
Unfortunately, yesterday somebody stole my car stereo while the car was parked in the parking. It was not just me but there were 5 more people who were complaining about the same. Let me describe the parking in my area- We have residential colonies and the parking slots are not permanent, so people park their cars near their houses-not necessarily in front of them.
I went up to the residential welfare association president to complain about what happened. He told me that he was helpless. He described the problem to me-
Problem: There are not many guards in the area. The existing guards are also very weak and are not that efficient
Cause of the problem: There were very few guards because there were no funds with the treasury to hire more. Why were there no funds? Well, the monthly service fee for security was not being paid by a significant number of residents.
So basically, only a few residents were paying money to the association to hire security guards for the residential colonies. This sounds like a typical free rider problem. A free rider is a person who receives the benefit of a so-called public good without paying for it. Few residents were not paying because they wanted others to pay for security.
Clearly, this is a problem
Solution:
Mr president suggested one solution- Make every individual pay a fee for every car they own. This will generate enough revenue to hire more guards. I like this solution. But the problem is that this fee is not a tax on the residents. Even if they don’t pay this fee, the association cannot do anything. This will also give the residents an incentive to lie about the number of cars they own.
Typically, solution to such problems lies with taxation. But, because the residential association is not a government unit, taxation is not an option.
Here is what I would suggest- Make every household pay a fixed fee. Assign an agent for every building (the agent should be a resident from the same building) in the residential area for collecting the amount. Have an incentivized structure for these individuals so they also get some share (1%-2%) from the total collection. I believe that a significant number of individuals who were not paying earlier would start paying. This fee is still not a tax. But collection from those individuals who were not paying anything earlier will increase as now the fee collection will be more organized & incentivized; agents will chase the residents and make them pay the fee. Seeing “friendly” neighbours collect money, residents will definitely start paying the fee.
Can you suggest any other solution?
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