ITSSD Journal on Indirect Taxation

Britain Supports EU Commision Raise of Green Taxes in 2010 Even Though Green Taxes Are Turning Britons More Skeptical About Climate Change

noreply@blogger.com (ITSSD Charitable Mission) — Sun, 15 Nov 2009 15:57:00 +0000

http://www.timesonline.co.uk/tol/news/environment/article6916648.ece

Global warming is not our fault, say most voters in Times poll

The Times UK

Ben Webster, Environment Editor, and Peter Riddell

November 14, 2009

Less than half the population believes that human activity is to blame for global warming, according to an exclusive poll for The Times.

The revelation that ministers have failed in their campaign to persuade the public that the greenhouse effect is a serious threat requiring urgent action will make uncomfortable reading for the Government as it prepares for next month’s climate change summit in Copenhagen.

Only 41 per cent accept as an established scientific fact that global warming is taking place and is largely man-made. Almost a third (32 per cent) believe that the link is not yet proved; 8 per cent say that it is environmentalist propaganda to blame man and 15 per cent say that the world is not warming.

Tory voters are more likely to doubt the scientific evidence that man is to blame. Only 38 per cent accept it, compared with 45 per cent of Labour supporters and 47 per cent of Liberal Democrat voters.

The high level of scepticism underlines the difficulty the Government will have in persuading the public to accept higher green taxes to help to meet Britain’s legally binding targets to cut carbon emissions by 34 per cent by 2020 and 80 per cent by 2050.

The recession appears to have made tackling climate change less of a priority for many people. Only just over a quarter (28 per cent) think that it is happening and is “far and away the most serious problem we face as a country and internationally”, while just over half (51 per cent) think it is “a serious problem, but other problems are more serious”.

Vicky Pope, head of climate change advice at the Met Office, said that growing awareness of the scale of the problem appeared to be resulting in people taking refuge in denial.

“Being confronted with the possibility of higher energy bills, wind farms down the road and new nuclear power stations encourages people to question everything about climate change,” she said. “There is a resistance to change and some people see the problem being used as an excuse to charge them more taxes.”

Ed Miliband, the Energy and Climate Change Secretary, said: “The overwhelming body of scientific information is stacked up against the deniers and shows us that climate change is man-made and is happening now. We know that we still have a way to go in informing people about climate change and that is why we make no apologies about pushing forward with our new Act on CO2 campaign.”

-------------------------------------------------------------------------------------------------

http://www.timesonline.co.uk/tol/news/environment/article6916510.ece

Widespread scepticism on climate change undermines Copenhagen summit

Peter Riddell, Ben Webster

The UK Times

November 14, 2009

Only a quarter of people believe that climate change is the most serious problem that the world faces, according to a poll for The Times.

The finding suggests that the public is unconvinced by the Government’s message that climate change is “the moral issue of our times” and that we must embrace urgently a low-carbon lifestyle.

The poll, undertaken last weekend, found that only two in five people in Britain accept as an established scientific fact that global warming is largely man-made.

The high degree of scepticism undermines the Government’s position at the UN climate change summit in Copenhagen next month. Gordon Brown will struggle to persuade developing countries that he has public support at home for drastic measures to reduce carbon emissions. Developing countries are threatening to walk out of the summit unless rich nations, including Britain, commit to making much greater cuts in carbon emissions than they are currently promising.

The poll results indicate that voters are not yet convinced of the need for significant sacrifices and will resist new green taxes.

Conservative voters are consistently less likely to be worried about global warming than other groups and are less supportive of measures to reduce emissions.

There is also a small gender gap, with women slightly more supportive of new green taxes than men.

Overall, 83 per cent accept, from what they have heard, that the Earth’s climate is changing and that global warming is taking place, with 15 per cent disagreeing.

Even among the majority that believes in global warming, only half believe that it is “now an established scientific fact that climate change is largely man-made”.

Among the public as a whole 41 per cent agrees that it is established that climate change is largely man-made. Tory voters are more dubious, at 38 per cent, than Labour and Liberal Democrat supporters (at 45 and 47 per cent).

A third of the public (32 per cent) agree that climate change is happening but believes it has not yet been proven to be largely man-made, while 8 per cent think that the view that climate change is man-made is environmentalist propaganda. Fifteen per cent believe that climate change is not happening.

Only 28 per cent believe that climate change is happening and is “far and away the most serious problem we face as a country and internationally”, while 51 per cent think that it is “a serious problem, but other problems are more serious”.

Only 3 per cent believe that climate change is taking place but is not really a serious problem.

Opinion is split about how the risks and possible consequences of climate change have been presented — 31 per cent believe that these have been presented “proportionately”; 32 per cent “understated”; and 33 per cent “exaggerated”.

On specific policy options the poll shows an increase in support compared with three years ago for new taxes on air travel intended to reduce the number of flights people take, and for raising the cost of motoring to encourage people to drive less.

Compared with November 2006, there has been a reduction in support for a much higher tax on cars that use a lot of petrol and emit high levels of carbon dioxide.

There is now a clear majority of 57 to 40 per cent in favour of new air travel taxes, up from a split of 50/46 per cent in 2006. The highest support is among women, professionals and managers, and Liberal Democrat voters.

Despite an increase in support, a majority still opposes increases in the cost of motoring, by 53 to 44 per cent. By contrast, despite a reduction in support, a big majority of 68 to 29 per cent support much higher taxes on cars that use a lot of petrol. Men (64 to 34 per cent) are much less enthusiastic than women (72 to 24 per cent).

A very big majority (87 to 11 per cent) support new building regulations for all new houses to meet the highest standards of insulation by making more use of renewal energy such as solar power, even if this increases the cost of new homes. Middle-class people back such a change much more than working-class groups.

The public clearly opposes, by 52 to 41 per cent, calls for the cost of meat to be raised because the farming of cows and pigs is a key contributor to methane emissions, a cause of climate change. Opposition is highest among men and Conservative voters.

Voters very strongly support, by 69 to 26 per cent, proposals to set limits on carbon dioxide emissions and to make companies pay for their emissions, even if this results in higher prices for manufactured goods and energy.

A Met Office survey conducted in August found that the proportion of people saying they knew little or nothing about climate change had grown from 32 per cent in 2006 to 47 per cent.

Mike Childs, head of climate change at Friends of the Earth, said that the continuing scepticism will make it difficult for politicians to obtain public support on measures to take climate change.

“If you are going to tackle climate change in places like the UK it means having to take difficult political decisions when we know that what we put out into the atmosphere now will not have an impact here for 20 or 30 years,” he said. “There will be difficulty in obtaining public support for some of the challenging decisions politicians have to take in the short term.”

There was little political risk in taking unpopular actions, though, because all the main parties were committed to tackling the issue, he said.

Mr Childs said that there was disproportionate media coverage of the view of scientists who challenged the link between climate change and human activity. The vast majority believed that the relationship was as strong as that between smoking and cancer.

Populus interviewed a random sample of 1,504 adults aged over 18 by telephone between November 6 and 8. For more details go to http://www.populus.co.uk/

-------------------------------------------------------------------------------------------------

http://www.euractiv.com/en/climate-change/eu-carbon-tax-new-commission-agenda-early-year/article-187029

EU carbon tax on new Commission's agenda early next year

EurActiv

November 4, 2009

The new European Commission will start work at the beginning of next year on a revision of EU energy taxation, designed to introduce CO2 as a fiscal element, a high-ranking EU official said today.

Proposing a revision of the 2003 Energy Taxation Directive will be on the agenda of the new Commission, "hopefully early in the New Year," Thomas Carroll, head of unit at the Commission's directorate-general for taxation and the customs union, told a roundtable organised by the Association of Chartered Certified Accountants (ACCA).

The outgoing Commission had hoped to see the proposal adopted already, but it became clear that member states had no appetite for controversial tax proposals when ratifying the Lisbon Treaty was the highest priority.

"We were told that anything that might jeopardise the right results should be kept back," Carroll said.

The revised directive will seek to bring current energy taxation in line with the EU's climate objectives by obliging member states to levy a CO2 tax on heating and motor fuels that do not feature in carbon trading, a draft shows (EurActiv 29/09/09). In addition, it seeks to iron out any overlaps with the EU's emissions trading scheme (EU ETS; see EurActiv LinksDossier) to avoid double-charging industries.

But Carroll stressed that EU countries would be free to choose a higher level of taxation than the minimum set by the EU.

"We are simply trying to create a level playing field and provide the tools in a Community framework," he said.

Carroll said that the Commission was currently working on the assumption that the carbon-related component would not increase the total level of energy taxation. Rather, the draft simply recasts the minimum tax rates for two components, one based on CO2 and the other on energy content.

"At the moment, this is just a working hypothesis," Carroll said. "Whether that will be the position of the new Commission, I don't know."

The official pointed out that the EU executive had wanted to avoid creating headlines in member states accusing the EU of being about to impose yet another new tax on citizens.

But the European Environmental Bureau (EEB) criticised the low rates, saying that they would not have the desired effect of persuading consumers to switch to more energy-efficient fuels. The Commission estimates that a carbon price of €39 per tonne of CO2 will be necessary to reach the EU's binding 2020 emission reduction target.

