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Distinguish Between a Tax and a Fee. - Economics

Distinguish between a tax and a fee.

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Solution

Differences between tax and fee:

1) A fee is imposed for a specific reason. For instance, the school management imposes a fee for school admission of a student. The tax has no specific reason. Sales tax is imposed on a commodity without stating any special benefit on a purchase of a commodity.

2) A fee is not a compulsory payment towards the Government. There will not be any legal punishment against the non-payment of a fee. For example, if the admission fee is not paid, then the student will not be admitted into school. Tax is a compulsory payment made by people to the Government.

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