Questions are sometimes raised whether (part of) the fine revenues should flow back to police forces or not. In this contribution we use a simple model to investigate how the allocation of fine revenues can influence the decisions made by police forces. Therefore we consider five different allocation scenarios, one reference scenario and four alternatives. We also describe the actual allocation program of fine revenues in Belgium and discuss its characteristics based in the insights learned from the modelling exercise. Firstly, we would like to note that there is no need to use fine revenues to influence decisions made by the police force, as long as the objectives pursued by police force are equal to the objectives pursued by the policy maker. Nevertheless it is still important to provide police forces with sufficient resources to pursue those objectives. Fine revenues could then be added to the federal or regional treasury so as to alleviate the welfare burden of labour taxation. However, if there is insufficient support for this kind of policy scenario, fines revenues could be earmarked and used to create a traffic safety fund. The division of these funds should then be carefully considered since the objectives pursued by the police forces should not be distorted by revenue raising incentives. Thus a pre-set distribution of resources based on, for instance, the number of road kilometre in the police zone or the number of inhabitants could still be considered. It is crucial that the factor determining the allocation of funds cannot be strategically influenced by the police force. Secondly, if the objectives pursued by the police forces differ from those pursued by the policy maker, the revenues from traffic fines can be used to align both set of objectives. An auctioning program could then be used to fund projects that are reducing traffic risk and have a positive cost-benefit ratio. Allocation rules depending on the number of road accidents with injured parties or on the number of fatalities are not advisable since they give rise to a revenue maximizing objective as well as an accident minimizing objective. Note that it is not necessary to use fine revenues to achieve this alignment in objectives, a change in the budget allocation rule could also suffice. (Author/publisher)
Abstract