Catherine Pearce, a policy officer at the EEB, stressed that taxation is still a "dirty word" for both consumers and companies and appropriately informing them about any changes to the current framework will be crucial.

"How such a measure is communicated is key, and I think it's where many member states have failed in the past," she said.

The EU executive has a bad track record of getting tax proposals through as member states refuse to relinquish their exclusive competency in the area. Carroll noted that although a previous proposal to tax CO2 emissions from cars failed in 2005, many member states had put in place similar national schemes since then.

"The messeage got through. Unfortunately it's been done in an uncoordinated manner," the EU official said.

He added that even within the Commission, it is difficult to get a taxation proposal out as commissioners from the less prosperous new member states are always looking at the impact of taxes on their societies.

Do Obama and the Democrats Walk in Lock-Step With Europe's Socialists on Regulatory and Tax Policy??

noreply@blogger.com (ITSSD Charitable Mission) — Sat, 14 Feb 2009 14:11:00 +0000

http://www.ipsnews.net/news.asp?idnews=45762

ECONOMY: EU Divided Over Regulation

Analysis by David Cronin

Inter Press Service

February 13, 2009

BRUSSELS, Feb 13 (IPS) - The global recession has exposed the ideological fissures at the highest level of officialdom in the European Union.

Joaquin Almunia, the European commissioner for economic affairs, expressed a widely held view Feb. 11 when he declared a "need for more ambitious regulation" of financial services, implying that the way this sector has largely been exempt from stringent rules has contributed to the near collapse of the international banking system.

But Almunia, a Spanish Socialist, does not hold the portfolio in the European Commission, the EU's executive arm, which would enable him to come forward with the kind of proposals he deems necessary. Instead, responsibility for this area belongs to Charlie McCreevy, the single market commissioner, who has emphasised his antipathy to far-reaching regulation.

Since taking up his current post in 2004, McCreevy has repeatedly recited the mantra 'less is more'. "For far too long the EU has been adopting rules at EU level, simply for the sake of having rules at that level," he told a conference in Cape Town during 2007. "Once adopted the rules have been left to gather dust on the statute book. My approach is a different one. We should adopt fewer, better quality rules and then devote our energy to making sure they are properly enforced."

Irishman McCreevy is studying a range of options for how hedge funds should be regulated, and has been tasked by the Commission with presenting a plan for doing so before elections to the European Parliament this coming summer. Yet while he has invited comments from all interested parties as part of a 'public consultation' exercise, he has maintained that he would prefer to see these investment funds subject to voluntary codes of conduct, rather than binding laws.

[EVEN WE AGREE THAT HEDGE FUNDS MUST BE REGULATED AND THAT THEIR OFF-BALANCE SHEET BOOKKEEPING PRACTICES & 'UNCOVERED' SWAP TRANSACTIONS, IN PART, LED TO THE CURRENT FINANCIAL DEBACLE. THE QUESTION IS HOW TO EFFECTIVELY REGULATE THEM TO MINIMIZE SYSTEMIC RISK.]

Some economic analysts have contended that hedge funds are at least partly culpable for creating the sub-prime crisis in the U.S. and for endangering banks on this side of the Atlantic by engaging in a highly speculative activity known as short-selling. Nonetheless, McCreevy said in late 2008 that hedge funds generally play a positive role in modern finance.

"I think he is finding it very hard to accept that his beloved unregulated market has failed," said Poul Nyrup Rasmussen, the former Danish prime minister and now a Socialist member of the European Parliament. "He has certainly been trying to delay and where possible avoid regulation on hedge funds and private equity. I can't say what lessons he has learned from the crisis but he does not seem to have changed his dislike of market regulation, which is a pity because practically everyone else has realised that better regulation is unavoidable and necessary. I suspect we will encounter further efforts by him to put off regulation."

Although hedge funds were banned in Germany until 2004 because they were considered too risky, McCreevy encouraged their development in Ireland, where he was finance minister from 1997 to 2004. And by the time their global value was estimated at 2.5 trillion dollars in the summer of 2008, the International Financial Services Centre in Dublin stood alongside London and New York as one of the major onshore centres of hedge funds in the world.

"Mr McCreevy behaves like a lobbyist for the hedge fund industry," says Peter Wahl from World Economy, Ecology and Development (WEED), a German anti- poverty group. "He has an extremist position and is a full believer in the casino style of capitalism that has now collapsed."

["WEED (World Economy, Ecology & Development) http://www.weed-online.org/themen/english.html was founded in 1990 as an independent non-governmental organisation with offices in Berlin and Bonn. Weed is active in the areas of International Financial System and Debts, International Trade and Investment Policy, European and International Environmental and Development Policies.

Globalisation is a process with tremendous historical implications. It is not only an economic process but also has political, cultural and social dimensions. Globalisation changes the structures of the world economy and international relations and affects the everyday life of people everywhere. So far, globalisation has been following the paradigm of neoliberalism: liberalisation, deregulation, privatisation and free market access have been the dominant dictum. The results are many losers and only a handful of winners. Social justice and ecological sustainability are being subordinated to the interests of Global Players, shareholders, investors and creditors. WEED is not going to accept it that is why it exists.

WEED stands for a different kind of globalization and campaigns for a change in international economic and environmental policies. Justice, human rights and the environment have to be put before profits. WEED sees itself as a consistent lobby for justice in North-South relations - in Germany, the EU and in international institutions such as the IMF, the World Banks, the WTO and the UN. Our goal is to raise awareness of the negative impacts of globalisation, to develop concrete alternatives and to contribute to their implementation. For doing so WEED analyses and evaluates processes of decision-making in the world economy and proposes alternatives to prevailing politics; provides professional expertise for social movements and other actors of the civil society; takes part in public campaigns and mobilises civil society interventions proactively, approaches decision makers in politics and economy and demands the realisation of sustainable policies.

WEED cooperates in national and international networks like ATTAC, IFI-Watchers, Seattles to Brussels Network, Social Watch, Erlassjahrkampagne (jubilee Germany) as well as with unions and many more partner organisations as EURODAD."]

[WEED promotes the 'negative' paradigm of sustainable development' described on the main ITSSD website].

In recent years, McCreevy has publicly identified with the chief architects of market fundamentalism. In December 2005, he praised Margaret Thatcher for how she had "economically transformed" Britain as its prime minister in the 1980s. And he quoted Milton Friedman, intellectual guru to the late U.S. president Ronald Reagan, as well as to the Chilean military dictator Augusto Pinochet, to support his contention that tax competition between nations is healthy.

In December last year, a United Nations conference in the Qatari capital Doha recognised the kind of tax competition McCreevy favours as a major contributor to global poverty. U.S. President Barack Obama has also promised to crack down on tax havens.

[ONE MUST BE CAREFUL HERE WITH THE MEANING OF WORDS. TAX MINIMIZATION IS PERFECTLY LEGAL, WHILE TAX EVASION IS NOT.]

According to the World Bank, up to 800 billion dollars in untaxed capital leaves poor countries or economies in transition each year, frequently because multinational firms have received tax breaks from the host countries. This dwarfs the 100 billion dollars that such countries receive in annual development aid.

Accountancy firms have been accused of providing invaluable advice to companies about how they can conceal their profits and thereby evade tax. The four biggest firms with global reach - PricewaterhouseCoopers, KPMG, Ernst & Young and Deloitte - have all paid huge settlements in recent times after they were sued for breaching financial rules. Yet McCreevy, himself an accountant by training, has recommended that the four (joined together in the International Accounting Standards Board) should effectively set the rules that companies listed on the EU's stock exchanges should follow. This has thwarted moves to introduce the kind of international system deemed vital by anti-poverty campaigners to tackle tax evasion: one where every multinational firm has to state what profits it makes and what taxes it pays in every country where it operates.

[IT IS ABSURD TO INSINUATE THAT LEGAL, FINANCIAL AND TAX ADVISERS HAVE A RESPONSIBILITY TO ENSURE THAT THEIR CLIENTS PAY & REPORT THE HIGHEST LEVEL OF TAXES POSSIBLE!! IT IS, HOWEVER, ARGUABLE, THAT MANY ACCOUNTING RULES FOLLOWED BY PUBLIC COMPANIES DO NOT ACTUALLY PROVIDE THE TRANSPARENCY AND ACCOUNTABILITY THAT LEGISLATORS AND REGULATORS HAVE SOUGHT. MORE REGULATION DOESN'T MEAN BETTER REGULATION. HERE, MR. MCGREEVY IS CORRECT AND THE SOCIALISTS ARE WRONG.]

"Published accounts will always be like bikinis - much more interesting for what they conceal than for what they reveal," McCreevy has said. "The view that more frequent reporting by companies increases transparency is one about which I am deeply sceptical."

John Christensen from the Tax Justice Network differs: "The IASB is a private company. By and large, it is manned by and controlled by the big four accounting firms and their clients. It doesn't generally consult outside the four. McCreevy is very closely connected to the four, he comes out of that background. And he doesn't buy into the idea that there is a legitimate interest in corporate information outside the investor community.

