The Fight Over Taxes Vs. Fees

When is a tax a tax, and not something else? It's hard to believe but the answer to the question is not as simple as one might think.

The latest example of a mix-up appears with a proposal on several county ballots to add $10 to the annual motor vehicle registration, with the proceeds going to manage local roads and transportation systems. The ballot issue is available because of a law passed last year by the state legislature that allows counties to ask for voter approval with a simple majority vote.

Typically, passage of a tax dedicated to particular purposes requires a two-thirds vote, courtesy of California's Proposition 13 that was enacted in 1978. But that's for a "tax."

In this case, the enabling legislation refers to the ballot proposal as a "fee," thereby allowing a simple majority vote to determine the outcome. And since majority votes are much easier to obtain than two-thirds votes, the sponsors of the fee are delighted with its description.

Some groups such as the Howard Jarvis Taxpayers Association are hopping mad. They argue that the proposed "fee" is really a tax in disguise, and as such, should require a two-thirds vote to pass.

In fact, the taxation process at the local level is about as disjointed and confusing as imaginable.


  • a proposed increase in the general sales tax requires a simple majority vote
  • proposals for school construction bonds pass with a 55 percent level of voter support
  • parcel taxes pass only with approval from two-thirds of the votes

How's that for confusion. No wonder the Howard Jarvis Taxpayers Association is angry; they equate the registration fee as something similar to a parcel tax, while the legislature viewed the fee as something close to a sales tax because of the broad nature of use.

Meanwhile, as the November election approaches, voters are likely to be perplexed over just what kind of vote is required for what issue. It may not be the kind of concern that polarizes the electorate, but the lack of clarity won't help to inspire confidence in the revenue collecting system. And at a time when the voters are angry to begin with, extra confusion is the last thing they need.   

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