What distinguishes a fine from a fee? Here are four stories that help you ponder the differences.
The first one is that of the Indian actor Shah Rukh Khan, who was found smoking in a cricket stadium where smoking is banned. In response, the actor simply paid a fine that was paltry by his standards and continued smoking. Yet, his behaviour was caught on camera and it made national news, bringing the actor much shame and disrepute.
The second story takes us to a child-care center in Israel, which faced the problem of parents arriving late to pick up their children. As a consequence, some teacher had to always stay behind with the children until they were picked up. To deter this behaviour, the child-care centers imposed a fine for late pickups. However, this measure only caused the number of late pickups to increase. The tardy parents now considered the fine to be a fee that earned them the right to show up late.
The third story takes me to the days of my late teens and early twenties. In my hometown, Bangalore, vehicles were mandated to perform an emission test every 6 months. I considered this process was a hassle – I had to find a petrol station, pay Rs 50 and the test took me about 20 min. The fine for not performing this check was Rs. 100 – to be paid if a traffic cop performed a random check. These random checks were rare – more infrequent than once in a year. Therefore, I found it to be more efficient to drive around the city without having an emission certificate. If I was caught, I simply paid the Rs. 100 fine without batting an eyelid.
The last story is that of the $217,000 speeding ticket, which Jussi Salonja, the Finnish multi-millionaire had to pay for driving 80 km/hr in a 40 km/hr zone. In Finland, residents are given speeding tickets that are proportional to their income. Salonja, who had an annual income of $7 million dollars, was forced to shell out the hefty sum for this infraction. What is more? These large fees often end up making national (and sometimes international) news.
A fine isn’t different from a fee in monetary terms. It is the accompanying moral censure that turns a fee into a fine. Therefore, when an act is penalized, the penalty ought to be high enough and its disapproval strong enough for the fine to be an effective deterrent.
Inspiration: If these stories intrigued you, be sure to read The Moral Limits of Markets