"There is not necessarily any financial conflicts of interests. But I'm afraid McCreevy is seen as representing the interests of the International Financial Services Centre in Dublin. Dublin is competing with other tax havens like the Isle of Man and Jersey. It is pushing lax regulation and McCreevy is seen as part of that problem of lax regulation." (END/2009)

What’s in a Name? That Which We Might Call a Fee By Any Other Name Would Be Called a Tax!

noreply@blogger.com (ITSSD Charitable Mission) — Wed, 24 Dec 2008 16:26:00 +0000

The title of this blog entry was inspired by famous English playwright William Shakespeare’s Romeo and Juliet, Act II, Scene 2. “Juliet: ‘What's in a name? That which we call a rose By any other name would smell as sweet'". A reproduction of this famous scene follows:

Juliet.

O Romeo, Romeo! wherefore art thou Romeo

Deny thy father and refuse thy name;

Or, if thou wilt not, be but sworn my love,

And I'll no longer be a Capulet.

------------

Romeo.

[Aside.] Shall I hear more, or shall I speak at this?

------------

Juliet.

'Tis but thy name that is my enemy'

--Thou art thyself, though not a Montague

What's Montague?

It is nor hand, nor foot,

Nor arm, nor face, nor any other part

Belonging to a man.

O, be some other name!

What's in a name? that which we call a rose

By any other name would smell as sweet;

So Romeo would, were he not Romeo call'd,

Retain that dear perfection which he owes

Without that title:--Romeo, doff thy name;

And for that name, which is no part of thee,

Take all myself...

----------

Romeo.

I take thee at thy word:

Call me but love, and I'll be new baptiz'd;

Henceforth I never will be Romeo.

----------

Juliet.

What man art thou that, thus bescreen'd in night,

So stumblest on my counsel?

----------

Romeo.

By a name

I know not how to tell thee who I am:
My name, dear saint, is hateful to myself,

Because it is an enemy to thee.
Had I it written, I would tear the word.

----------

Juliet.

My ears have yet not drunk a hundred words

Of that tongue's utterance, yet I know the sound;

Art thou not Romeo, and a Montague?

----------

Romeo.

Neither, fair saint, if either thee dislike.

----------

Juliet.

How cam'st thou hither, tell me, and wherefore?

The orchard walls are high and hard to climb;

And the place death, considering who thou art,

If any of my kinsmen find thee here.

-----------

Romeo.

With love's light wings did I o'erperch these walls;

For stony limits cannot hold love out:
And what love can do, that dares love attempt;
Therefore thy kinsmen are no let to me.

------------------------------------------------------------------------------------------------

http://stats.oecd.org/glossary/detail.asp?ID=1330

Indirect Taxes, Eurostat, OECD Glossary (2001)

According to the Paris-based Organization for Economic Cooperation and Development (OECD), the term 'indirect taxes' is defined as follows:

"[I]ndirect taxes can be separated into three groups:—

The first comprises VAT and other deductible taxes directly linked to turnover (product sales & services) which are excluded from turnover. These taxes are collected in stages by the enterprise and fully borne by the final purchaser.
The second group concerns all other taxes and duties linked to products which are either: (1) linked to turnover and not deductible; or (2) taxes on products not linked to turnover. Included here are taxes and duties on imports and taxes on the production, export, sale, transfer, leasing or delivery of goods and services or as a result of their use for own consumption or own capital formation.

The third group concerns taxes and duties linked to production. These are compulsory, unrequited payments, in cash or in kind which are levied by general government, or by the Institutions of the European Union, in respect of the production and importation of goods and services, the employment of labour, the ownership or use of land, buildings or other assets used in production irrespective of the quantity or the value of goods and services produced or sold.

...For the purposes of national accounts, taxes on production and imports can be separated into five groups, the first and last of which are essentially then same as the first and third groups used in business statistics.

value added type taxes

import duties

taxes on imports excluding VAT and import duties

taxes on products except VAT and import taxes

other taxes on production."

-------------------------------------------------------------------------------------------------

"TAX - A sum that legislation imposes upon persons (broadly defined to include individuals, trusts, estates, partnerships, associations, companies, and corporations), property, or activities to pay for government operations. The power to impose and collect federal taxes is given to Congress in Article I, Section 8, of the U.S. Constitution. Collections that arise from the sovereign powers of the federal government constitute the bulk of governmental receipts, which are compared with budget outlays in calculating the budget surplus or deficit." [See: A Glossary of Terms Used in the Federal Budget Process, Fifth Edition, United States General Accounting Office (Sept. 2005) at p. 94, at: http://www.gao.gov/new.items/d05734sp.pdf ].

"A hidden tax is a tax that is not visible to the taxpayer. These taxes can raise prices of goods and lower salaries for workers. Hidden taxes, although hidden, can decrease the purchasing power of individuals significantly." [See: Hidden Tax Wikipedia http://en.wikipedia.org/wiki/Hidden_tax ].

"Purchasing power is the amount of value of a good/services compared to the amount paid with a currency." [See: Purchasing Power, Wikipedia at: http://en.wikipedia.org/wiki/Purchasing_power ].

"[A] Hidden Tax [is] a tax that is not immediately apparent. For example, while a consumer may be aware of a tax on retail purchases, a tax imposed at the wholesale level, which consequently increases the cost of items to the retailer, will not be apparent." [See: Hidden Tax, BNET Business Dictionary, at: http://dictionary.bnet.com/definition/hidden+tax.html ].

"Hidden Tax: same as Indirect Tax". [See: Hidden Tax, Encarta at: http://au.encarta.msn.com/dictionary_1861719133/hidden_tax.html].

"Indirect Tax: tax on goods and services: a tax levied on goods or services, instead of directly on companies and individual people". [See: Indirect Tax, Encarta at: http://au.encarta.msn.com/dictionary_1861714665/indirect_tax.html ].

EXCISE TAX - An excise tax is a type of ad valorem tax that is imposed at the time of a purchase or sale transaction (sales tax or value added tax (VAT)) or in connection with importation across a political border (tariffs). The tax may be based on the purchase price or the declared value, or some standard estimate of a fair price: for example, the sales tax on used boat purchases in the United States is determined with reference to a published list of prices.

Excise taxes are often pledged for certain purposes. For example, a fuel excise is often used to pay for public transportation, especially roads and bridges and for the protection of the environment. Excises (or exemptions from them) are also used to modify consumption patterns. For example, a high alcohol or tobacco excise is used to discourage alcohol and tobacco consumption, relative to other goods. [See: Excise Tax - Law & Legal Definition, US Legal at: http://definitions.uslegal.com/e/excise-tax/ ].

------------------------------------------------------------------------------------------------

http://www.regulationtaskforce.gov.au/__data/assets/pdf_file/0011/69734/sub001.pdf

Fighting Australia’s Over-regulation

By Senator the Hon. Michael Ronaldson

"...Red tape is a hidden tax. Australian individuals, families, communities and businesses are drowning in a sea of acts of parliament, delegated legislation, forms, non-essential procedures, licences, cumbersome judicial interpretations, rules, regulations and administrative policy.

By its very nature, government power creates transactional and compliance costs. As government assumes responsibility for and control over more and more facets of our society, the more the autonomy and independence of the individual is diminished..."

------------------------------------------------------------------------------------------------

http://cei.org/articles/%E2%80%98hidden-tax%E2%80%99-rules-hits-economy

A ‘Hidden Tax’ Of Rules Hits Economy

By Clyde Wayne Crews and Ryan Young

Competitive Enterprise Institute

August 5, 2008

"President Bush's fiscal 2009 U.S. budget is the first to top $3 trillion. Federal spending has risen from 18% of GDP in 2000 to 21% today. The administration's spending explosion has been roundly criticized by both the right and the left.

What is less well documented are regulatory compliance costs — such as environmental, labor and energy efficiency mandates. As a result, too many remain unaware of the size and scope of regulation. Regulations are a "hidden tax" now estimated to cost business and consumers hundreds of billions, above and beyond federal spending itself.

In June, New York Times columnist Paul Krugman blamed inadequate food regulation for everything from health scares to foreign policy troubles with South Korea. The Republican administration now proposes sweeping new regulation of America's financial sector. Clearly, many have the impression that the American economy is as lawless as the Wild West.

To be blunt, that impression is wrong.

While the Dow collapses, we have a bull market in government regulations. The 50-plus departments, agencies and commissions are now at work on 3,882 rules; 757 will affect small businesses. More than 51,000 final rules were issued from 1995 to 2007. Those regulations are not free.

Enforcing and overseeing them costs $42 billion per year. A far bigger cost — one that is not counted in the budget — is compliance. Regulatory compliance costs of $1.16 trillion are now higher than Canada's entire 2004 GDP ($1.017 trillion).

At a time of lackluster 1% economic growth, the regulatory state costs 8.5% of U.S. GDP. Combined with the 21% of GDP consumed by federal spending, we have a federal government that absorbs nearly 30% of economic output. None of this includes state and local government, which push the burden of government up to 53.9% of GDP.

The Federal Register, which lists all new rules, ran to 72,090 pages in 2007. This was down 3.8% from 2006. The record year was 2004, which saw 75,676 pages.

Out of more than 60 federal departments, a mere five accounted for 45% of new rules. The departments of Treasury, Commerce, Agriculture, and Homeland Security, along with the EPA, instituted a combined 1,741 new rules in 2007.

Some rules cost more than others and deserve special attention. Of the new rules, 159 are 'economically significant,' meaning they will cost at least $100 million a year..."

