A Fee by Any Other Name

The City of London is claiming that the US Embassy currently owes them $5.7 million dollars in unpaid congestion charges. The City of London charges drivers 8 pounds per day for driving in the city center during peak hours. The US Embassy does not seem to dispute the fact that employees are driving in the city center during these hours. The dispute is over whether this is a tax or a fee. The US Embassy is claiming that the congestion pricing is tax and thus they are not obliged to pay it. The City of London is that this reperesents a fee.

The Tax Foundation holds that any assessment that raises money in excess of what is needed to defray costs is a tax, not a fee. It should be noted that City of London created 70 million pounds of surplus revenue last year. Whether the US Embassy should pay tax is another matter.