A Service Fee That Amounts to a Second Tax

Jul 11 , 2026
By Daniel Fikadu

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Ethiopians are being asked to pay twice for the same thing. The cost of basic government services has climbed steeply in recent months, piling onto an already high cost of living.

If the purpose of taxation is to secure public services in the first place, steep fees layered on top of it look less like a price and more like a second levy. It is worth asking by what right the state charges taxpayers a second time for services their taxes already fund.

The logic of the social contract makes the point. In the tradition of John Locke and Thomas Hobbes, citizens surrender a portion of their liberty and wealth to the state through taxation. In return, the state is bound to protect their rights and provide public goods. Adam Smith set out the terms plainly in "The Wealth of Nations," where his canons of taxation insist that state revenue be raised with equity and economy.

Charging high fees on top of ordinary taxes breaks that compact. It is double extraction, an abuse of sovereign power dressed as a service charge.

Defenders of the fees will say they merely reflect the cost of delivery. If that were true, few would object. But the setting is not a market. Government services are, by design, non-competitive. There is no rival counter to walk to. Nor are they sought freely. Citizens are legally required to use them, from vehicle-plate changes to permits and certificates, so demand does not fall when the price rises.

Charging inflated fees under forced compliance is not the discipline of supply and demand. It is economic coercion, and it collides with what the legal philosopher Lon Fuller called the inner morality of law, which holds that administrative rules should not impose unconscionable or impossible burdens on the people they govern.

Worse, the practice rewards the very waste it claims to cover. James Buchanan's public-choice theory observed long ago that public bodies tend to maximise their budgets, power and reach. An agency that procures badly and spends loosely drives up its own costs, then recovers the difference by billing the public. Shielded from competition, it faces a plain moral hazard. Any inefficiency can be offloaded onto captive citizens under the label of a fee, and the incentive to run a tight and accountable office quietly disappears.

None of this means the state may never charge for a service. But the power to set fees is bounded, not absolute. Administrative law asks that every such decision be rational and proportionate. A fee should follow the principle of cost recovery, covering the real cost of delivery, rather than serving as a disguised tax to plug a budget hole.

The old English test of Wednesbury unreasonableness captures the standard well. A charge set without transparent study, without evidence, and without regard to what people can afford is arbitrary. An arbitrary charge offends the rule of law as surely as an unlawful one.

The remedy is not complicated, only unpopular with those who profit from the status quo. The government should rebuild its tariff-setting framework around three principles it has neglected; i.e., law, equity, and sound public finance. Fees should be tied to the demonstrable cost of the service, published with the workings that justify them, and weighed against the public's capacity to pay. Anything less asks citizens to underwrite bureaucratic waste out of their own pockets.

Governance is meant to serve the public, not to bill the public for its own inefficiency. A state that forgets the difference should not be surprised when the people it overcharges stop believing it works for them.

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PUBLISHED ON Jul 11,2026 [ VOL 27 , NO 1367]

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