Impact Fees 2

The fairness and benefit issues between taxes, rates and fees may become irrelevant when tax revenue is not an option. Currently though, most government services use some combination of the three revenue sources. Each service may benefit some individuals more than others. They are consumed by both those able to pay and those unable to pay. Roads, fire protection, public recreation, education are provided to all levels of users, water and sewer are among the many kinds of services that fall in a middle category. Financing such services solely out of taxes or rates may represent an unfair distribution of the burden between those who use a lot and those who use little or none of these services. Financing solely out of fees and charges would result in producing too little of the service (because the price would not reflect the public benefits) and would be burdensome on the poor. So governments at all levels use a mixture of taxes, rates and fees or charges. Some spending is financed solely out of taxes, some solely by rates, some solely by fees, but a great many government services are financed by a combination of the three.