[lbo-talk] The Political Economy of Fees

[michael perelman]

With all the hubbub about the need to cut taxes, I haven't seen much 
attention to the subject of fees.  Fees are an excellent way of gouging 
extra money from the public.  Airlines, knowing that people shop by 
price, advertise low prices and then pile on the fees.  Banks make 
enormous profits from fees.  During a recent stay at the Hilton Hotel in 
New York, I discovered that the cost of printing out a boarding pass was 
several dollars and that the charge for Wi-Fi in the lobby was separate 
for the $15 daily charge for the Internet in our room.

In the public sector, government can generate revenue from taxes or from 
fees.  For example, governments can make up for shortfalls in revenue, 
in part, by becoming more conscientious about getting tickets for 
driving or parking infractions.  Visits to parks or museums become more 
expensive.

Privatization offers an indirect method for generating fees.  The 
privatization of the public road saves the government money for 
maintenance, but the public then covers the cost, as well as profits for 
the operator, by charging fees.  In addition, the public has to endure 
the inconvenience of stopping and waiting to pay their fees.

Fee-based government seems to be a far more fiscally regressive method 
than the traditional fee-based government.  In addition, these do not 
seem to generate the same degree of public resistance.

-- 
Michael Perelman
Economics Department
California State University
Chico, CA
95929

mperelman at csuchico.edu

530 898 5321
fax 530 898 5901
http://michaelperelman.wordpress.com