It’s time to renew my driver’s licence, so I jumped online yesterday to do the deed. And I found, like many agencies, that if I chose a 1 year renewal option, it would be around $85AUD, rising by years to the max of 5 years for just under $200.
In all honesty, I couldn’t quite afford the 5 year deal, but bit the bullet understanding that if I did it one year at a time, the cost to me overall would have been over $500: More than $300 difference.
And of course it got me thinking about those (especially in these times) who TRULY could not afford the 5 year deal being unfairly ‘taxed’ because of their financial circumstances. Sure, $120 might not seem here nor there for most, but in the long run, the ‘wealthier’ save $$ by paying upfront whilst the ‘poorer’ are penalised. Reminiscent of Terry Pratchett’s 'Boots Theory of Socioeconomic Unfairness:
“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness.”
Upfront payments have two major advantages, which I’ll oversimplify. For the business it provides tangible rather than potential payments, and money in hand today is more valuable because it can generate interest. For the consumer it offers a discount and removes the necessity and uncertainly of later payments.
Yes, some people cannot take advantage of these advantages. What exactly is the solution to this? Pratchett never says, does he? There’s no way to get a good boot’s price under fifty dollars: the quality that makes it good makes it expensive. Should we just ban quality products? What if we turn the problem around and just give the poor more money to make them rich? Who does the work in a society of millionaires?
Various isms have been proposed that would in theory put the two sides into equality. None of them have ever worked outside of theory.
It’s not fair that some people have lots more money than other people. The size of inequality today is huger than it was in the 1950s and that size could perhaps be modified by various tax schemes. But the underlying differences can seemingly be addressed only in small groups outside the industrialized present we’ve grown accustomed to for 200 years.
Lots of good things can be done. Overturning the structure of the world cannot.
It’s to point out one of the reasons people can’t get out of poverty. Because they spend smaller amounts more often, they spend more of a more limited resource over the long run.
The big advantage to the driver’s license bureau of the 5 year deal is not the interest value of the money. It’s that they can (at the limit) process one fifth of the total transaction volume over the 5 years and still take in the same revenue over the same timespan. 1/5th the workers, 1/5th the storefront agencies, 1/5th the mailing costs, etc., etc., etc. That is a huge force multiplier for them.
Which we can see in the huge rakeoff they offer. The nature of a license is not like, say, insurance as a service or a consumable product like, a 5 years supply of potato chips. For those things, the cost of goods sold is significant and a 5-year bulk package might get you a few percent discount. For something like a license whose actual cost of goods sold is very close to zero and most of whose price is simply overhead or tax, they can offer a tremendous rake-off because of how that feeds into reducing their fixed costs.
Turning to the points well made by @Exapno_Mapcase just above …
There are lots of ways in which being poor is much more expensive than being middle class. Having volumes of poor people is very economically inefficient in many, many ways. Some of which ways come out of our pockets and some of which come out of theirs. Overall it’s a lose-lose game.
I just checked the fees in the state where I previously had to renew a licence, and in Victoria, it’s around $85 for 3 years. I’m now in Queensland and the bastards are ripping us off.
Oh, and yeah, Australia is bloody expensive. I always have a little giggle (and a sad sigh) when I watch (esp) US YouTubers who come here to vlog their travels across the country. It ain’t cheap by any measure
There is no such thing as a right to drive. Driving is a priviledge to be paid for, if you qualify. If you don’t qualify and can’t pay you have no right to drive.
I know Americans are fond of trotting this out this supposed difference between rights and privileges, but it doesn’t stand up to scrutiny. What’s the difference between the right to drive and the right to vote? We all expect that everyone should by default be equally entitled to do them subject to equal rules for qualification, and both can be taken away under specified circumstances only for equally applied objective disqualifying reasons, not on a whim. There is no conceptual difference whatsoever. Driving may not be a fundamental right, one can easily imagine a society where nobody drives. But the point is that the right to do it should be equal for all.
A nominal admin fee to cover costs maybe, but I think treating this as a source of significant tax revenue - and a regressive tax revenue that costs poorer people a larger percentage of their incomes - is wrong. It’s wrong for it to be so expensive even before the “wealth discount” for longer periods.
Taxing vehicles in various ways is a much fairer and more appropriate method for generating revenue.
