D. Topic Box:

USER FEES

In common with the practice followed by other provinces and other levels of government, the government of British Columbia funds certain services through user fees rather than from general taxation.

For example, municipalities charge user fees for building permits, water and sewer services, parking, use of arenas and other recreational facilities, and sometimes for garbage collection. The province charges fees for use of provincial campsites and other Crown lands, hunting and fishing licences, and various commercial and regulatory services, including company and land registrations, safety inspections and motor vehicle licensing. At the federal level, fees are charged for passports, visas and immigration applications, radio licensing, saltwater fishing licences, commercial weights and measures inspections, and various information and publication services.

The provincial government administers a wide range of fees and licences, including royalties for the use of natural resources. In 1995/96, user fees accounted for about $1.5 billion or 7.6 per cent of total provincial government revenue. This excludes revenue received from royalties, forest stumpage, and fines and penalties which totalled approximately $2.1 billion in 1995/96. In addition, there are a number of other user fees, such as college and university tuition, which are retained by these institutions and, therefore, are not considered part of provincial government revenue.

User fees are intended to recover a fair share of the government's cost of providing goods and services from those who receive the direct benefits. These fees are not another form of taxation, but instead help to make the provincial government's revenue system fairer by shifting some of the burden away from general taxation, borne by all taxpayers, to those individuals or companies who derive a clear benefit from a specific government activity. As well, user fees help to encourage responsible and economical use of government services by making clients aware of the costs of those services.

The provincial government's user fees can be grouped as follows:

Fees for subsidized service -- Some public services are provided to meet the general social and economic needs of all British Columbians. Services such as health care, education, income assistance and justice are funded mainly through general taxation, but may be partially funded through user fees to encourage responsible use, or to reflect potential economic benefits to individuals. To prevent user fees from hampering access for specific users, such as non-profit organizations, the elderly, the disabled, or those with low incomes, the government often provides an additional subsidy (such as student assistance or Medical Services Plan premium assistance).

Regulatory and inspection fees -- Some public services are directed to specific people or firms and are provided either at the request of these parties or because of their activities. For example, regulation of companies and real estate transfers help ensure fair dealing and legitimacy among those regulated, as well as providing general consumer protection. Health and safety inspections help to ensure that health and safety standards are maintained to protect owners, workers and the general public. Generally, the government believes that the cost of protecting the public in these areas should be fully recovered from the commercial activities that create the need for government involvement.

Resource fees and royalties -- Use of the province's natural resources or public infrastructure, such as forestry, mining and commercial water usage, often provide economic benefits to users well in excess of government's service costs. The government believes that in the interest of good public policy, consumers of these resources should return to the province a fair share of the economic benefits received, regardless of the government's costs in providing associated services.

Private sector competitive fees -- In providing essential public services, government sometimes supplies other related services that are of value to specific people or groups, and which may also be available in the private sector. For example, publications of maps and various economic, social and statistical reports are provided in support of government programs but are also available to the public. For these services, government usually charges fees in line with rates established in the private sector for similar products and services.

Like all governments today, the British Columbia government is reviewing all of its programs to ensure that the cost of services that benefit particular people or firms are not being unfairly transferred to the general public. Where appropriate, changes to programs and user fees are being introduced, guided by the following principles:

• Need for government involvement -- in some cases, it may no longer be appropriate to continue to provide goods or services in areas no longer warranted by public demand or government priorities, or where alternative delivery systems exist and can provide these services more efficiently and effectively. For example, some services may be more efficient and responsive to public demand if delivered by local governments or the private sector.

• Cost of providing service -- inflation and increased public demand have boosted the government's cost of providing goods and services and a number of fees have not kept pace with these costs. Over half of the government's user fees have not been adjusted since 1992, and it is likely that many of these are no longer recovering a fair share of their service costs.

• Achievement of public policy goals -- certain fees intended to encourage or discourage activities may not be achieving their goals, thus causing increased government costs. For example, fees intended to discourage environmental pollution (and encourage use of alternative technology), may be set at unrealistically low levels. This often results in non-compliance with environmental standards and increased costs of government monitoring and enforcement.

• Efficiency of administration -- in some cases, program efficiencies can be realized by eliminating fees that are too costly to administer, streamlining fee schedules, and simplifying licence issuing and regulatory inspection processes. These changes help to reduce costs to both government and clients by minimizing the amount of "red tape" involved in conducting business or complying with regulations.

• Impact of fees on users and the user's ability to pay -- the cumulative impact of fees on the financial health of businesses and affected client groups is considered against the government's objective of ensuring that service costs benefiting specific users are not transferred to the general public. Wherever possible and practical, user groups are consulted and notified about changes to fees prior to the introduction of changes.