In 2018, I mocked the government for their insistence that an increase in fuel tax was an excise, not a tax. Since I'm a firm believer in equal treatment of the government of the day when they display their economic illiteracy, I thought I needed to pick up on this story from earlier in the week:
Is it a tax? Is it a levy? An additional charge for a liquefied natural gas import terminal has turned into a communications nightmare for the Government...
Asked if this was a new tax on households, the prime minister was quick to intervene.
“This isn’t a tax, it’s a levy to fund a key piece of infrastructure,” he said.
So, it's a levy, and that is different from a tax? Not according to the OED, which defines a levy as:
Levy, n.
A duty, impost, tax.
Or, if you prefer the Merriam Webster Dictionary:
1 a : the imposition or collection of an assessment
Merriam Webster then defines an assessment as (emphasis is mine):
2 : the amount assessed : an amount that a person is officially required to pay especially as a tax
A levy is a tax. It has the same effects as a tax (for example, see this post for the details) - it raises the price that consumers pay, it lowers the effective price that sellers receive (after paying the levy to the government), it delivers revenue to the government, and it creates a deadweight loss (even if there may be offsetting benefits from how the revenue is spent). Whether the government uses that revenue for a liquefied natural gas import terminal, or for any other purpose, that doesn't change the fact that the levy is a tax.
I wrote back in that 2018 post that:
...this isn't the first (and it won't be the last) government to try their hardest not to refer to taxes as taxes.
It seems I was correct in that assessment.
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