Do your travel plans this summer involve driving in California? If so, be sure to pay particular attention while in the Sacramento region. According to the Property Casualty Insurers Association of America, Sacramento is the latest local government in California to consider imposing a “crash tax” on visiting motorists who are involved in road accidents. The tax is supposedly justified by the costs of sending emergency responders to accident scenes.
In some situations, insurers are paying for the tax on behalf of motorists, but this is not always the case. As a result, insurance premiums could increase for many motorists if such tax schemes become more popular. Of course, auto insurance is a competitive market, so insurers may or may not be able to increase premiums without losing market share. It may be more likely for insurers to add clauses to policies to exclude payment of such taxes.
With local and state governments facing large budget deficits, the prospect of taxing visitors who cannot vote in local elections is appealing. However, the instinct to tax visitors is nothing new. Travelers are already familiar with rental car taxes, hotel occupancy taxes, and airport fees that mostly impact tourists and business travelers but not residents within the taxing authority.
It brings to mind the old saying: “Don’t tax you. Don’t tax me. Tax the man behind the tree.”