Should the rich pay more for the same ser­vices? And higher fines when they do some­thing wrong?

The Guardian - - MONEY - p.collinson@the­guardian.com Pa­trick Collinson

There was out­rage this week when the gov­ern­ment said it was press­ing ahead with a new ap­proach to charg­ing for its role in pro­bate (the le­gal process for set­tling your fi­nan­cial af­fairs on death). In­stead of the cur­rent £155 flat fee for the pa­per­work, the gov­ern­ment is con­sid­er­ing a slid­ing scale of pro­bate fees based on the value of the es­tate, from zero to £6,000 – even though the cost of the pa­per­work is vir­tu­ally the same.

The Law So­ci­ety – rep­re­sent­ing the so­lic­i­tors who do pro­bate work – says it’s un­fair. “The cost to the courts for pro­vid­ing a grant of pro­bate does not change whether the size of the es­tate is £10,000 or £1m.” It ar­gues that this is no longer a fee but a “stealth” in­crease in in­her­i­tance tax.

Much steeper in­her­i­tance taxes are per­fectly fine, but this back-door at­tempt to raise IHT will strike even soak-the-rich types as a bit odd. What next? Should a home­buyer pay a higher fee for lo­cal au­thor­ity searches de­pend­ing on the sale price of the prop­erty? Should your TV li­cence be based on your in­come? Should you pay a big­ger fine for not hav­ing a TV li­cence, if you have an above-av­er­age in­come?

Ac­tu­ally, on the last one, plenty of coun­tries do go down that path. In Fin­land – to which we must now gen­u­flect on all things pro­gres­sive – there is a sys­tem called “day fines”. If you com­mit a mis­de­meanour that may re­sult in a fine is­sued by a pub­lic au­thor­ity – such as a speed­ing ticket – then the size of the penalty is based on the per­son’s in­come.

In 2015, a mil­lion­aire in Fin­land was hit with a €54,000 (£4,700) fine for speed­ing, while in 2002 a Nokia ex­ec­u­tive re­ceived a €116,000 fine for speed­ing on his Har­ley David­son mo­tor­cy­cle, and in 2001 a driver was pun­ished with a €35,300 fine for go­ing through a red light.

Be­hind the idea of big­ger fines for the rich is the fear that they can “pur­chase” the right to com­mit of­fences, be­cause the rel­a­tive cost to them is im­ma­te­rial. Any­body who speeds, or evades their TV li­cence, or who goes through a red light, is equally blame­wor­thy, but the richer per­son is less de­terred from re­peat­ing the of­fence be­cause the fine is rel­a­tively mean­ing­less.

Of course, this is all about mis­de­meanours. Surely there’s no read-across to pure gov­ern­ment ser­vices? But there is: your fam­ily might pro­duce the same amount of rub­bish as a sim­i­lar fam­ily on the other side of town, but you are al­ready ef­fec­tively pay­ing a much higher price (through your coun­cil tax) for it to be col­lected if you live in a pricier house.

There may be more merit in a slid­ing scale for pro­bate fees than first thought – and a very good case for mak­ing speed­ing and other fines payable ac­cord­ing to in­come.

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