a few minutes' income and takes a few more minutes to pay. For the poor, the same fine may represent a whole week's income and its consequences may be felt for months or years afterwards. As fines are already expressed in terms of penalty units to facilitate indexing for inflation, it would be a simple matter to express a "penalty unit" in terms of some measure of capacity to pay; but, to date, there has been no political will to do so. While the recent practice of allowing the poor to pay fines by instalments has reduced the likelihood of imprisonment for non-payment, it has further enforced the inequality of financial punishments. We must conclude that punishing the poor more harshly than the rich is not an "unintended consequence" of the system, but one of its goals.
- Unlike most other debts, unpaid fines are not cancelled by bankruptcy. Considering the ease with which wealthy offenders can pay their fines, one might argue that an offender driven to bankruptcy by a fine has already been punished too much. But so determined is the State to punish the poor more harshly than the rich that it is still not satisfied; it wants to prolong the punishment beyond bankruptcy. This practice defeats the ostensible purpose of a fine, namely to bring the matter to a close (the word fine comes from the same Latin root as final and finish). It also defeats the purpose of bankruptcy, which is to give the debtor a fresh start.
(Don't bother pointing out that bankruptcy law in Australia is a Federal prerogative. That the States have a Federally-legislated right to pursue fines beyond bankruptcy does not oblige them to enforce that right. The States, like all other creditors, can forgive or settle debts. And don't bother claiming that the sequestration of fines is designed to protect other creditors. In fact it encourages insolvent offenders to offload fines onto their creditors by prioritizing fines over other bills before they go bankrupt, or by declaring bankruptcy in order to free up income to pay the fines — unless, of course, the poor aren't supposed to know the bankruptcy rules!)
- Many traffic offences are induced by insufficient, confusing, or distracting signage. But the offenders (or rather the victims) cannot escape conviction on such grounds, because (a) ignorance of the law is no defence, although politicians routinely pass laws without reading them, (b) traffic offences are offences of absolute liability, for which even a reasonable mistake of fact is no defence, and (c) the law does not provide a general protection against entrapment. (Does anyone detect a pattern here?)
- When an offence is punishable by a fine which is paid into consolidated revenue, the Executive Branch of government has a financial incentive to induce people to commit the offence, whereas the first duty of the Executive Branch is to ensure that the laws are obeyed! This is the clearest possible conflict of interest and occurs at the highest possible level. And of course it helps to explain the aforesaid problems with signage.
- The State makes no effort to ensure that the person legally liable to pay the fine is the one who ultimately pays it. Fines can be paid vicariously or even anonymously. Such lack of interest in punishing the right person is inconsistent with any genuine desire to deter offences, and shows that the State simply wants the money. (That's why the State doesn't care if offenders use the bankruptcy laws to offload fines onto their creditors: the State still gets the money!)
Furthermore, duties on new cars, like all transaction taxes, impede the supply of goods and/or services and consequently raise prices, increasing inflationary pressures and raising the so-called natural rate of unemployment, which is the minimum unemployment rate that causes enough wage restraint to give stable inflation. This in turn raises interest rates, because the Reserve Bank sets interest rates so as to maintain unemployment at the "natural rate", which is called "full employment" in clause 10(2)(b) of the Reserve Bank Act. Yes, folks: "full employment" means a sufficient rate of unemployment to keep employees under the thumb.
In contrast, holding taxes on land-like assets — that is, on assets can cannot be produced or imported by private effort — have no such ill effects, because they don't penalize any productive activity. Moreover, because the supply of land-like assets cannot be increased in response to demand, the values of such assets are competed upward until they absorb the economy's capacity to pay. It follows that transaction taxes, together with the cost of all the economic damage that they cause, ultimately come out of the values of land-like assets. So do holding taxes on land-like assets, except that there is no economic damage. So if transaction taxes were replaced by holding taxes on land-like assets, not only would there be more wealth-creation and less unemployment, but even the owners of land-like assets would be better off.
Accordingly, I hold that governments should raise revenue from holding taxes on land-like assets. Duties on new cars don't fit that prescription. Neither does tricking people into committing offences punishable by fines.
But, having set forth all these moral arguments, I do not imagine for a moment that State governments are going to do the right thing simply because it is right. They will not do the right thing until they find themselves in a trap from which doing the right thing is the only escape. Then they will claim to be doing it solely because it is right! To the political class, perhaps more than to any other, we may apply the variously attributed dictum that "When you've got 'em by the [gοnads], their hearts and minds will follow."
