7/29/2019 Tax or a fee? Depends

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Session Weekly 3April 15, 2005

FIRSTREADING

First Reading continued on page 4

BY MATT WETZEL

The money you pay to renew your driverslicense is commonly called a fee. Yet formost adult Minnesotans, having a driv-

ers license is not really an option, it is a ne-cessity. You need it to get to work, school, thegrocery store and practically anywhere else.

Thats not really a choice to the vastmajority of people in the state, said Rep.

Phil Krinkie (R-Shoreview), chairo f t h e H o u s eTaxes Commit-tee. Therefore, hebelieves, the re-newal charge isnot a fee, but a tax.Its only a fee iftheres a competi-tive service or acompetitive availability for it, he said.

You cant go anywhere but to the state to getyour drivers license, so it is a tax, accordingto Krinkies definition.

And as the owner of a small business, hedoesnt have any options when he renews hisbusiness license. Im required by law to do itand I have nowhere else to go, he said.

On the otherhand, people nowhave plenty of op-tions beyond theU.S. Postal Servicewhen writing aletter or shippinga package. That

includes e-mail,FedEx or UPS. Sothe money you payfor a postage stamp would be a fee, accordingto Krinkies definition. This is competitive.When there is no competition, how do weknow if the fee youre paying truly representsthe cost of the service? he asked.

Krinkie believes that the definitions of taxesand fees have gone way out of whack in Min-nesota government, so hes trying to bring folksback to reality by sponsoring HF2178, which

Whats in a name?Tax or fee? Its all in your definition

would define a tax, fee and charge. The bil l isnot yet scheduled for a hearing, but has beenreferred to the House Taxes Committee.

A companion bill (SF2206), sponsored bySen. Lawrence J. Pogemiller (DFL-Mpls), hasbeen referred to the Senate Taxes Committee.

The bill states, in effect, that a tax is anycharge assessed by a government entity onpeople, businesses, goods, services or trans-

actions. The billf u r t h e r s t a t e sthat any fee orcharge fittingthat definition isa tax.Historically,

people have cometo define taxes aswhat is deductedfrom your salary,

what you pay extra on things you buy andthe assessment you pay on your property. Forbusinesses, its the money they pay on sales,property, income and payroll.

According to Websters New World Diction-ary and Thesaurus, a tax is a compulsorypayment or percentage of income, propertyvalue, etc., for the support of government.

P e o p l e h a v ecome to definefees as the moneyyou pay wheneveryou do businesswith the govern-ment , such aslicense fees and

filing fees. Lo-cal governmentsalso charge sew-

age fees, inspection fees, and most of thoseservices cant be obtained anywhere else.

Going back to the dictionary, a fee is acharge for professional services, licenses,etc.

Dan Salomone, commissioner of theDepartment of Revenue, said the differencebetween a tax and a fee is not black and white,and he provides a checklist to identify a fee:

1. The public benefits or cost can be assignedto a particular group of people. An examplewould be a hunting license. Hunters pay fohunting licenses, and they get the benefits

2. The fee should pay for the cost of service.3. There should be no large extended benefits

paid for by fees, such as higher education.4. The use or level of use is not mandatory.5. Is the fee a burden to people on low or fixed

incomes?6. Fees shouldnt be more expensive to admin

ister than the revenue they collect.Also, under Krinkies definition, licensing

fees for casinos, plus just about anything elsepeople pay to the government for service theycant get somewhere else, would be a taxIn recent years, to balance the budget, stategovernment has increased some fees.

Theres been a great deal of discussion asto Is it a fee increase or a tax? Krinkie said

The governor has said he doesnt support anytax increases or new taxes. I think this wouldbe a good way to have a discussion of what isa tax and what is a fee.

Weve had dramatically increasing fees inthe last six to eight years. What were doing inot about the cost (of the service); were putting the money in the General Fund to balancethe budget.

He doesnt blame governments for raisingfees, especially when budgets are tight. Idont think its intentional. I dont think itsdeliberate, he said.

