Bill: Rejected Tax-Fee Distinction Act

[Talion77]

A
BILL
To

Clarify the definition of tax​

The people of the Commonwealth of Redmont, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:

1 - Short Title and Enactment
(1) This Act may be cited as the 'Tax-Fee Distinction Act'.
(2) This Act shall be enacted immediately upon its signage.
(3) This Act has been authored by Vice President Technofied and formatted by PoS Pepecuu.
(4) This Act has been co-sponsored by Representative .CaldironJa1.

2 - Reasons
(1) The announcement of a new “Fairness Fee” has caused much debate on to what extent Departments can impose their own fees.
(2) The definition under common law for taxation imposes an overly binary view on taxation, and whether it is voluntary or involuntary (see: zLost v. The Commonwealth of Redmont [2023] FCR 75)
(3) A clear definition for fees should be established to:
(a) Distinguish the functional purpose of tax from fees;
(b) Provide commercial certainty and confidence in daily language used in the course of economic transactions.
(4) Congress wishes to keep its fundamental responsibility of the “Power of the Purse”, but also allow Departments to have some flexibility in fee collection for their services.


3 - Definitions
(1) The key terms below shall be defined as follows:
(a) “Tax” means a payment required by the Government, for public purposes, and not in return for a specific service.
(b) “Fee” means a payment in return for a specific service provided to, or regulatory activity undertaken.

 

[Anthony_Org]

I don't think this particularly matters so I'm abstaining

 

[Franciscus]

Nay.

The definition of fee with respect to “regulatory activity undertaken” is far too wide. A capitation to cover general supervisory regulatory activity of an agency cannot stand as a mere “fee”, lest we basically give every agency to levy what are de facto general taxes.

1. Would a charge placed on every building owner by the DCT on a progressive per-property basis be a “fee” if it were undertaken on the basis that the DCT must make regular inspections, or would this obviously be a property tax?
2. Would the DHS be allowed to charge a capitation on every citizen who logs in, on the basis that all citizens receive police protection and detectives regardless of whether they ask for it or not?

These are both obviously taxes in common parlance: the former is a property tax, and the latter is a head tax. But broadening the definition of a “fee” to include these broad sorts of “regulatory activity undertaken” cedes the power of the purse needlessly.

The Tax Foundation puts the distinction succinctly:

The main objective of a tax is to raise revenue, which distinguishes them from fees and fines. Fees are levied to offset the cost of providing a service. An example is paying a small fee to enter a state park, which covers the cost of staff and park maintenance. Fines are different from taxes because their main objective is to penalize an unlawful or harmful act, like fines for littering.

Mandatory payments to the Commonwealth in exchange for services or regulatory actions that one does not ask for are taxes, not fees. The definition in this law does not provide a limiting factor around the size or scope (such as to recover expenses) and does not distinguish between payments made in order to deter behavior (like the so-called “fairness fee”) and those which are genuinely instituted to help cover costs (like adoption certificate handshakes for pets). And lumping fines into fees are exactly the sorts of arguments that led to the whole DCT kerfluffle.

I therefore vote nay.

 

[zLost]

Nay - why an entire standalone bill just to define two terms

 

[Anthony_Org]

Nay.

The definition of fee with respect to “regulatory activity undertaken” is far too wide. A capitation to cover general supervisory regulatory activity of an agency cannot stand as a mere “fee”, lest we basically give every agency to levy what are de facto general taxes.

1. Would a charge placed on every building owner by the DCT on a progressive per-property basis be a “fee” if it were undertaken on the basis that the DCT must make regular inspections, or would this obviously be a property tax?
2. Would the DHS be allowed to charge a capitation on every citizen who logs in, on the basis that all citizens receive police protection and detectives regardless of whether they ask for it or not?

These are both obviously taxes in common parlance: the former is a property tax, and the latter is a head tax. But broadening the definition of a “fee” to include these broad sorts of “regulatory activity undertaken” cedes the power of the purse needlessly.

The Tax Foundation puts the distinction succinctly:



Mandatory payments to the Commonwealth in exchange for services or regulatory actions that one does not ask for are taxes, not fees. The definition in this law does not provide a limiting factor around the size or scope (such as to recover expenses) and does not distinguish between payments made in order to deter behavior (like the so-called “fairness fee”) and those which are genuinely instituted to help cover costs (like adoption certificate handshakes for pets). And lumping fines into fees are exactly the sorts of arguments that led to the whole DCT kerfluffle.

I therefore vote nay.

I have changed my vote to NAY after Multimans explanation