steepholm (steepholm) wrote,

What is the difference between a tax and a charge?

I've often wondered.

President Obama - or at least the US government, and many other governments beside - refuses to pay the London congestion charge because diplomatic vehicles are exempt from local taxes. But is the congestion charge a tax, or a charge?

Does the embassy pay to have its bins emptied? Or for its electricity? Why not for road maintenance and a pleasant city environment, then? Where does a tax end, and a charge for services rendered begin?

Is it to do with who's doing the charging? Some of these things are in private ownership, some in public - and in several cases they've changed between the two over the years. Yet taxes don't suddenly become charges when you privatise the company - do they? And anyway, why should it be okay to take the state (i.e. taxpayers) for a ride, but awful to do the same to a private company (who are in it for profit)?

Maybe it's to do with the type of service provided - e.g. optional versus obligatory? Yet every self-respecting embassy needs roads to roll along, windows to look out of, and lorries to take away their rubbish. Everyone needs to eat, too, but there's never been any suggestion that food should be distributed by the state out of tax revenues.

Or is it to do with choice - i.e. monopolies vs. free markets? There's only one road network, whereas there's sometimes a choice about refuse companies and always about window cleaners. But in the old days, when there was only one refuse collection service (i.e. the local council), there was never a suggestion that embassies shouldn't have to pay their refuse bills - was there?

All this came to a head in the late '80s with the Poll Tax/Community Charge, of course. If it was a charge for services rendered rather than a general tax, why should people who didn't have children, for example, have to pay for schools they didn't use? That wasn't what brought the poll tax down, though, so much as its regressive nature - something it shares with the congestion charge, which takes no account of either wealth or income.

So - well, I'm genuinely confused. Where does tax end, and charge begin? And what are the criteria by which we can distiguish the two?
Tags: current affairs, maunderings
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