Question

Differentiate tax and fee.

Answer 1

Tax :

1. A tax is a compulsory payment made to the government.
2. People on whom a tax is imposed must pay the tax.
3. There is no quid pro quo between a taxpayer and public authorities. This means that the tax payer cannot claim any specific benefit against the payment of a tax.

Fee :

1. Fees are another important source of revenue for the government.
2. A fee is charged by public authorities for rendering a service to the citizens.
3. The government provides certain services and charges certain fees for them. For example, fees are charged for issuing passports, driving licenses, etc.