how user fees work
in levying or authorizing user fees from a government standpoint the u s congress determines whether the revenue should go into the treasury or should be available to the agency providing the goods or services government services and facilities that are supported by user fees instead of by taxes may closely resemble private businesses because it is not apparent whether a true demand exists for those services and facilities in that sense the line between user fees and taxes can blur in certain circumstances sometimes a tax will be incorrectly labeled as a user fee for political reasons i e user fees that are often deemed more palatable and able to be passed on to voters than taxes for example if a politician wants to keep a promise to not raise taxes but still take certain steps to try to increase government revenue streams the politician may push for an increase in certain kinds of taxes that can be labeled as fees in contrast to user fees taxes must be paid and do not necessarily go toward a specific service or facility that an individual actually uses or benefits from for example the money governments spend to treat smoking related illnesses in this case via the sale of cigarettes could be considered both a tax and a fee income taxes can be an alternative to funding facilities and services with user fees everyone pays income taxes including those who may not necessarily use or benefit from a specific facility or service user fees and economic developmentwithin international development circles user fees refer to a system fee for fundamental health care education and other essential services implemented by a developing country to make up for the costs of these services for one the international monetary fund often recommends that nations start charging fees for these services in order to reduce budget deficits for poorer nations however such user fees can have a counteractive effect adding a burdensome expense on an already impoverished population 