Krinkies bill has attracted some interestingco-sponsors, including his philosophical opposite, Rep. Tom Rukavina (DFL-Virginia), alsoa member of the House Taxes Committee.

Rukavina agrees that its time to define atax and fee, and thats why he signed on withthe bill.

When I had a surcharge on my seatbelt vio-lation I didnt get anything for it, he said. Youpay a sewage fee to the city when they come outo adjust your septic system. Its a tax.

Websters New World Dictionary and Thesaurus defines

a tax this way.

Websters New World Dictionary and Thesaurus defines

a fee this way.

Tax means any fee, charge, exaction,

or assessment imposed by a

governmental entity on an individual,

person, entity, transaction, good,

service, or other thing.

HF2178 definition

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4 Session Weekly April 15, 200

Virtuous displayStatues remind visitors of moral roots of their government

First Reading continued from page 3

PHOTOILLUSTRATION BYTOMOLMSCHEID

Another co-sponsor of the bill is Rep.Ann Lenczewski (DFL-Bloomington), the leadDFLer on the House Taxes Committee. Shesaid the term fees is a lot more palatable topoliticians and the public than taxes.

I think what people are doing is mitigatingthe definition of a tax because they dont wantto call it a tax, she said. The best way to do

it is call it a tax and fight for it.She said gambling advocates are proposing

to fix the budget with gambling fees, and taxes

arent even mentioned. If theyre generatingmoney for the state, you should call it a tax,she said. Gambling should be viewed in thesame light as everything else.

Gov. Tim Pawlenty campaigned on a NoNew Taxes platform, and he continues tomake that his watchword. Krinkie is awareof that, and hes aware that if his bill becomeslaw it might turn the governors fee increasesinto new taxes or tax increases.

My interest here is to deliberate on thepolicy issues and not to deliberate on the po-litical risk of the equation, Krinkie said. If

it comes down to a definition, then I guess hehas to decide. I agree with the governor thawe shouldnt raise taxes, he said.

Rukavina is more blunt. The governor saidno new taxes but thats a promise hes alreadybroken, he said, because property taxes andmany fees have gone up.

Krinkie cant wait to talk about what is atax, and what is a fee and who is raising whatThe first stop is his committee.

Lets have the debate. Hopefully, well havea spirited debate, he said.

The six statues abovethe main entrance to theCapitol symbolize thevirtues apparent in good

government and goodcitizenship.Exercise sound judgment;be wise, brave, generous

and honest, they say from across the agesin al legorical fashion.

From left to right, they are: Wisdom,Courage, Bounty, Truth, Integrity andPrudence.

The statues reflect conventional studioposes, and carry such typical studio equip-ment as Truths mirror, Prudences lamp,and the sword and shield of Courage,

explains Thomas OSullivan inNorth StarStatehouse. These fine points of iconologymay be obscure to viewers so far below, butthe statues add a graceful human accent

and remind those entering the Capitol ofthe moral roots of their government.

Designed by American sculptor DanielChester French (1850-1931), who alsocollaborated on the Quadriga, or GoldenHorses statuary, the statues were carvedin marble, on site, by local stonecutters.

French is perhaps best known for his statelyseated statue of Abraham Lincoln in theLincoln Memorial in Washington, D.C.

Though the golden horses above the stat-ues tend to steal their thunder, the statueslend a moral air to the faade.

Apparently, French worried about cross-ing into immoral territory with his designfor one of them.

He was a bit concerned Truth would be

too naked for Minnesotans social mores,according to Neil B. Thompson inMinne-sotas State Capitol: The Art and Politics of

a Public Building. So, he solicited criticismfrom architect Cass Gilbert, Thompsonwrote. No reply exists in the architectspapers, but the finished statue (the fourthfigure from the left) suggests that Gilbertfelt public opinion in Minnesota was ca-pable of accepting the nudity of a classicalstone figure.

(N. WOOD)

Wisdom, Courage, Bounty, Truth, Integrity and Prudence, from left to rightin this composite photo, stand above the front entrance of the

Capitol as steadfast reminders of upstanding citizenship and government.