------------------------------------------------------------------------------------------------

http://www.heritage.org/Research/Regulation/bg2116.cfm

Red Tape Rising: Regulatory Trends in the Bush Years

By James L. Gattuso

Heritage Foundation Backgrounder #2116

March 25, 2008

"[Through] the hidden tax of regulation...[t]he federal government...impose[s] a burden of some $1.1 trillion—an amount that is comparable to total federal income tax receipts. And the cost of regulation is getting higher... Since 2001, the federal government has imposed almost $30 billion in new regulatory costs on Americans. About $11 billion was imposed in fiscal year (FY) 2007 alone. Even more are on the way.

...Over 50 agencies ranging from the Animal and Plant Health Inspection Service to the Bureau of Customs and Border Protection have a hand in federal regulatory policy. Together, they enforce over 145,000 pages of rules, with purposes and impacts as varied as the agencies themselves. Some rules are meant to protect health and safety, some to protect (or suppress) economic competition, and others to protect the environment.

Certainly, many of these regulations are justified—and even necessary. For instance, most would agree on the need for security rules to protect citizens against terrorism, although the extent and scope of those rules may be subject to debate. Moreover, imposition of a regulation is not per se inconsistent with market principles. Some in fact reinforce property rights and market mechanisms.

Nevertheless, all rules come at a cost: a 'regulatory tax' imposed on all Americans..."

------------------------------------------------------------------------------------------------

http://www.thefreemanonline.org/columns/a-tax-is-not-a-user-fee/

A Tax Is Not a User Fee!

By Lawrence Reed

The Freeman Ideas on Liberty

June 1st, 1999

"Politicians and bureaucrats are notorious for manufacturing euphemisms—clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase 'revenue enhancement' entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say 'tax hike.'

At all levels of government, a bipartisan effort to impose new or higher taxes and mislabel them as seemingly less onerous “user fees” provides another example. Sometimes, a user fee is indeed a user fee. Other times, it’s not that at all. Instead, it’s a tax hike disguised by a misnomer.

When someone chooses to use a government service and pays for it, he’s paying a user fee. Furthermore, what he pays should cover the cost of the service he is receiving; if it goes for something he isn’t getting or doesn’t want, then he’s paying a little of both—a user fee plus a tax. Taxes differ from user fees in that paying them isn’t a matter of choice and what you pay is not tied directly to what you’re using.

In principle, true user fees make a lot of sense, especially if you want people to understand that nothing from government is truly 'free.' Indeed, the more government finances itself through user fees instead of taxes, the less it looks like government and the more it gets out of the redistribution business and begins to resemble private firms operating in free markets.

Instinctively, most people sense a certain fairness about true user fees. You pay for what you get, and you get what you pay for. Most people understand and support user fees for such things as toll roads, harbors and waterways, and even parks and recreational facilities. If they understand that private enterprise would probably do a better job with these things, they know that at least a user fee approach for government services gives them an opportunity to make a rational economic choice: buy it if it’s worth the price, patronize an alternative, or do without. All this makes for useful background to a victory that advocates of liberty and sound economics recently won in my state of Michigan.

In 1978, Michigan voters approved the Headlee Amendment to the state constitution. Among other provisions, the amendment requires voter approval before a tax can be imposed or increased. In its 1994 report, the Headlee Amendment Blue Ribbon Commission found that a growing number of Michigan townships, counties, and cities were skirting that requirement by mislabeling certain taxes “user fees.” The commission recommended that the legislature clarify the difference between a tax and user fee. The Michigan Supreme Court now has done what the legislature never got around to doing. Here’s how the case arose:

In 1995, the city of Lansing adopted Ordinance 925, known by many as the “rain tax.” It provided for the creation of a storm water enterprise fund “to help defray the cost of the administration, operation, maintenance, and construction” of a new storm water system that would separate sanitary and storm sewers. Heavy rains had occasionally caused the city’s combined sanitary and storm sewer system to overflow, discharging untreated and partially treated sewage into the Grand and Red Cedar rivers. Fifty percent of the 30-year, $176 million cost of the system was to be financed through an annual “storm water service charge” imposed on each parcel of property in the city. The city maintained that the service charge was a user fee and therefore did not have to be put before the voters for approval. But Lansing citizen Alexander Bolt had read the constitution and knew a tax when he saw one.

Bolt challenged the Lansing 'rain tax,' taking the case all the way to the Michigan Supreme Court, a majority of which on December 28, 1998, declared, 'We hold that the storm water service charge is a tax, for which approval is required by a vote of the people. Because Lansing did not submit Ordinance 925 to a vote of the people as required by the Headlee Amendment, the storm water service charge is unconstitutional and, therefore, null and void.' The decision established an important precedent that puts municipalities on notice that the voters who approved the amendment intended for it to be enforced, not subverted.

The Court’s majority opinion refreshingly argues that 'a primary rule in interpreting a constitutional provision . . . is the rule of ‘common understanding.’' In other words, in this case the intent of the voters should be of utmost importance, as opposed to some judicially activist fabrication. The Court affirmed that the voters intended to place limits on taxes and governmental expansion.

Just what exactly distinguishes a user fee from a tax? The Court advanced three main criteria: (1) a user fee is designed to defray the costs of a regulatory activity (or government service), while a tax is designed to raise general revenue; (2) a true user fee must be proportionate to the necessary costs of the service, whereas a tax may not be; and (3) a user fee is voluntary, whereas a tax is not.

The Lansing ordinance failed all three tests of a user fee. The Court determined that it constituted “an investment in infrastructure as opposed to a fee designed simply to defray the costs of a regulatory activity” and agreed with the dissenting opinion in a lower court ruling that the revenue from the charge was “clearly in excess of the direct and indirect costs of actually using the storm water system.” The Lansing rain tax applied “to all property owners, rather than only to those who actually benefit,” contrary to a genuine user fee. Moreover, the ordinance “failed to distinguish between those responsible for greater and lesser levels of runoff.”

Most plainly, the rain tax was utterly involuntary. True user fees are only “compulsory” for those who choose to use a service, but Lansing property owners in this case had “no choice whether to use the service” and were “unable to control the extent to which the service” was used.

The Court’s majority concluded by quoting the Headlee commission report, “This is precisely the sort of abuse from which the Headlee Amendment was intended to protect taxpayers.” Amen!

The message is clear to Michigan municipalities: You now have no legitimate excuses for mislabeling taxes as “user fees.” Be honest. If it’s a tax, put it before the voters as the Headlee Amendment requires and make your best case. You can’t junk the constitution just because you want the money. It’s a refreshing message that ought to be applied everywhere.

Lawrence Reed is president of the Mackinac Center for Public Policy, a free market research and educational organization in Midland, Michigan, and chairman of FEE’s Board of Trustees. As a member of the Headlee Amendment Blue Ribbon Commission, he helped write the portion of the commission’s report dealing with the user fee versus tax issue in 1994.

-----------------------------------------------------------------------------------------------

USER FEES - "Fees charged to users of goods or services provided by the Federal Government. In levying or authorizing these fees, Congress determines whether the revenue should go into the Treasury or should be available to the agency providing the goods or services." [See: United States Senate Glossary, at: http://www.senate.gov/reference/glossary_term/user_fees.htm ].

USER FEE/ USER CHARGE - "A fee assessed to users for goods or services provided by the federal government. User fees generally apply to federal programs or activities that provide special benefits to identifiable recipients above and beyond what is normally available to the public. User fees are normally related to the cost of the goods or services provided. Once collected, they must be deposited into the general fund of the Treasury, unless the agency has specific authority to deposit the fees into a special fund of the Treasury. An agency may not obligate against fees collected without specific statutory authority. An example of a user fee is a fee for entering a national park."

From an economic point of view, user fees may also be collected through a tax such as an excise tax. Since these collections result from the government’s sovereign powers, the proceeds are recorded as governmental receipts, not as offsetting receipts or offsetting collections.

In the narrow budgetary sense, a toll for the use of a highway is considered a user fee because it is related to the specific use of a particular section of highway. Such a fee would be counted as an offsetting receipt or collection and might be available for use by the agency.

Alternatively, highway excise taxes on gasoline are considered a form of user charge in the economic sense, but since the tax must be paid regardless of how the gasoline is used and since it is not directly linked with the provision of the specific service, it is considered a tax and is recorded as a governmental receipt in the budget. [See: A Glossary of Terms Used in the Federal Budget Process, Fifth Edition, United States General Accounting Office, supra at p. 100 ].

The difference between user fees and taxes:

User Fee- A fee assessed to users for goods or services provided by the federal government. User fees are normally related to the costs of the goods or services provided. Once collected, they must be deposited into the general fund of the Treasury, unless the agency has a specific authority to deposit the fees into a special fund of the Treasury.

Tax- A sum that legislation imposes upon persons, property, or activities to pay for government operations. When Congress imposes taxes, it need not consider benefits bestowed by the government on an individual but may base taxation solely on an individual’s ability to pay. [See: User Fees FAQ’s, U.S. Customs & Border Patrol, at: http://www.cbp.gov/linkhandler/cgov/travel/inspections_carriers_facilities/advisory_committee/user_fees_faqs.ctt/user_fees_faqs.doc ].

