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Question

State two differences between a tax and a fee.

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Solution

TAX FEE
A tax is a compulsory contribution made by a taxpayer. A fee, by definition, is a voluntary payment.
As far as tax is concerned, there is no direct give-and-take relationship between the taxpayer and the tax-levying authority. A fee is a direct payment by those who receive some special advantages or the government guarantees the services who pay fees. Fees are, therefore, deemed to be the by-products of the administrative activities of the government.
It has no separate objective. Taxes are levied in the greater interests of the country.Fees are mostly imposed to regulate or control various types of activities.

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