This was an era long before every resident’s personal details were easily accessible to authorities such as cops who often had to go by word of honour and self-reporting. The policeman asked, ‘Well, what do you do for a living?’ The man replied meekly, ‘Oh, I just sell some pots and blankets.’ Ah, well, thought the cop, he mustn’t be making much, and let him off with a warning and a very small fine.
The man drove off, pleased as punch because the policeman hadn’t asked him what kind of pots and blankets he sold. He sold huge wood pulp boilers – the Finnish word for pots and boilers is the same – and industrial wet blankets that paper machines use to press down and smoothen the paper. He was a wealthy man.
That was then. Now, in highly-digitised Finland, authorities can easily estimate the earnings of a resident and levy more accurate income-based fines, known as ‘day fines’ (paivasakko). Income-based fines link traffic and petty crime fines to the offender’s income and wealth with the aim of making the financial impact of the fines more equitable across different income levels.
Last summer, when 76-yr-old Finnish millionaire Anders Wiklof was fined ₹121,000 (about ₹1.1 cr) for exceeding the speeding limit by 30 kmph, it made global headlines. Wiklof, whose businesses include real estate and trading, has an estimated net worth of nearly ₹10 mn. In modern Finland, unlike in the apocryphal story of the pot and blanket salesman, the police can instantaneously check an offender’s income by connecting their smartphones to a central taxpayer database.
The first passenger cars were brought into Finland in 1900, and the first driver’s licences issued in 1907 when Finland was still a duchy under the Russian empire. Three years after it became independent, in 1920, it became the first country to introduce income-based fines for offences such as traffic violations.The system aimed to ensure that fines have a similar deterrent effect, regardless of the offender’s income. In some instances, it has led to increased fine revenues, especially from high-income offenders. More importantly, according to several studies, income-based fines have led to increased compliance and reduced recidivism.Not long after Finland introduced the system, other European countries followed suit. Sweden introduced a similar system in 1931, Denmark in 1939, Germany in 1975, and Switzerland in the 1990s. France introduced it in 1983 for certain offences, and expanded its scope in 2007.
‘Day fines’ are called that because typically they are calculated based on a person’s daily income. The fine is determined by two factors: the number of day fine units assigned to the offence, depending on its severity; and the daily income of the offender.
Daily income is usually calculated as a fraction of the offender’s daily disposable income, often around 1/60th of their monthly income after taxes. Finally, the penalty or fine amount is determined by the number of day fine units multiplied by the daily income amount. For example, if an offence warrants 20 day fine units, and the offender’s daily income is determined to be ₹100, the total fine he would have to pay would be ₹2,000.
The term day fine reflects that the penalty for the offence is expressed in terms of a certain number of days’ worth of the offender’s income. So, the system aims to create an equivalent economic impact on offenders with different income levels by making the punishment feel equally severe regardless of wealth.
That the system has been in force, and has been implemented for more than a century, is an indication of two things:
- It works and has distinct advantages, both as deterrent as well as in terms of revenues collected by the state from offenders.
- It is generally accepted by the people, the majority of whom feel that is a just and equitable way of meting out punishment for offences.
Finland consistently ranks among the countries with the lowest road fatality rates in the world. Finland’s 3.8 road deaths per 1 lakh inhabitants is significantly lower than the global average of 17.4. Besides an effective deterrence system, its driving licence requirements emphasise driver education and awareness. Traffic rules are implemented strictly, and it’s at the forefront of using tech innovation to improve road safety.
Public discourse about the day fine system is rare and, while some HNIs manage to game the system by financial manipulation of their incomes, the authorities say such instances are not common.
However, when an individual case such as Wiklof’s surfaces, it can create some ripples. Wiklof is what you might call a repeat offender. In 2018, he was fined ₹63,680 for speeding. Five years before that, he had to cough up ₹95,000 for a similar offence. He is nonchalant, though. After his latest fine last summer, he reportedly said, ‘I have heard the government wants to save ₹1.5 bn on healthcare in Finland, so I hope that my money can fill a gap there.’
Lessons for India, with its rising cases of overspeeding, DUI brats behind wheels?
