User Fee in the United States

User Fee/User Charge in the Federal Budget Process

Meaning of User Fee/User Charge in the congressional and executive budget processes (GAO source): 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 also Offsetting Collections under Collections; Tax.)

User Fees under NAFTA

Goods that originate in the NAFTA territory and that qualify to be marked as Canadian goods according to the Marking Rules are exempt from the merchandise processing fee as of January 1, 1994. Goods that originate in the NAFTA territory and that qualify to be marked as Mexican goods according to the Marking Rules are subject to the merchandise processing fee at the reduced rate of .19 percent. The reduced rate for the Mexican goods is not the result of a staged phaseout but rather because the Agreement specifies that neither Mexico nor the United States may raise its user fees as to goods of the other. Thus, when the United States increased its merchandise processing fee to .21 percent on January 1, 1995, Mexican goods that originate in the NAFTA territory continued to be subject to the previous rate of .19 percent. This reduced fee will continue to apply until June 30, 1999, when it will be eliminated completely. Other fees are unaffected and will be collected whether the goods originate in Canada or Mexico. Other fees include cotton, beef, pork, honey, etc. Mail entries will continue to be subject to a US$5 processing fee.

Neither Mexico nor the United States may raise its user fees as to goods of the other pending elimination of the fee on June 30, 1999.

Note: Canada Customs has no user fees. Mexico eliminated its customs processing fee on June 30, 1999, for originating goods from both Canada and the United States. The fee was not eliminated in stages–it continued to apply until June 30, 1999, when it will be eliminated entirely.

Resources

See Also

• Federal Appropriations
• Entries about the United States Budget Process in the Encyclopedia (including User Fee/User Charge)
• Public Debt

Further Reading

• Legislatures and the budget process: the myth of fiscal control (J Wehner, 2010)
• Reconcilable Differences?: Congress, the Budget Process, and the Deficit (JB Gilmour, 1990)
• Fiscal institutions and fiscal performance (JM Poterba, J von Hagen, 2008)

User Fee in the International Business Landscape

Definition of User Fee in the context of U.S. international business and public trade policy: A payment made by those who use a specific good or service provided by government.