Is a Fee a Tax?
While going on YouTube to play a music video for my daughter (I’ll spare the details so as not to put myself in the running for the “Bad Parent of the Year Award”), an ad popped up before the video attacking Governor Ehrlich for raising fees during his time in office. Paid for by Martin O’Malley’s campaign, its main contention was that “a fee is a tax” and that Ehrlich is hypocritical when he’s saying that he didn’t raise taxes during his term since he did raise fees. But is a fee really a tax?
In theory, there is a difference between a fee and a tax. A fee is the payment to the government for services rendered. When I get a fishing license, I pay a fee to the government that helps pay for the maintenance of the state’s waterways. The government is taking an action that benefits fishermen and it’s only right that we should bear some or all of the cost.
There are many fees we pay at all levels of government for access to government services. Most of these fees are earmarked to pay for the programs being used. It is preferable to charge the users of government services fees rather than have the burden of funding certain programs fall exclusively on taxpayers.
Another difference between fees and taxes is that you can easily avoid fees by not taking a certain action. If you don’t want to pay a fee for a fishing license, then don’t buy one. But it’s pretty difficult to legally avoid paying taxes. If you want to avoid the income tax legally, for instance, you must stop making income. Sure, you could do that, but it’s not a realistic alternative.
So, no, fees aren’t taxes. Fees are different than taxes, at least in theory. Certainly fees can be abused by the government and treated as merely another way to take money from state residents. But that’s a separate issue of whether fees are the same thing as taxes.
I’m not defending the fee increases that happened during the Ehrlich years. I’m not well informed enough right now to have an opinion on whether they were legitimate fee increases or simply a way for the Ehrlich Administration to extract more money from Marylanders. However, saying that Ehrlich raising fees is the equivalent of raising taxes is wrong. Fees and taxes aren’t the same thing, no matter what a YouTube commercial may try to tell you.