Tax: A charge imposed by governmental authority to raise money for public purposes.
Fee: A charge fixed by law for the services of a public officer or for licenses, registrations, permits; a sum paid for a privilege."
-- The Living Webster's
The Massachusetts Supreme Judicial Court clarified the difference in "Emerson College vs. the City of Boston" in 1984, when Boston tried to charge businesses a fire protection "fee" that other property taxpayers did not have to pay on top of their property taxes.
In ruling for Emerson, the high court said that fees are charged for particular governmental services which benefit the parties paying the fees in a manner "not shared by other members of society;" are paid by choice, in that one can forego the service and avoid the charge; and are collected not to raise revenues but to compensate the governmental entity for providing the service.
Here's a quiz -- Of the following, which is a tax, and which a fee?
1.) A charge on your income to pay for general government programs like education and law enforcement.
2.) A charge for being issued a deed for your home, the proceeds from which are used to run the Registry of Deeds.
3.) A co-payment when getting treatment from the state Medicaid system.
4.) A charge on your purchase of new furniture.
5.) A charge for being caught driving drunk, with revenues going toward court costs.
The answers are fairly obvious:
1.) Tax
2.) Fee
3.) Fee
4.) Tax
5.) Fee
Governor Mitt Romney is raising fees on the use of state golf courses.
Setting aside the absurdity of having government golf courses in the first
place, it's fair to ask golfers to pay for the cost of maintaining these facilities
rather than expecting taxpayers to subsidize them. This is a true fee.
But Governor Romney is also creating a new "user fee" of $150,000 on health insurers to help pay for Medicaid -- the state healthcare service for the poor or for people who make themselves appear poor by hiding their money with their kids.
To determine if this is really a "fee," or if it is, in fact, a tax; you must ask the question: What service or privilege do the health insurers get in return for their money?
Even better: If the insurers pass their "fee" on to their clients, what do businesses and their employees get in return for paying it?
Do we all have a choice about paying it? Well, I suppose we could all refuse to be insured and insist on free medical care ourselves.
That would get Medicaid costs under control!
Finally, the Romney administration, by putting this in the budget, has made it clear that the purpose is to raise revenues, not to compensate the state for providing some sort of service to health insurers that the rest of society isn't getting.
This new type of tax burden began last year with the Swift/legislative "fee" on self-paying nursing home beds and prescription drugs. For the first time, individuals who are personally supporting a health system have become responsible for paying toward the use of that system by others who aren't paying as much into it. It looked to me like "a charge imposed by the government to raise money for public purposes" -- in other words, a tax.
I am convinced that Gov. Romney doesn't see it as a tax; I suspect he, like his predecessor, hasn't thought much beyond the chance to get half-reimbursement from the federal government for any amount spent on the state Medicaid system. Yet even assuming that the feds will support this little game, the precedent of the nursing home, prescription and health insurer "fees" is an invitation to taxes we have just begun to face.
Why not a "fee" on your dental bill to pay for people who can't afford dental care? What government privilege would you receive for this?
How about a "fee" on your car repair bill to pay for repairs to state vehicles? Or a "fee" on your theater or Red Sox tickets to provide access to "the arts" for poor people who can't afford tickets.
Where would it end? How about a new tax on "your job" to support those who don't have one?
Any charge on some individuals to pay for services received by others is a tax. And in Massachusetts, it's a tax on top of the fourth highest per capita tax burden in the nation.
I understand the pressure Gov. Romney is under to balance the budget, and I enthusiastically support his reform efforts. But the potential is this: The new "fees" pass readily, the reforms do not, and we taxpayers get tax rate hikes on top of more and more individualized taxes, forever.
There is a serious Medicaid problem and Romney is beginning to address it with co-pays for recipients and regulations that discourage cheating. But the already-strapped nursing homes, pharmacies, health insurers and hospitals, and the people who pay their own way, are the good guys who are doing their share for a healthier commonwealth already. Taxing the responsible businesses and citizens will not solve the budget crisis, and will eventually cause yet another kind of health care crisis.