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Diplomacy lesson: is a congestion charge a service fee or a tax?

Diplomacy lesson: is a congestion charge a service fee or a tax?

The new U.S. ambassador to Britain, Louis Susman, has indicated he will not pay the 3.5 million pounds ($5.7 million!) in congestion charges the embassy owes the City of London. 

Drivers pay 8 pounds a day for the privilege of driving in a central zone at peak hours — but the U.S. embassy has refused to pay. The argument? The congestion charge is a tax, not a service fee. And embassies don’t pay taxes. 

The mayor’s office and Transport for London, which administers the program, argue that around three-quarters of embassies pay the charge — a service, not a tax — and that the United States should do better than to rely on semantics to wiggle out of it. 

I tend to think of congestion charges as taxes. They’re designed to encourage certain behaviors and to make money for local governments. London spends the program’s surplus (around a third of revenue, or nearly 90 million pounds, in 2007) on transport investment, for instance. But this still seems a little unseemly. What do you think?