In civilized democracies the right to vote is a constitutionally guaranteed birthright that stems from a nation’s founding principles. The “right” to drive is not a right at all, and asserting otherwise is the height of ridiculousness. It’s no more a “right” than the “right” to pilot an aircraft or ship or do any of a myriad of other activities that are licensed in the interest of public safety and subject to meeting qualifications. Driving just happens to be a very common activity that most of us qualify for and many of us depend on, but that gives it no special fundamental status.
As for driver’s license renewal fees, the ones cited in the OP seem rather extortionately high, but for the most part – especially in the US and Canada where fees much lower – it’s unlikely to have much financial impact on anyone who can afford to drive in the first place. Poorer folk will be more sensitive to the cost but it probably isn’t worth the bureaucratic overhead of pro-rating it to income. This is distinct from the UHC photo health card, for instance, which as a matter of principle has no fee at all. It used to be non-expiring but now has five-year renewals only for security reasons.
There is no bureaucratic cost to raising the revenue more from vehicle taxes and less from the driving license, since vehicles are already taxed too. Vehicle taxes can naturally be much more progressive - as a percentage of value and related to emissions, and obviously just the number of vehicles per household. A wealthy family with 2 SUVs and a Ferrari are then paying appropriately more than a poor family that shares a 15-year-old Camry between work and transporting the kids; whereas both families require the same number of licences.
So if you received a letter refunding your fee and revoking your driving license with no explanation, would you object? On what basis, if you think you have no right to drive?
This is a big part of Barbara Ehrenreich’s Nickel and Dimed in America. The quote below (from Wikipedia) gives two examples of upfront “discounts” that many poor people can’t afford: security deposits and working appliances (I’d add reliable transportation). If you can afford those upfront costs, life is a lot cheaper.
This is sloppy logic that muddles the issue. That driving is not an intrinsic right means that the government can impose conditions on the licenses that it grants and can enact legislation to block, suspend, or revoke such licenses under whatever conditions it reasonably deems necessary to protect public safety. It means that I can’t challenge such revocation on the basis that I’ve been deprived of a basic right. But it does not mean that the government can act arbitrarily, without regard for due process. I can challenge it on the basis of whatever legal grounds have been used as justification – and under the constitutional guarantee of due process those grounds do have to be provided.
The only sloppy logic is in claiming that there is some qualitative conceptual difference between a “privilege” and a right. If there is something qualitatively different that can sensibly be distinguished as a “privilege”, it’s not a driving license, it’s things like being invited to a birthday party where nobody has any reasonable expectation of entitlement or equality or fairness or objectively applied rules.
Obviously it’s true that there is a hierarchy of rights, that some rights are much more fundamental, that only certain rights are constitutionally protected.
But in a society where driving is so important to everyday life, there is really no functional qualitative difference between the right to drive and the right to vote, aside from what level of legal recourse we may appeal to for redress if the right is unfairly violated. The ethics are the same. We all expect equal entitlement to do these things, and that the right can only be taken away for clearly defined objective reasons that are applied equally and fairly to everyone. That is the definition of a right, not “things that are mentioned in the U.S. Constitution”.
Rights are legal, social, or principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people according to some legal system, social convention, or ethical theory.
That general definition of a “right” is certainly not restricted to just the most fundamental or constitutionally protected rights, and that definition is perfectly congruent with what you said you would do if your driver’s licence were revoked without apparent justification:
It certainly doesn’t help poorer people. You get the same with subscription services like Netflix, Disney, etc. With my power bill I get a discount if I let the power company take $200 at a time in advance. If you can afford to buy products in bulk you can save money as well.
It seems particularly mean for a government department to use this tactic though.
Yes, it’s one thing for private entities that are driven by real financial risk - a mortgage lender demanding a higher interest rate from a poorer person, for example. But that justification really doesn’t exist here.
Driving is a basic need for most people, so this kind of pricing structure is highly regressive, essentially the diametric opposite of the philosophy of Universal Basic Income.
So (if I understand correctly) the upfront payment saves them money, and they’re passing at least some of that savings on to you.
That seems fair to me. Unless the $85AUD fee is unfairly high in the first place. Which I don’t have enough information to know whether it is; but if it is, then that’s where the unfairness lies.
