OKLAHOMAN’S CONFUSION OVER TAXES AND FEES

By Charlie Meadows
Charliemeadows7@gmail.com This past Thursday the Oklahoman ran an editorial called “Possibilities: Could provider fee survive a challenge?” The editorial couched what I believe is the Oklahoman’s desire to raise revenues by
adding what they suggest is a fee of 1% on claims paid by insurance companies. They couched the editorial in terms, that if South Carolina could finally raise the tax on tobacco, maybe the Oklahoma legislature could raise a fee that would surely be called a tax by its opponents. Sound confusing, hopefully I can shed some light on the issue.

In 1991 the citizens of Oklahoma passed State Question 640 which did the following: It said the legislature could not raise taxes without a 75% super majority of support in both chambers of the legislature or the proposal would have to go to a vote of the people. The measure only put restrictions upon taxes, it did not prohibit the ability of the legislature to raise fees. What 640 did not do was DEFINE the difference between a tax and a fee.

As a result, anytime the legislature has wanted more revenues, they call revenue increases “fees” and thus get around the need for a 75% super majority or a vote of the people. Though Senator Brogdon and Representative Wesselhoft have tried to introduce legislation to define the difference, they have not met with success. Not until last year when Oklahoma’s taxpayer watchdog, Jerry Fent, took a case before
the State Supreme Court. He won a case that did a fairly good job of defining the difference.

If we ever want to have good government it will be very important to know the difference, especially if we are ever successful in restructuring our tax codes. It is such an important issue that it is one of the 10 questions on our legislative candidate survey and I might add, one that very few candidates know the difference.

Please pay close attention. A FEE is revenue raised from a particular activity or upon a certain item (such as a car tag) and all the money raised must be spent ONLY on the regulation or support of that activity. Example, all monies paid to use our turnpikes are fees as all those monies are used ONLY to pay off bonded indebtedness, repair the roads and pay for their operations.

The wildlife department is similar, as all monies spent for licenses and specialty stamps or tags are used to fund the wildlife department and thus those revenues are fees. However, if some of those monies were to be used for roads or education, those revenues would no longer be deemed a fee but rather a tax.

Taxes are revenues raised from a particular activity or upon a certain item. However, the money can be put into the general fund to be used for things other than the support of the activity from which the revenue was derived.

Thus, if the revenues derived from when we purchase a gallon of gas, our auto tags, our registration fees or driver’s licenses were to all be used to build roads, bridges and pay for the highway patrol and the overhead at the Oklahoma Department of Transportation, then all those revenues would be considered as fees. However, when they are diverted to build the weather school at OU or the bio-terror lab at OSU and the support of local school districts, then they are in actuality a tax.

The reason Representative Doug Cox’s (R-Grove) proposal is a tax and not a fee is that it forces the people who pay for health insurance to be charged higher premiums because when the insurance company pays out more it will raise rates to compensate for the increase. The legislation will have all insurance companies to pay 1% of any claim to state government, not to be used to support health care for all,but to support the health care of people who don’t pay for insurance. Thus it is not a fee, but rather a tax.

Folks, this was a demand by the Democrats who trusted one of their buddies (Representative Doug Cox) to carry the legislation as a Republican to help its chances for passage. Of course Cox wasn’t alone in his efforts as a large number of the usual suspects helped. Lawmakers such as Lee Denny (R-Cushing) Don Armes (R-Lawton), Eddie Fields (R-Wynona), Gary Banz (R-Midwest City), Kris Steele (Christian Socialist Progressive Republican from Shawnee) Shane Jett (R-Tecumseh)
Ann Cody (R-Lawton) and a few others voted along with Cox and the Democrats for passage. However, the good news is that it didn’t get close to the 75 super majority, so if the Senate doesn’t kill the measure, then look for another lawsuit by Mr. Fent, a truly great Oklahoman and great American.