User Fee

AAA

DEFINITION of 'User Fee'

A sum of money paid by the individual who chooses to access a service or facility. Examples of user fees include highway tolls, parking charges and national park entry fees. With user fees, the individual directly pays for something he wants and receives what he has paid for. In contrast, taxes must be paid by force and do not necessarily go toward a specific service or facility that an individual actually uses or benefits from.

INVESTOPEDIA EXPLAINS 'User Fee'

Because user fees are more palatable than taxes, politicians may sometimes try to disguise taxes as user fees. However, sometimes the line between user fees and taxes is blurred, as in the case of gasoline taxes being used to fund the Interstate Highway System. Government services and facilities that are supported by user fees instead of by taxes more closely resemble private businesses because it is apparent whether a true demand exists for those services and facilities.



RELATED TERMS
  1. Utilization Fee

    An annual fee assessed by a lender against a borrower. The fee ...
  2. Licensing Fee

    1. An amount of money paid by an individual or business to a ...
  3. State Income Tax

    Tax levied on income at the state level. State income taxes have ...
  4. Regressive Tax

    A tax that takes a larger percentage from low-income people than ...
  5. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  6. Gas Guzzler Tax

    An additional tax on the sale of vehicles that have poor fuel ...
RELATED FAQS
  1. How does the market share of a few companies affect the Herfindahl-Hirschman Index ...

    In economics and commercial law, the Herfindahl-Hirschman Index (HHI) is a widely used measure that indicates the amount ... Read Full Answer >>
  2. How does automated work affect structural unemployment rates?

    One of the main causes of structural unemployment is the automation of work. If jobs become increasingly automated, more ... Read Full Answer >>
  3. What is the difference between economies of scope and economies of scale?

    Economies of scope and economies of scale are two different economic concepts used to help cut a company's cost. Economies ... Read Full Answer >>
  4. How is productivity calculated?

    Productivity measures the efficiency of a company's production process. It is calculated by dividing the outputs produced ... Read Full Answer >>
  5. What is the role of agency theory in corporate governance?

    Agency theory is used to understand the relationships between agents and principals. The agent represents the principal in ... Read Full Answer >>
  6. What's the difference between agency theory and stakeholder theory?

    Agency theory and stakeholder theory are both used to understand and explain various types of relationships in business. ... Read Full Answer >>
Related Articles
  1. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  2. Taxes

    The Tax Benefits Of Having A Spouse

    Check out the perks designed to promote and preserve your post-work savings - if you're married, that is.
  3. Taxes

    Tablets To 1040s: How Taxes Began

    Ever dream of a world without tax? It existed - 3,000 years ago.
  4. Taxes

    7 Year-End Tax Planning Strategies

    Do you have a capital loss that could be booked and used to offset future tax liabilities? If so, it may be time to sell.
  5. Taxes

    Do Tax Cuts Stimulate The Economy?

    Learn the logic behind the belief that reducing government income benefits everyone.
  6. Taxes

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  7. Taxes

    Cut Employee Stock Option Taxes With AMT Credit

    Learn how refundable AMT credits can help you save on taxes, AMT bills and more.
  8. Fundamental Analysis

    Calculating the Herfindahl-Hirschman Index (HHI)

    The Herfindhal-Hirschman Index, (HHI) is a measure of market concentration and competition among market participants.
  9. Economics

    Understanding Horizontal Integration

    Horizontal integration is the acquisition or internal creation of related businesses to a company’s current business focus.
  10. Economics

    The Nash Equilibrium

    Nash Equilibrium is a key concept of game theory, which helps explain how people and groups approach complex decisions. Named after renowned mathematician John Nash, the idea of Nash Equilibrium ...

You May Also Like

Hot Definitions
  1. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  2. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  3. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  4. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  5. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center