The stratagem
The "trap" in which the States find themselves is this: The duties levied by Australian State governments on sales or registrations of new cars are almost certainly duties of excise, in which case they are unconstitutional. While the High Court has not yet ruled them unconstitutional, the past rulings of the Court on related matters indicate that if the duties in question were challenged before the Court, they would almost certainly be held unconstitutional (for reasons explained in the Appendix). If the duties imposed by a particular State were struck down, that State would not only lose a source of revenue but also owe millions or billions of dollars in refunds. The Federal Parliament might come to the rescue by imposing a 100% "windfall tax" on such refunds, so that taxpayers would not bother claiming them. But a prudent State would not want to bet so heavily on Federal intervention.
Is the State going to risk all that in order to extract a lousy $100 or $1000 fine from you? Not likely. So, if you have a good reason for challenging the fine, I suggest a letter along these lines:
... I object to the fine on the grounds that [enter legal defence and/or special circumstances here].
Also note that I have paid $x [or a total of $x] in new-vehicle duty into the Treasury of this State (see attached). I believe that this duty is a duty of excise and as such contravenes s.90 of the Constitution. Accordingly I submit that, even if my objection to the fine is invalid, the fine [or part of the fine] has already been paid in the form of the unconstitutional duty (not to mention the accumulated interest thereon).
If necessary, I will defend the above positions in court.
If financial difficulty is one of your reasons for objecting, you could then add something like:
If the court upholds the fine but refuses to consider whether it is offset by any vehicle duty owed to me, I will then find it necessary to initiate separate proceedings for a refund of the duty, in order to obtain sufficient cash to cover the fine.
The hope is that the State, rather than risk any litigation on the legality of new-car duties, will make an executive decision to drop the charge or waive the fine (or the "unpaid" part thereof).
N.B.: Don't say "If you don't drop the charge, I'll challenge the new-car duty," or anything to that effect, because that might be construed as an attempt to interfere with enforcement or prosecution (and the State would surely be vindictive enough to construe it that way). First state your objection to the fine. Then state your claim that the disputed fine (or part thereof) has already been paid. Then indicate what (if anything) will need to happen if the latter claim is not entertained.
Limitations of the stratagem
(a) New cars, not used cars
If you have only paid duty on used cars in the relevant State, you're out of luck. Duties on sales of used cars or on transfers of registration of used cars are apparently legal. Only the ones on new cars can be held to be illegal "duties of excise" (see the Appendix).
This of course has the unfortunate implication that poorer people are less likely to be able to use the constitutional threat when objecting to fines. But if people who can use the constitutional threat have their fines waived on other grounds, the resulting precedents may help those who can't use the constitutional threat. And, as we shall see, any fines that are waived will tend to be waived on "other" grounds.
(b) State fines, not council fines
Local councils are masters of raising revenue from inadequate or confusing parking signs. The technique is especially attractive because the burden falls preferentially on people who lack local knowledge — that is, on visitors who don't vote in elections for this particular council and therefore can't settle the score at the ballot box.
Brisbane, for example, has a Central Traffic Area in which parking is limited to two hours "except as signed". In other words, if a parking spot inside this area has a limit of two hours, there is no visible sign warning you of this fact. The only warning signs are above the roads leading into Central Traffic Area. These "boundary signs" satisfy the political requirement of "informing" you of the rules while minimizing the risk that you actually get the information. The council says the boundary signs are more "cost effective" than interior signs. Indeed they are; interior signs would be too expensive because too many people would be tempted to obey them.
But whenever a fine is payable to a local council, the council is not going to waive it in response to any legal threat to a State-imposed tax such as the duty on new cars. That's the State's problem, not the council's problem.
(c) The importance of plausible deniability
If you claim a legal defence or special circumstance and threaten to make an issue of new-car duties, the State can pretend that it is waiving the fine solely because of the legal defence or special circumstance; in other words, it can plausibly deny that its decision has anything to do with the alleged illegality of new-car duties. And you can say "Yeah, whatever." But if your objection relies solely on the claim that you have already paid the fine in the form of new-car duty, the State is less likely to waive the fine, because that could be construed as admitting what the State doesn't want to admit: that new-car duties are unconstitutional.
