A Tax by Any Other Name Costs as Much

Friday, January 18, 2002

Page 9

AFFAIRS OF STATE (Column)

A Tax by Any Other Name Costs as Much

By DAVID KLINE

What’s the difference between a “tax” and a “fee.” Nothing, if you’re the one paying it.

But if you’re a politician, there’s a big difference. Voters don’t seem to care much about fees, but they instinctively react against taxes.

“Read my lips, no new fees.” It wouldn’t have mattered much if the elder President Bush had made this pledge—or, for that matter, if he had broken it. But when he made the same pledge about taxes, voters listened and remembered.

This explains why Gov. Gray Davis, running for re-election, is so adamant about describing his new budget as being devoid of new taxes, even though it proposes $127 million in new assessments on the people of California.

Those assessments, which would take effect July 1 and last indefinitely, are fees rather than taxes, Davis protests.

The biggest fee increase is a $55 million assessment on hospitals which treat a significant number of low-income patients—county hospitals and University of California medical facilities, primarily. The state currently charges these hospitals a $29.8 million “administration fee,” but Davis wants to nearly triple that to $85 million.

People who are required to have permits from the Water Resources Control Board would see their fees double under the Davis budget. The governor’s press materials describe this as “a General Fund savings of $14.9 million,” but to those who pay the money, this “savings” amounts to a new $14.9 million tax.

Another fee will impact auto insurance agents and others who request driving records from the Department of Motor Vehicles. Davis wants to raise the fee to $4 per record to raise $40 million.

For an additional $2 million, the governor would create a $120 filing fee for appealing a driver’s license suspension involving charges of drunken driving.

The cost of going to court to protect your rights also would increase under the Davis plan. The governor proposes a 10 percent increase in filing fees for civil cases, to raise $15.2 million for the government.

Davis also wants to enact a $25,000 fee simply for applying to build a new power plant in California, at a time when the state instead should be encouraging such construction. He anticipates this fee would raise $250,000 for the state’s coffers.

The governor’s budget director, Timothy Gage, told reporters the difference between fees and taxes is “a lot more than semantics.”

“Taxes are broad-based—these fees are focused in a very particular fashion,” Gage said.

Soft-focused, perhaps. The hospital fees will be passed on to patients, water permit fees paid by businesses will be passed on to customers and DMV fees assessed to insurance companies will be passed on to drivers.

Most Californians will pay, and the money will come out of their wallets just as surely as if these fees were called taxes.

— Capitol News Service