Public Administration Essay Paper on Taxes by Any Other Name

Taxes by Any Other Name

The collection of revenue using non-tax sources started as a way of limiting tax increases by the federal government (Fortin, 1997). Therefore, citizens were required to pay for some public services and goods provided by local governments in order to supplement federal government aid. The charges include paying for services such as the use of public museums, hospitals, swimming pools and other public-good utilities such as gas, electricity, water and sewerage. License and permit fees on the other hand fund regulatory and administrative or inspection processes through payments such as driver’s license, building permits and professional licenses (Zorn, 2014).

The defined differences between user charges, user fees, licenses and taxes have been on the use of the revenue collected and the obligation to pay.  According to Zorn (2014), “user charges and fees are beneficiary charges, paid for voluntarily paid for by the consumer although they are provided by the government. On the other hand taxes are imposed by the government in order to finance wide-ranging services that may not have a direct individual benefit (Hager, 2011). Secondly, payment for public-goods such as water payment is proportionate to the amount used. Taxes are on the other hand viewed not to be related to quantity of goods or services.

User charges, user fees and licenses are sources of revenue for state and local governments. The terms user fees and charges are just euphemisms created to transfer the cost of public services and goods to the public. Using the water, roads and hospitals do not amount to an individual benefit only, and cannot be voluntary. The argument of direct and indirect benefits also does not justify the fees because goods and services such as water and health are essential for the public good. In addition, if the charges are meant to cover the cost either partially or wholly, the payments must reflect the real cost. The cost of subsidizing is paid from the taxes paid by all people and, therefore, if they are for individual benefit, they should be paid wholly by the beneficiary. Thus, user fees and charges are another way of taxing citizens through disguised methods.

References

Fortin, S. (1997). Local Government Fees and User Charges: A Trend Analysis of the Reliance on Fees and User Charges of Five Local Governments in Cook County. The Civic Federation. 1-37. Retrieved from http://www.civicfed.org/sites/default/files/civicfed_136.pdf

Hager, C. J. E. (2011). User Fees: The Hidden,‘Other’ Tax. Morrison Institute for Public Policy. Retrieved from http://sod208.fulton.asu.edu/publications-reports/2011-user-fees-the-hidden-other-tax/.

Zorn, C. K. (2014). User Charges and Fees. International Journal of Public Budget. N. p. In Local Government Finance: Concepts and Practices, published by the Government Finance Officers Association, Chicago, IL. Retrieved from http://www.asip.org.ar/en/revistas/40/zorn/zorn_02.php