Let us now debate the difference between user fees and taxes - Macleans.ca

Let us now debate the difference between user fees and taxes


John Baird says the government will increase the airport security fee charged to air travelers, the opposition critics say this is a tax and this is perhaps relevant because the Prime Minister once said, “I give you my word, as long as I will be Prime Minister … there will be no new taxes.” (In fairness, he said “no new taxes,” which wouldn’t, one supposes, necessarily preclude him from increasing taxes that already exist.)

Here, for the sake of argument, is how the distinction was explained in a 1987 New York Times story about the Reagan administration’s attempt to navigate this discussion.

Joseph A. Pechman, a leading tax authority and a senior fellow at the Brookings Institution, thinks there can be a distinction. A user fee – such as the admission fee to national parks – is, he said, ”imposed on individuals who use certain services provided by the Government and is proportional to the use of the service.” By contrast, he defines a tax as a ”mandatory assessment on an individual family based on certain characteristics, such as income or consumption.”

But Mr. Pechman adds that a user fee is sometimes not very different from an ”excise tax,” which is a tax imposed on particular commodities, such as gasoline, cigarettes and alcohol.