"The boundaries between fees and taxes are not always clear...In general, a user fee is related to some voluntary transaction or request for government goods or services above and beyond what is normally available to the public, such as a request that a public agency permit an applicant to practice law or medicine or construct a house or run a broadcast station. Taxes, on the other hand, arise from the government’s sovereign power to raise revenue and need not be related to any specific benefit, and payment is not optional; when Congress imposes taxes, it need not consider benefits bestowed by the government on an individual but may base taxation solely on an individual’s ability to pay...

...Fees vary in the degree to which they can be considered truly voluntary because the availability of reasonable substitutes varies. For example, to enter certain national parks, one must pay an entrance fee. The fee is voluntary to the extent that there are alternatives to national parks for outdoor recreation, for example, state, county, or private parks and recreation facilities. In contrast, people who want to operate radio stations have no similarly close alternative and must obtain a license from the Federal Communications Commission and pay a fee for that license.

[In United States v. La Franca, 282 U.S. 568, 572 (1931) (dealing with the legal distinction between a 'tax' and a 'penalty'), the Supreme Court ruled that a tax is 'an enforced contribution to provide for the support of government.' (See: http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=US&vol=282&invol=568 )].

"...[Thus,] The legal distinction between a 'fee' and a 'tax' can be complicated and depends largely on the context of the particular assessment [e.g., whether a fee is 'truly voluntary' - i.e., whether there exists a 'reasonable alternative']. Whether a particular assessment is statutorily referred to as a tax or a fee is never legally determinative. Instead, federal courts will examine the structure and the context of the assessment’s application." [SUCH DETERMINATIONS WILL REQUIRE A CASE-BY-CASE, 'FACTS & CIRCUMSTANCES' TEST].

...Agencies derive their authority to charge fees either from the Independent Offices Appropriation Act of 1952 (IOAA) (Title V of the Independent Offices Appropriation Act, 1952, Pub. L. No. 82-137, 65 Stat. 268, 290, known as the “IOAA” or the “User Charge Statute.”) or from specific statutory authority. IOAA provides broad authority to assess user fees or charges on identifiable beneficiaries by administrative regulation. User fees assessed under IOAA authority must be (1) fair and (2) based on costs to the government, the value of the service or thing to the recipient, public policy or interest serviced, and other relevant facts. Fees collected under this authority are deposited in the general fund of the U.S. Treasury and are generally not available to the agency or the activity generating the fees.

Unless otherwise authorized by law, IOAA requires that agency regulations establishing a user fee are subject to policies prescribed by the President. OMB provides such guidance to executive branch agencies under this authority through Circular No. A-25.9. [See: http://www.whitehouse.gov/omb/circulars/a025/a025.html ]. The Circular establishes federal guidelines regarding user fees assessed under the authority of IOAA and other statutes, including the scope and types of activities subject to user fees and the basis upon which the fees are set. It also provides guidance for executive branch agency implementation of fees and the disposition of collections. [OMB Circular No. A-25 does not apply to the activities of the legislative and judicial branches of government or to mixed ownership government corporations as defined by 31 U.S.C. § 9701].

In many instances, Congress has provided specific authority to federal agencies to assess user fees—in agency authorizing or appropriations legislation, for example. Legislation authorizing a user fee may enact a specified rate or amount to be assessed or may stipulate how the fee is to be calculated, such as a formula; the method and timing of collection; and the authorized uses of the fee collections, which may be broadly or narrowly defined. The amount of a fee may be set to partially or fully recover costs or may be set according to some other basis (e.g., market value). Specific authorizing statutes may even grant the agency broad discretion to set and revise fee rates without Congressional approval—that is, solely through the regulatory process—based on various factors. Specific user fee statutes should be construed consistent with IOAA and OMB Circular No. A-25 to the extent possible as part of an overall statutory scheme." [See: FEDERAL USER FEES: A Design Guide, Report to Congressional Requesters (GAO-08-386SP), United States Government Accountability Office (May 2008) at pp. 4-6, at: http://www.gao.gov/new.items/d08386sp.pdf ].

[READERS SHOULD NOTE THAT THE 'GENERAL ACCOUNTING OFFICE', WHICH WAS FORMED IN JULY 1921, WAS RENAMED THE 'GOVERNMENT ACCOUNTABILITY OFFICE' IN 2004].

[The GAO "assists Congress in carrying out its investigation and evaluation role." According to former GAO General Counsel, Anthony Gamboa, "a proposal ha[d] been made to change the name to 'General Accountability Office' in order to get away from the concept that the agency is only about accounting. The agency operates through teams that specialize in specific areas of government. Members of Congress ask the agency to investigate particular problems and the selected team relies on the General Counsel's office to provide legal support for the investigation. The agency also adjudicates government procurement disputes, rules on the propriety of appropriation requests and provides formal legal opinions to Congress." See: "GAO To Begin Recruiting At The College of Law", Sandra Day O'Connor College of Law, Arizona State University website at: http://www.law.asu.edu/?id=7951 . For a more detailed history surrounding the creation and role of the GAO, See: Walker v. Cheney, MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT, Civil Action No. 1:02CV00340 (JDB) (D.C. Cir. 2002), at: http://fl1.findlaw.com/news.findlaw.com/hdocs/docs/gao/wlkrchny41102pmem.pdf ;
GAO STATEMENT CONCERNING LITIGATION (Feb. 22, 2002) at: http://www.gao.gov/press/gaostatement0222.pdf ; Walker v. Cheney, Civil Action No. 1:02CV00340, Complaint Filed in the U.S. District Court for the District of Columbia (Feb. 22, 2002) at: http://fl1.findlaw.com/news.findlaw.com/hdocs/docs/gao/wlkrchny022202cmp.pdf .The federal district court ultimately ruled against the GAO during 2003. See: "GAO PRESS STATEMENT ON WALKER v. CHENEY", (Feb. 7, 2003) at: http://oversight.house.gov/documents/20040625103334-22539.pdf ].

-------------------------------------------------------------------------------------------------
[ANOTHER GAO REPORT]

“When Congress authorizes a program or activity that will benefit private interests, it must also decide how to finance that program or activity. Basically, the choices are subsidization, user financing, or some combination of the two. Subsidization means funding the activity from appropriated funds, thus spreading the cost among all taxpayers. The user financing option involves some form of user charge or fee, under which part or all of the cost is borne by the recipients of the benefit. A user fee may be defined as ‘a price charged by a governmental agency for a service or product whose distribution it controls,’ or ‘any charge collected from recipients of Government goods, services, or other benefits not shared by the public.’

"We all pay a variety of user fees. When you buy postage stamps at your local post office, buy a fishing license, or pay highway tolls, you are paying a user fee. These common examples show some of the different types of user fees. You pay the toll only when you use the highway; if you never use the highway, you never need to pay the toll. Similarly, if you have no intention of going fishing, you don’t need to buy a fishing license. Once you buy the license, however, whether you ever use it or not is irrelevant to the issuing authority. You can use it as often as you like during the fishing season, but it becomes worthless once the season or specified time period is over, and even if you’ve never used it you can’t get your money back. You can use the postage stamp for its intended purpose, or you can save it. Although you can’t sell it back to the post office, it never loses its face value as long as it remains unused.

The advantages and disadvantages of user financing are much discussed and debated in the public financing literature. Supporters of user fees regard them as equitable because they place the economic burden on those receiving the benefit. They are also politically and 'budgetarily' attractive as an alternative to general tax increases. This was especially true during the budgetary shortfalls of the 1980s and early 1990s. CBO has noted that “[m]ost of the new and increased [user fee] charges of the 1980s followed the passage of the Balanced Budget Act of 1985. As the search for new sources of funds intensified, changes in law and budget processes helped assure the enactment of new user charges.” CBO, The Growth of Federal User Charges xi (August 1993). Moreover, the legal basis for setting user charges expanded from reimbursing an agency’s costs of providing services, to financing all or specified portions of the agency’s budget. Id.

While user fees at the federal level are not new, they received relatively little attention prior to the final third of the 20th century. In March 1980, GAO issued its report The Congress Should Consider Exploring Opportunities to Expand and Improve the Application of User Charges by Federal Agencies, GAO/PAD-80-25, the thrust of which is evident from its title. Page 1 of that report stated:

'Both individuals and businesses are concerned with tax burdens. Businesses are also concerned with the fact that compliance with Federal regulations is often expensive. Both concerns can be addressed by the Government’s promotion of economy and efficiency through actively employing user charges. [Footnote omitted.]

User charges can reduce Federal taxes, as well as the costs of certain types of regulation. They are a source of revenue that can partially replace general taxation of individuals and businesses. They also reduce the amount of taxes needed to finance the production of goods and the delivery of services to the extent that charging higher prices reduces recipient demand.'

In addition, GAO has issued a minor deluge of reports analyzing, and encouraging optimum use of, user fees in specific contexts. The fever spread to Congress generally as well as the Office of Management and Budget and the rest of the executive branch, with the result that the growth of user fees mushroomed. Between 1980 and 1991, CBO found, user charges increased by 54% in constant dollars, and financed much larger shares of many agencies’ budgets. CBO, Growth of Federal User Charges (1993). A later GAO report supports the notion that this trend continued during the 1990s, as many agencies became increasingly more reliant upon user fees, over general tax revenues, to fund their programs and operations, Federal User Fees: Budgetary Treatment, Status, and Emerging Management Issues, GAO/AIMD-98-11 (December 1997).

