Government charges higher fees for everyday services

Pay as you go

GETTING divorced? If so, you are increasingly likely to receive a bill from the government. As cash-strapped America tries to balance their books without raising unpopular taxes, it are charging higher fees for everyday services. American cities tap their residents for around a quarter more in such charges than they did at the turn of the century. Half the countries in the EU have increased health-care charges since the financial crisis. In Britain, where a severe fiscal squeeze is under way, new fees are popping up in unexpected places, from the criminal courts to municipal pest-control agencies states The Economist

Pay-as-you-go government has advantages. Charging for services helps allocate resources efficiently, deterring overconsumption, just as parking meters stop people hogging spaces. And far from being uniformly regressive, fees can be fairer than general taxation. Selling water by the litre, as Ireland controversially began to do in January, means frugal users pay less than those whose taps gush. Tuition fees reduce the subsidies paid to students by those who never enjoyed the benefit of university. Some of the biggest consumers of free or subsidised services are the middle classes, who ought to pay.

But the recent spread of fees has less to do with economics than with political expediency. Politicians have seized on charges as an easy way of raising money, and have inflated some fees until they bear little relation to the cost of the service supposedly being purchased. Too often the result is a regressive, economically distorting swindle.

The root of the problem is an inability to raise money by more transparent means—that is to say, taxation. A system in which the public finances are topped up by milking those unfortunate enough to need services over which the government has a monopoly is not responsible, it is a scam.

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