President Bush hates new taxes, that’s for sure. But tell that to airline passengers, higher-income veterans and owners of freighters using the St. Lawrence Seaway. They are among those hit up for billions of dollars under his new budget plan.
The spending proposal for the budget year that begins Oct. 1 contains $3.5 billion in new user fees. Typically branded as new taxes by those who have to pay them, these fees are intended to hold down the public’s cost for programs such as airline screening, medical care for veterans and military retirees, food inspection and oversight of commodities markets.
The fees would swell to $47.2 billion over five years, dunning taxpayers and industry to help pay for government services.
Most if not all of the proposed fees, however, arrived on Capitol Hill dead as a doornail.
The largest single fee would increase the tax paid by airline passengers for security screenings from $2.50 to $5 for a one-way nonstop ticket. It would raise $1.6 billion when combined with fees on cargo carriers.
The Air Transport Association, the major airlines’ trade group, opposes the higher security fees and is confident Congress will reject the proposal, said the group’s president, James May.
Administration defends fees
The idea behind user fees is that those who benefit from government services should pay for them rather than everyone.
Current fees on passports, national park admissions, patients, stock transactions, federal court filings and agricultural inspections and other services are expected to raise $209 billion next year.
“It’s not reasonable for all Americans to bear the entire cost of government activities from which they only receive a partial benefit,” said Scott Milburn, a spokesman for the White House budget office.
“User fees help match the cost of government programs to those who benefit from them,” he said.
Like some other pieces of Bush’s 2007 budget, the new fees mostly are proposals rejected in the past.
Airline passengers, in other words, should not start worrying about paying $10 for every round trip. Congress ignored a comparable proposal last year after protests from the airline industry.
A similar fate should befall a thrice-rejected plan to boost prescription drug co-payments for higher-income veterans without military disabilities and have those veterans pay a new enrollment fee.
Plan ‘dead on arrival’?
Besides generating $544 million from the fees, the proposal would save $251 million from veterans who left the system rather than pay the fees.
“I think it’s dead on arrival,” said Rep. Cliff Stearns, R-Fla. “We’re in a time of war and we have a huge number of veterans coming back and casualties. And I don’t think at this time we are going to increase the deductible or co-payment or anything.”
Bush also wants to save $249 million from the military health care costs of early retirees covered by the Pentagon’s Tricare health plan by increasing enrollment fees and deductibles. This is a new proposal; it, too, is not expected to pass.
Taxpayers would benefit from a new transaction fee on futures and options markets to finance the Commodity Futures Trading Commission.
The commission, now supported by general taxes, and has a proposed budget of $127 million. A similar transaction fee proposal in 2002 died after the entire Illinois congressional delegation — including House Speaker Dennis Hastert, R-Ill. — signed a letter opposing it.
The Chicago Board of Trade, the Chicago Mercantile Exchange and the Chicago Board Exchange Options are major employers in the state.
Then there are the more obscure proposals.
A tax of 2 cents per pound on explosives made in or imported into the United States would pay to regulate the explosives industry. The tax would raise $120 million next year. An identical fee died last year amid opposition from large-scale users of explosives such as the mining industry.
Why does the White House propose dead-on-arrival fees year after year?
With domestic agency budgets so squeezed, fee proposals allow the administration to boost those budgets without appearing too profligate — by assuming the fee revenue gets passed.
“We’re not going to just walk away from a good idea just because someone disagrees with it,” said Milburn, the budget office spokesman.