Political attractions aside, levying user fees is not simply a question of raising revenue, but can implicate a variety of other economic and public policy issues as well. For example, increasing a user fee can result in capital losses in the form of decreased asset values. This in turn raises questions as to the desirability of some form of compensation for these losses. A GAO analysis of these issues can be found in Congressional Attention Is Warranted When User Charges or Other Policy Changes Cause Capital Losses, GAO/PAD-83-10 (October 13, 1982). The case study presented in that report is the use of water in the Columbia Basin Project in the Pacific Northwest. The study showed that, if the price charged for water provided to farmers for irrigation purposes were raised to market levels, water would be diverted from farming to the production of electricity, and the value of farmland would drop significantly. (pp. 15-132 to 15-134)

In National Cable Television Ass’n v. United States, 415 U.S. 336 (1974), the Supreme Court distinguished two of them, fees and taxes. A fee is something you pay incident to a voluntary act on your part, for some benefit the government has bestowed or will bestow on you which is not shared by other members of society, examples being ‘a request that a public agency permit an applicant to practice law or medicine or construct a house or run a broadcast station.’ Id. at 340. Taxes, on the other hand, need not be related to any specific benefits. Congress can take your money by taxation merely because you have it to be taken. Id. at 340-41. [In National Cable Television, the Supreme Court held that the IOAA authorizes fees but not taxes…After drawing the distinction noted above, the Court added that the primary measure of a fee under the IOAA is the ‘value to the recipient' standard of 31 U.S.C. § 9701(b)(2)(B). An attempt to recoup total cost would go beyond this by charging recipients for the public as well as private benefits of the FCC’s regulatory activities, which would at least arguably amount to levying a tax. Holding that the FCC could not do so, the Court considerably narrowed the scope of the IOAA, stating:

‘It would be such a sharp break with our traditions to conclude that Congress had bestowed on a federal agency the taxing power that we read [the IOAA] narrowly as authorizing not a ’tax’ but a ’fee’.’ 415 U.S. at 341.

By adopting this narrower interpretation, the Court was able to avoid having to directly confront the constitutional issue of the extent to which Congress could delegate its power to tax.

… On the same day it decided National Cable Television, the Court also decided the companion case of FPC v. New England Power Co., 415 U.S. 345 (1974), applying National Cable Television to invalidate annual assessments levied on pipeline companies by the Federal Power Commission. The Court agreed with the Court of Appeals for the District of Columbia Circuit (467 F.2d 425) that the IOAA does not authorize assessments on whole industries, but applies only with respect to 'specific charges for specific services to specific individuals or companies.' 415 U.S. at 349. The Court noted with approval portions of OMB Circular No. A-25, now found at sections 6 (agencies should assess user charges to “identifiable recipients” ),and 6a(4) (agencies should not assess fees “when the identification of the beneficiary is obscure”). This, said the Court, ‘is the proper construction of the [IOAA]’ and helps to restrain it from crossing the line into the realm of taxes. 415 U.S. at 351.

Notwithstanding overbroad language occasionally encountered in some lower court decisions, National Cable Television and New England Power do not stand for the proposition that Congress may not delegate the authority to assess charges which are more appropriately categorized as taxes. Indeed...it is now settled that Congress can do so as long as the statutory delegation is sufficiently explicit and provides intelligible guidelines. Rather, these cases hold merely that Congress did not do so in the IOAA.”

[1. USER FEES ARE DIRECTLY RELATED TO & CONTINGENT UPON THE ISSUANCE OF REGULATIONS].

In order to assess fees under the IOAA, an agency must first issue regulations… A simple policy statement to the effect that fees will be charged for special services has been held too vague to support fee assessment…Rather, since rulemaking under the Administrative Procedure Act must provide the opportunity for public comment, the agency’s notice must include, or make available on request, a reasonable explanation of the basis for the proposed fee. This, one court has held, must be one that ‘the concerned public could understand.’ Engine Manufacturers Association v. EPA, 20 F.3d 1177, 1181 (D.C. Cir. 1994)… The Court of Appeals for the District of Columbia Circuit has also stressed the need for the agency to make a clear public statement of the basis for its fees so that a reviewing court can measure the agency’s action against the Supreme Court’s standards.

…The first step in establishing a fee or fee schedule under the IOAA is to ‘identify the activity which justifies each particular fee’ the agency wishes to assess… Thus, the threshold question is what kinds of government services or activities are regarded as conferring special benefits for purposes of the IOAA?...[In Ayuda, Inc. v. Attorney General, 848 F.2d 1297 1300 (D.C. Cir. 1988), the Court of Appeals for the District of Columbia Circuit had previously held that the] phrase should be construed broadly…this…is made clear by comparing the source language, 65 Stat. 290, which authorized fees for:

‘any work, service, publication, report, document, benefit, privilege, authority, use, franchise, license, permit, certificate, registration, or similar thing of value or utility performed, furnished, provided, granted, prepared, or issued by any Federal agency to or for any person (including groups, associations, organizations, partnerships corporations or businesses)…’

OMB Circular No. A-25, section 6a, provides further guidance.

[2. A SPECIAL BENEFIT MUST BE CONFERRED BEFORE A USER FEE CAN BE ASSESSED UNDER IOAA].

…On the one hand, the mere fact of regulation is not enough to justify a fee…An agency may also charge a fee under the IOAA for services which assist regulated entities in complying with statutory duties…This is particularly true where the statute was enacted ‘in large measure for the benefit of the individuals, firms, or industry upon which the agency seeks to impose a fee’… Use of government property is another activity for which fees may be charged under the IOAA. A common example is the granting of a right-of-way over public lands…Information is certainly a ‘thing of value.’ Accordingly, the dissemination or distribution of information is another area subject to the IOAA to the extent not governed by some other statute such as the Freedom of Information Act… Another activity susceptible to IOAA fees is adjudicatory services by an administrative agency. The services may or may not be incident to a regulatory program. An example of the former is Federal Energy Regulatory Commission review of administrative appeals of remedial orders… An example of the latter is the range of adjudicatory services rendered to aliens by the Immigration and Naturalization Service.

Fees incident to litigation in the courts are also commonplace, but they implicate certain constitutional considerations and are prescribed under statutes other than the IOAA. See 28 U.S.C. §§ 1911 (Supreme Court), 1913 (courts of appeals), 1914 (district courts), 1926 (Court of Federal Claims), 1930 (bankruptcy fees). The rule is that, with the exception of certain indigent situations, reasonable fees may be charged to those seeking access to the courts…

Still another example is transportation services. Thus, if local services are not available, the National Park Service may provide transportation to injured or ill visitors in national parks, but should attempt to recover its costs under the IOAA.

[3. THE AMOUNT OF THE FEE MUST RELATE TO THE SPECIFIC PRIVATE BENEFIT CONFERRED UPON AN IDENTIFIABLE BENEFICIARY].

…[A]n attempt by a regulatory agency to recover its full operating costs would amount to charging the regulated entities for those portions of the program that benefit the public as a whole. This would go beyond the concept of a 'fee,' which is all the IOAA authorizes… Although the Supreme Court has not revisited the IOAA since its two 1974 decisions, two important principles have emerged from the body of lower court jurisprudence:

1. When establishing a fee for a specific benefit conferred on an identifiable beneficiary, the agency must exclude expenses incurred in serving some independent public interest.

2. Once it is established that a given activity confers a specific benefit on an identifiable beneficiary. The agency may charge its full costs of providing the service, regardless of the fact that the service may incidentally benefit the general public as well.

[4. CALCULATION OF THE USER FEE].

The agency must first separate its beneficiaries into ‘recipient classes’ (applicants, grantees, carriers, etc.), among which costs will be allocated. Each recipient class should be ‘the smallest unit that is practical’. The agency then proceeds to calculate the cost basis for each fee assessed against each recipient class. Full cost for purposes of the IOAA includes both direct and indirect costs… The agency is not required to calculate its costs with ‘scientific precision’… The final step is for the agency to ‘divide that cost among the members of the recipient class . . . in such a way as to assess each a fee which is roughly proportional to the ‘value’ which that member has thereby received’…The fee cannot exceed the agency’s cost of rendering the service…This is because the IOAA requires that the fee be based on both factors and that it be ‘fair.’ 31 U.S.C. §§ 9701(b)(1),(b)(2)(A) and (B).

…The D.C. Circuit, in a 1996 case, tried to simplify matters by stating that 'the measure of fees is the cost to the government of providing the service, not the intrinsic value of the service to the recipient,' but acknowledged that this would still be subject to the statutory fairness prescription… Thus, the agency must calculate its fee on the basis of its actual or estimated costs. Nonetheless, the law seems to require that ‘value to the recipient’ be taken into consideration… Applying these principles, assuming one could hypothesize a high cost but low-value service, the agency might well not be able to recover its full costs. Conversely, in a situation where the value to the recipient may substantially exceed the cost to the government, the agency will be able to recover its full costs but no more. It is improper, for example, to look to the value the recipient may derive from the service, such as anticipated profits….(‘In effect courts limit fees to either cost to the government or value to the beneficiary, whichever is lower’.) [See: Principles of Federal Appropriations Law, Second Edition, Vol. 4 (GAO-01-179SP), Office of the General Counsel, United States General Accounting Office (March 2001) at pp. 15-132 to 15-134, 15-137 to 15-150, at: http://www.gao.gov/special.pubs/d01179sp.pdf ].

