The Sacramento City Council is scheduled on August 17 to decide whether to impose a a tax on out-of-town motorists who are involved in auto accidents within the city limits. The fee would be imposed on at-fault, nonresident drivers.
The proposed “crash tax” ordinance would operates “like a small-town speed trap, gouging unwary non-resident drivers,” according to Sam Sorich, president of the Association of California Insurance Companies. Sorich intends to testify against the proposed ordinance.
The ordinance anticipates contracting with a third-party billing company that will bill insurance companies, according to ACIC. The ordinance’s scheme is based on the notion that insurance companies will pay the bill.
“But the fact is that auto insurance policies were never designed to cover these fees. Therefore, many accident victims will be forced to pay the tax out of their own pockets. The fees could be $2,000 or more. For insurers who pay the tax, it represents an increase in costs — which in turn could affect rates for all drivers,” Sorich said.
Additionally, ACIC belives the ordinance also could end up hurting and not helping the city. The city anticipates additional revenue will result from the tax, but fails to consider the amount of lost sales revenue when residents from surrounding areas and potential visitors decide to stay away to avoid being taxed for just being in an accident, Sorich said.
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