Towards a user fee manifesto for the Canadian left

Undoubtedly the title will already lead some to call me third way. The Canadian left struggles with the issue of user fees: are they regressive taxes on the poor or can they be constructive public policy tools? The environmental movement, where the focus is on a polluter-pay principle, has forced us to think harder about this issue.

Here’s my brief take on where to draw that line in the sand. First of all, almost all user fees have disproportionate impacts on the poor. On the other hand, user fees can be very efficient in preventing the over consumption/over-use of a particular goods. Garbage, congestion, and overfishing are all classic examples of where user fees may be helpful in achieving social goals. If a user fee can be shown to reduce the indirect negative impact of one’s choice on others, I argue that the user fee should be considered.

For example, take traffic congestion in the GTA. Commuters do not consider the effects of their driving on others resulting in incredible levels of costly congestion (see the 401 at 4pm). A toll would force some of those drivers to take public transit, carpool, etc. Along the same general principle, companies that pollute the air and water should be forced to pay for their emissions.

That said, user fees should not be applied to services that are basic rights. This includes for example health and education. Using these services do not represent choices (note that neoliberals see this differently, but they are clearly wrong) for there are no other options/alternatives. If you’re sick, you need to go to the hospital. If you want to get a decent paying job, you need to go to school.

This provides a basic framework for evaluating user fees. Going back to road congestion, is driving in the GTA a choice (i.e., not a basic right)? Likely — public transit provides hundreds of thousands of people a route to work everyday. Certainly a small proportion of commuters have no transportation options choices in terms of transportation. A user fee policy supported by the left would involve addressing these deficiencies.

That said, user fees are not the be all and end all of public policy. As has been mentioned elsewhere on this blog, regulation can complement or be better than user fee in achieving public policy objectives. Lastly, the importance of income redistribution should not overlooked. High levels of income redistribution reduce the inequalities inherent in user fees, and must play a key role in the left’s user fee policy.

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