Question

In: Economics

Describe the major differences between fees and taxes and provide examples for each.

Describe the major differences between fees and taxes and provide examples for each.

Solutions

Expert Solution

Tax is explained as the needed payment on property, good, etc it is a compulsory charge paid  to government by people or different business organizations. According to law Failure of tax payment leads to punishment. Direct taxes and indirect taxes are there. It is taken for government expenses and country benefits. There is no quid pro connection within the tax levying authority and taxpayer. So there are no benefits for the payer for tax payment. Tax will not be always same it changes according to the decisions of government. Payroll tax, tariff, income tax are the examples of taxes

Fees are considered as a voluntary payment to tax levying authority for the specific services by government for the public interest. It is a direct payment made by individual to government. Fees give certain specific advantages for the fee payer. Fee payer receives the benefits for payment from government. It can be any services. Thus fees is said to be the results of administrative activities carried out by government. Location fees, rental fees, user fee are all examples.


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