California Democrats Seek to Adopt State 'Taxation Without Representation' Plan: Is a New Boston Tea Party in the Making??

noreply@blogger.com (ITSSD Charitable Mission) — Mon, 22 Dec 2008 05:40:00 +0000

http://www.mercurynews.com/breakingnews/ci_11275055

Democrats' Budget Ploy Could Shake Up Balance of Power in Sacramento

By Mike Zapler

Mercury News

12/21/08

SACRAMENTO — One longtime Capitol observer called it the legislative equivalent of the nuclear option.

When legislative Democrats last week unveiled a risky gambit to raise billions in new revenue by exploiting a loophole in the state Constitution, it was more than just a bid to prop up the sagging general fund.

The move threatened to realign the balance of power in Sacramento — and strip Republicans of their most important source of political influence, the ability to block tax increases.

"We're going to govern, with or without our Republican colleagues," new Senate President Pro Tem Darrell Steinberg warned repeatedly in recent weeks as negotiations over the state's massive, $40 billion deficit remained deadlocked.

Whether Democrats can get away with that is another matter. Their proposal attempts to do an end-run on one of the most ingrained assumptions of state governance: That any tax increase must be approved by a two-thirds majority, and thus needs at least some Republican votes.

[THIS SOUNDS QUITE SIMILAR TO THE 'TAXATION WITHOUT REPRESENTATION' EVENTS THAT LED TO SIGNIFICANT TENSIONS BETWEEN ENGLAND & THE AMERICAN COLONIES.]

["'No taxation without representation' began as a slogan in the period 1763–1776 that summarized a primary grievance of the British colonists in the Thirteen Colonies. In short, many in those colonies believed the lack of direct representation in the distant British Parliament was an illegal denial of their rights as Englishmen, and therefore laws taxing the colonists (the kind of law that affects the most individuals directly), and other laws applying only to the colonies, were unconstitutional. Since the 17th century, Parliament had regulated the trade of the British colonies through the Trade and Navigation Acts. Colonists generally accepted these regulations, but when Parliament began in the 1760s to tax the Americans for the express purpose of raising revenue, rather than regulating trade, many in the colonies protested that this was a violation of the British Constitution. The English Bill of Rights 1689 had forbidden the imposition of taxes without the consent of Parliament. Since the colonists had no representation in Parliament they complained the taxes violated the guaranteed Rights of Englishmen. It is unclear who coined the phrase "no taxation without representation". Boston politician James Otis famously used a variation, "taxation without representation is tyranny." See: No Taxation Without Representation, Wikipedia at:

http://en.wikipedia.org/wiki/No_taxation_without_representation ].

The Democrats' complicated plan would essentially replace taxes with fees, which need only a majority vote. It would generate $18 billion, slightly more than half in new revenue.

But although the plan cleared both legislative houses on near party-line votes, it faces legal and political hurdles, including a threatened veto by Gov. Arnold Schwarzenegger. In one promising early sign for Democrats, the governor did not take issue with the tax proposal itself; instead, he said the plan does not do enough to cut spending and stimulate the economy.

If the governor eventually gets on board, taxpayer groups have promised to sue and go to the ballot to overturn the deal. Steinberg, who took over as Senate leader just this month, said the Legislature's lawyers have assured him the plan will hold up in court, but the matter is hardly clear cut.

One legal expert likened the proposal to an accountant finding clever ways to reduce a client's tax bill.

"The line between tax planning and tax evasion is often paper-thin," said Floyd Feeney, a professor at UC-Davis School of Law. "Whether this is good enough to fit into the tax planning category or is over the line is not an easy question to answer."

Tony Quinn, a Republican political analyst who has worked in and around the Legislature for four decades, predicted courts would not intervene to stop the plan. "They are very leery of getting involved in how the Legislature and governor pass laws," he said.

If courts do give the green light, the political ramifications could be sweeping. Republicans fret this would be the first of many Democratic attempts to raise new revenues by replacing taxes with fees.

"There will be tax after tax after tax," said Sen. George Runner, R-Antelope Valley. "Californians should be scared."

[DURING THE 18TH CENTURY, MANEUVERS LIKE THAT PLOTTED BY CALIFORNIA'S DEMOCRATIC LEGISLATIVE MAJORITY & UNOPPOSED BY CALIFORNIA'S GOVERNATOR, HAD BEEN UNDERTAKEN BY THE BRITISH CROWN AND PARLIAMENT. THEY THEN LED TO POPULAR REVOLTS, & ULTIMATELY, TO THE BOSTON TEA PARTY.]

[The Americans rejected the Stamp Act 1765 (which was repealed), and in 1773 violently rejected the remaining tax on tea imports at the Boston Tea Party. The Parliament considered this an illegal act because they believed it undermined the authority of the Crown in Parliament. When the British then used the military to enforce laws the colonists believed Parliament had passed illegally, the colonists responded by forming militias and seized political control of each colony, ousting the royal governors. See: No Taxation Without Representation, Wikipedia, supra.]

[John Hancock Circular Letter Signed Protest - No Taxation Without Representation (Signed September 14, 1768)]

Steinberg has as much as conceded that Democrats will use the tactic again if it proves successful. And GOP legislators would be powerless to stop it.

Quinn said Republicans made a serious strategic mistake by not engaging with Democrats on taxes. Instead, they proposed a budget heavily dependent on spending cuts while refusing to consider tax hikes.

That prompted the Democratic majority to pursue what Quinn called "the nuclear option." If successful, it would leave Republicans powerless to push through any of the government reforms they want.

"Republicans are reaching the point," he said, "where they will not be relevant to the political process."

Indeed, when budget negotiations resume, legislative Republicans will find themselves on the outside looking in as Democrats and Schwarzenegger work to resolve their differences.

GOP legislative leaders seemed almost resigned to that fact. But they suggested at the same time that if the courts fail to step in, voters would have the last say, as they often do in California. Conservative interest groups are already gearing up for an initiative battle to invalidate the Democrats' move.

Said Senate Republican Leader Dave Cogdill: "People like the checks and balances that are in place now".

However it turns out, the Democratic proposal certainly shook up what had become a paralyzing debate in Sacramento.

"There hasn't been a really interesting idea in the budget discussions for a long time," said Phil Isenberg, a former Democratic state legislator and Sacramento mayor. "This is very interesting, and I mean that sincerely."

------------------------------------------------------------------------------------------------

http://www.latimes.com/news/local/politics/cal/la-me-budget19-2008dec19,0,6896307.story

Schwarzenegger Says He Won't Back Democratic Budget Plan

The governor says the $18-billion plan calling for higher taxes and spending cuts doesn't go as far as he'd like to stimulate the economy. The state may run out of money in early February. [THE GOVERNATOR SOUNDS LIKE A TRUE EUROPEAN TAX & SPEND SOCIALIST]

By Jordan Rau and Patrick McGreevy

From the Los Angeles Times

December 19, 2008

Reporting from Sacramento — Gov. Arnold Schwarzenegger on Thursday rejected an $18-billion plan the Legislature passed to ease the state's financial crisis through higher gas, sales and income taxes and cuts to schools and healthcare. [???]

Schwarzenegger, who for weeks has exhorted lawmakers to act to forestall a cash crisis, vowed to veto the package after Democrats used a series of legal maneuvers to push through $9.3 billion in taxes without any GOP votes. He called on legislators to return to the negotiating table.

It was not the taxes -- or the tactics Democrats used to pass them -- that Schwarzenegger said troubled him. He complained the plan did not go as far as he wanted to stimulate the economy.

[THE GOVERNATOR WANTED THE CALIFORNIA LEGISLATURE TO IMPOSE HIGHER TAXES & FEES???]

"I need exactly what I recommended [for my] recovery package," he told reporters an hour after the Senate and Assembly concluded voting following a tense legislative session. "I think they should stay here, work some more on this budget."

Schwarzenegger said the Democratic plan -- which would speed up financing for more than $3 billion in public spending on construction related to hospitals, streets, housing, flood protection, parks and transit -- was "bogus." He said the state also needs to ease environmental rules that can delay such projects and allow a greater role for private contractors in public building.

[THE GOVERNATOR SEEMS FRUSTRATED & CONFLICTED: ON THE ONE HAND HE IMPOSES INDIRECT TAXES THROUGH A PRECEDENT-SETTING CARBON CAP & TRADE CLIMATE CHANGE LAW; ON THE OTHER HAND, HE DOESNT' LIKE IT WHEN THE 'GREENIES' BLOCK HIS INITIATIVES. AAARNOOOLD, IT'S TIME TO WAKE UP & SMELL THE COFFEE! WHAT KIND OF PUBLIC SERVANT ARE YOU REALLY??]

He also complained that it did not include an additional $1.2 billion in cuts to the state workforce and welfare programs.

"They thought I would sign it, that they could put the pressure on," he said.

The governor's move comes as the state is projected to run out of cash as early as February. And it came a day after the state's financial straits forced officials to stop payments for nearly 2,000 public works projects. The suspension of that money could make it impossible for lawmakers and Schwarzenegger to jump-start construction even if the stimulus measures the governor seeks are passed.