But don't make up stories about mitigating circumstances, nor misrepresent your financial position, nor overstate the amount of duty you have paid, nor count used-car duty as new-car duty, nor count duty paid to another State unless you propose to sue that State. Any such false pretenses will get you into far worse trouble than a simple traffic offence. (Concerning legal defences against speeding charges, see e.g. Speeding Fine Consultants.)
One implication of the above is this: If it's a fair cop and you can afford the fine, you probably have to wear it. (In other words, I meant it when I said that I wasn't in the business of excusing traffic offences.)
Meanwhile, the State parliament will quietly abolish duties on new cars — not because they are bait for future constitutional challenges (oh, no, of course not), but because new cars have lower greenhouse gas emissions. With luck, the parliament might even redefine "penalty units" in terms of capacity to pay — not because those who can't pay are threatening to seek refunds of new-car duties (oh, no, of course not), but simply because the government has (suddenly and inexplicably) found a conscience.
(d) Not only traffic fines, but all State fines
As local governments have discovered that it is more lucrative to fine motorists for illegal parking than to charge them a reasonable fee for legal parking, so the States have discovered that it is more lucrative to fine railway passengers for not having tickets than to sell them tickets — and again the burden falls preferentially on visitors who can't take vengeance at the ballot box. So instead of ticket sellers on the trains — as there used to be when I was a kid, and as there still are in more civilized countries — there are only inspectors who will fine you if you don't already have a ticket. Obviously the inspectors are more "cost effective". (In Queensland I've even seen police on suburban trains, apparently doing nothing but inspecting tickets and fining "fare-dodgers".) If the fines were truly intended to encourage people to buy tickets, the purchase of tickets would be made as easy as possible. Instead, it is made difficult, especially for the aforesaid visitors who don't know the system. Stations are not staffed after hours, or not staffed at all. Ticket-vending machines don't accept notes. There are no change dispensers. Queues form behind the machines. If your train pulls up while you're standing in the ticket queue or just arriving on the platform, you can either miss the train or cop a fine. This is entrapment, pure and simple.
But if the fine is payable to the State, you have a comeback — provided, as usual, that (a) you can cite a legal defence or special circumstance (of which there are plenty in the preceding paragraph), and (b) you have paid some new-car duty to the same State.
(e) Territories included
The High Court has ruled that the exclusive power of the Federal Parliament to impose excise duties is exclusive not only of the States, but also of the Territories. So in this article, you can generally interpret "State" as "State or Territory", and "States" as "States and Territories".
Also note that the difficulty concerning fines payable to the local council does not arise in the ACT, where the Territory government has the functions of both a "State" government and a "local" council.
Risks
If you challenge a fine by the method that I have suggested, you are hoping that the State will waive the fine rather than risk a constitutional challenge to new-car duties. You are not hoping to proceed with such a challenge. But if push comes to shove, should you proceed?
That of course raises another question: How certain is it that new-car duties imposed by the States are unconstitutional? If the High Court were to find that such duties are legal, it would have to reverse its past rulings on at least one key question of law (see the Appendix). While this is unlikely, it cannot be absolutely ruled out. National supreme courts sometimes change their minds in the light of experience, e.g. in order to remove newly discovered conflicts between old rulings. Sometimes they even change their minds simply because former judges who held one opinion have been replaced by new judges who hold another, although such reversals are widely frowned upon and tend to provoke indignant dissenting judgments. Hence I have characterized the duties as only "almost certainly" unconstitutional.
Moreover, if you were to challenge the legality of new-car duties and lose, you would "almost certainly" be liable for the other side's costs — perhaps even indemnity costs (that is, all actual costs reasonably incurred).
For these reasons you probably won't want to initiate constitutional proceedings unless (a) you can afford the consequences of losing, or (b) the fine would leave you in such dire financial straits that any further losses would be borne by your creditors, not by you, or (c) you are the sort of activist who is willing to risk a criminal record, in which case I submit that it is better to risk bankruptcy, or (d) you are so incandescent with rage that you don't care what it costs to make your point. When assessing the cost of the fine under (b), be sure to include the effect on an infringement on your insurance premiums and cover; see e.g. Speeding Fine Consultants. I don't recommend (d), but it's your call.
Appendix: Whether vehicle duties are excises
This section has been revised.
[Last modified Aug.17, 2009.]
