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Bush budget relies more on user fees

©Associated Press
February 5, 2003

WASHINGTON -- To pay for some of his proposed tax cuts, President Bush wants to raise more than $2-billion by charging new or larger fees on everything from stockyard, kennel and poultry plant inspections to military veterans' health care and Medicare claims processing.

Big-ticket items include a new $250 annual enrollment fee for higher-income veterans seeking low-priority medical treatment at overcrowded Department of Veterans Affairs hospitals, raising the current $100 fee for processing visa applications and charging health care providers when Medicare claims are in error.

The White House anticipates raising $271-million next year from the visa fees, $230-million from the new VA deductible and $195-million from Medicare providers who file claims improperly.

Other items include charging taxpayers for written responses to their questions as well as new fees kennels and humane societies would pay for animal welfare inspections, and food processors would pay anytime government inspectors had to work overtime.

The Bush administration expects to raise a total of $176.3-billion next year through user fees, about $6-billion more than the $170.4-billion now raised. Of that increase, about $2-billion reflects White House proposals for higher fees or charges that do not now exist. The other $4-billion represents additional revenues expected from existing user charges.

Many of the charges date back to the birth of the United States, such as the $693-million in customs fees and the $70-billion the Postal Service will collect next year in mail charges.

Newer is the $2.5-billion in surcharges charged airline passengers -- as much as $20 for round-trip tickets -- to pay for increased security at airports and along borders after the Sept. 11 attacks.

Bush's budget proposal describes such nontax payments it collects as user charges rather than fees, saying the terminology better reflects what the government collects for market-oriented activities it regulates.

The approach is not new. Some agencies such as the Federal Communications Commission pay for most of their budgets from fees. The FCC's money comes from license renewals and fees charged broadcasters or telephone companies.

Jeff Stein, a senior policy analyst for Taxpayers for Common Sense, a government watchdog group, said user charges can be good or bad depending on how much choice is involved.

"The benefit of user fees is that it more efficiently allocates resources. It gives the payers of the fee a choice whether they want to pay if there are alternatives to a particular program," Stein said.

"When you start imposing user fees on people and they don't have alternatives, it becomes more of a tax," he said. "Which would be ironic, given all the tax cuts in the rest of the budget."

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