The Sacramento City Council, on Thursday, approved a new city ordinance, known as a “crash tax”, affecting out of town drivers.
The tax will be levied against visiting drivers that get into accidents and the funds will be given to the fire department’s response services. The fee would only apply in the non-resident driver was found at fault by insurers. Business owners that live outside of the city but still have property within its limits would be exempt from the crash tax.
The ordinance has strong opposition and many are saying that it will hurt the city in the long run. Sam Sorich, president of ACIC, said, “Given the difficult economy, it’s understandable that the City is looking for new revenue sources. Putting this burden on out of town drivers is unfair.”
Inspired by the new policy, the Sacramento Metropolitan Fire District, the largest in the region, is considering instituting a crash tax of its own in an effort to make sure citizens are treated fairly.
Sacramento joins 60 other cities in instituting a crash tax on out of town drivers. Supporters of the policy say the city stands to make a healthy profit that will prevent cuts to vital job industries in the future. An early estimate stated that the city could make more than $1 million a year. Current estimates conducted by independent analysts suggest that the actual number is between $300,000 and $500,000.
Sorich says that insurers will have no choice but to raise rates over the entire region as a result of the new fees. With more cities opting for crash tax, the price of coverage could send premiums skyrocketing as a result of sudden demand.