Democrats accused the governor of keeping the state in financial jeopardy over fringe issues. The projects that Schwarzenegger would like to see privatized or fast-tracked and the program cuts he wants implemented, they say, make up only a tiny fraction of overall state spending.

"We gave him an $18-billion gift, and he tossed it down the toilet," said Sen. Mark Leno, (D-San Francisco). "This is more about his ego than what is good for the state."

Despite the veto threat, many in the Capitol expect some version of the package to survive.

Legislative leaders late Thursday had not sent their bills to the governor's desk, according to Capitol staffers involved in budget discussions and are planning to reopen talks with the governor's office in coming days.

"When the bus is about to go over the cliff, you don't just pump the brakes once and give up," said Democratic strategist Jason Kinney. "You keep pumping until the bus stops."

If some version of the plan is eventually signed into law, it could still unravel.

Several Republican lawmakers and antitax advocates said they would file a lawsuit charging that the plan violates Proposition 13's provision that all tax increases require a two-thirds vote of the Legislature.

They also threatened to launch a referendum to overturn the proposed increase in the 13-cent-a gallon gas tax, which is scheduled to take effect in February.

"Let's just have the signature gatherers stand at the gas stations and see how long that takes to get the signatures on a referendum," said Jon Coupal, president of the Howard Jarvis Taxpayers Assn.

Qualifying the referendum would require 433,971 signatures. Once they were collected and validated, the increase would be suspended pending a vote of the electorate.

Legal experts said it was unclear whether courts would overturn other parts of the Democrats' package in the event that the governor were to sign it.

The proposal would raise $9.3 billion by increasing sales taxes three-fourths of a cent. It would add a surcharge of 2.5% to everyone's 2009 state income tax bill. It would also require businesses to withhold taxes on payments above $600 made to independent contractors, as they are now required to do with salaried employees.

In addition, it would cut $7.3 billion from schools, healthcare and other programs. Their package would nearly halve the state's budget shortfall, projected to reach $41.8 billion in the next 18 months.

The Democrats circumvented Republicans through a number of novel maneuvers that took advantage of the legal difference between taxes and fees [TO BE DISCUSSED IN LATER ENTRIES TO THIS BLOG] and skirted the need for a two-thirds vote of the Legislature, which is normally required for tax hikes. A two-thirds vote would have required some Republican support, but GOP lawmakers have vowed not to raise taxes. On the floors of the Senate and Assembly, Republicans said the Democrats showed contempt for voters and an unprecedented subversion of California's Constitution.

"Once this approach is adopted, there will be tax after tax after tax," said Sen. George Runner (R-Lancaster).

[“Historians of the colonial era are virtually unanimous in concluding that the American Revolution was fought over private property and the English refusal to apply to their own colonists the great constitutional principle of England: legitimate taxation of privately owned resources can derive only from the people’s elected representatives. Said John Wilkes, Lord Mayor of London, during this time, ‘If we can tax the Americans without their consent, they have no property, nothing they can call their own.’” See: O. Lee Reed, Exclusive Private Property is Indispensable to Brazil’s Economic Development, International Journal of Economic Development Volume Eight, Numbers 1-2 (Sept. 2006) at pp. 5-10 at p. 7 (2006), at: http://www.itssd.org/White%20Papers/ijed-8-1-2-reed.pdf , cited in Lawrence A. Kogan, US Private Property Rights Under International Assault, Presented at the Tenth Annual National Conference on Private Property Rights of the Property Rights Foundation of America (Oct. 14, 2006) at: http://prfamerica.org/speeches/10th/USPrivatePropertyRightsUnderIntlAssault.html ].

Senate GOP leader Dave Cogdill (R-Modesto) said the Democrats' holiday message to voters was, "We certainly hope you got most of your Christmas shopping out of the way . . . because you've got another big bill coming."

Democrats said the Republican alternative, to make $22 billion in cuts, almost half of that in school spending, would ruin the basic functions of California's government and intensify the state's economic troubles. They said GOP intransigence on tax increases had given them no other option.

"We have a fiscal crisis, and if we do not act, the No. 1 job killer in the state will be the fiscal crisis," said Assemblywoman Noreen Evans (D-Santa Rosa).

For some Democrats, the act of bypassing Republicans appeared almost cathartic after years of frustration on both sides over negotiating state spending plans. GOP lawmakers have routinely blocked budgets.

"Today, democracy reigns in the state Legislature," said Sen. Gil Cedillo (D-Los Angeles). "Today, we end the tyranny of the minority. No longer will we be captured by ideologues who don't respond to their responsibility."

[ACTUALLY, SENATOR CEDILLO, TYRANNY WILL REIGN IN THE CALIFORNIA LEGISLATURE IF THE DEMOCRATIC MANEUVER, WHICH IS TANTAMOUNT TO 'TAXATION WITHOUT REPRESENTATION', IS PERMITTED TO GO THROUGH.]

Governator is First US Politician to Say: I Will Tax You & You Will Love It!!

noreply@blogger.com (ITSSD Charitable Mission) — Mon, 22 Dec 2008 05:14:00 +0000

http://www.msnbc.msn.com/id/28180839

Schwarzenegger is First US Politician to Raise Taxes in Current Economic Crisis: Calif. Adopts Major Global Warming Plan

Backers predict energy savings, new jobs; critics worry about upfront cost

The Associated Press

Thurs., Dec. 11, 2008

SACRAMENTO, Calif. - California air regulators on Thursday approved a climate plan that would require the state's utilities, refineries and large factories to transform their operations to cut greenhouse gas emissions.

The California Air Resources Board adopted what will be the nation's most sweeping global warming plan, outlining for the first time how individuals and businesses will have to meet a landmark 2006 law that made the state a leader on curbing warming emissions.

California's worst polluters will be held accountable for the heat-trapping emissions they produce — transforming how people travel, utilities generate power and businesses use electricity.

At the heart of the plan is the future creation of a carbon-credit market designed to give the state's major polluters cheaper ways to cut emissions.

The plan sets strategies for how the country's most populous state plans to cut emissions at a time many governments around the world are struggling with a financial crisis that threatens to undermine efforts to fight climate change.

California's plan comes at a time when governments around the world are struggling with a financial crisis that threatens to undermine efforts to fight climate change. California itself is facing a forecast budget gap of $41.8 billion through June 2010.

Republican Gov. Arnold Schwarzenegger, who has said the state's climate law will stimulate the economy, said Thursday that California was providing a roadmap for the rest of the country.

"Today is the day we help unleash the full force of California's innovation and technology for a healthier planet, a stronger and more robust economy and a safer and more secure energy future," Schwarzenegger said in a statement released after the board's vote.

His sentiments echo those of President-elect Barack Obama, who also has promoted investments in energy efficiency and green technology to help spur the country out of recession. Last month, Obama said he hoped Congress would adopt California's targets for the entire country, essentially reversing eight years of U.S. policy against mandated emission cuts.

California's 2006 law, called the Global Warming Solutions Act, mandates the state cut emissions to 1990 levels by 2020.

31 new rules

The strategy chosen by air regulators relies on 31 new rules affecting all facets of life, from what fuels Californians put in their vehicles to what kind of air conditioners businesses put in their buildings.

The average Californian, for example, can expect to pay to have his or her car tires inflated during oil changes and to pay higher power bills as utilities try to increase their use of renewable energy.

He or she could also see more fuel-efficient cars at dealerships, better public transportation, new housing near schools and businesses, and utility rebates to equip homes to be more energy efficient.

New fees and reporting requirements will accompany the emission rules.

"Overall I feel that we have a very solid basis for what we're working to accomplish," air resources board chairwoman Mary Nichols said as the board opened discussion on the plan Thursday.

Finding ways to implement California's target has not been without controversy.

Chamber of Commerce opposes

Republicans, some small businesses and major industries that will be forced to change their operations say jobs could be lost, companies might leave the state and energy prices will skyrocket.

"The deepening recession has affected businesses throughout the state," Amisha Patel, a policy advocate at the California Chamber of Commerce told the board Thursday. "The reality of climate regulation is there will be costs."

California's nonpartisan legislative analyst and independent scientists have criticized some of the air board's research, saying the costs to the state could be greater than projected.

An air board analysis published in September projected California's economy would grow faster if the state acts to cut emissions. It estimated 100,000 more jobs would be created and the average California household would save $400 a year by driving more fuel-efficient vehicles and living in more energy-efficient homes.

Nichols said she was optimistic the country would be out of the recession by the time California's industries, commercial businesses and individuals must begin complying with emission regulations in 2012.

Costs, savings estimated [??? - ARE THEY KIDDING??]

Once all the measures are in force, the air board projects the cost to the state at $25 billion in 2020, but said that will be more than offset by the savings — which it estimates at $40 billion that year. Supporters of the law also hope it will make California a leader in green technology, attracting investments and jobs.

Most of the reductions in California's emissions will come from more detailed regulations that will be written over the next few years, including rules governing a cap-and-trade program that launches in 2012 to help the largest polluters achieve emission cuts.

But allowing businesses to buy their way out of the problem is another contentious part of the plan. Representatives of California's poor communities say the polluting power plants, refineries and factories in their neighborhoods could write a check rather than cut emissions.