Question

Which of the following distinctions separates government user chargers from taxes?

Answer 1

When someone chooses to use a government service and must pay for it, he's paying a user fee. Furthermore, what he pays should cover the cost of the service he's receiving; if it also pays for something he isn't getting or doesn't want, then he's paying both a user fee and a tax. Taxes differ from user fees in that paying them isn't a matter of choice and what you pay is not tied to what you get.

In principle, true user fees make a lot of sense. If you use a service, you pay for it. You don't pay if you don't use. Most people understand--and support--user fees for such things as toll roads, harbors and waterways, and even certain parks and recreational facilities. Each person has to make a rational economic decision: Is this service really worth the price or should I choose a more economical option?

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