Ferry Tolls are Not Taxes:
Why Attempts to Characterize a Toll as a Tax are Baseless
March 9, 2012
On February 29, 2012, Governor Beverly Perdue issued Executive Order 116 to “establish a moratorium on the collection of new tolls for the North Carolina ferry system.” Executive Order 116 does not itself describe the ferry tolls as “taxes”; however, in a press release issued on February 28, 2012, announcing Executive Order 116, the Governor repeatedly described the tolls as “ferry taxes” and “new taxes.” Although the legally significant document in the controversy surrounding the tolls is the Executive Order, the “tax” label cannot be ignored because misuse of the word “tax” risks diminishing its significance and misleading the public. Below is a short explanation of why the ferry tolls established at Session Law 2011-145, section 31.30 are not taxes as a matter of law.
The object of Session Law 2011-145, section 31.30 is to generate funds. If implemented, the law would raise money, but that fact alone does not transform the ferry tolls into taxes. As the North Carolina Supreme Court held in N.C. Turnpike Auhor. v. Pine Island, Inc., 265 N.C. 109, 116-17, 143 S.E.2d 319, 325 (1965), “Tolls are not taxes. A person uses a toll road at his option; if he does not use it, he pays no toll.” In distinguishing taxes from other governmental charges upon North Carolina residents, the Court stated, “[t]axes are levied for the support of government…. [t]olls are the compensation for the use of another’s property or improvements made.” (internal citation omitted). Id. The context of Turnpike Authority was tolls for roadways, but its reasoning and holding are equally applicable to ferry tolls as such tolls are indistinguishable from road tolls in both a legal and practical sense.
Other legal authority supports the conclusion that a ferry toll is not a tax. In Stat ex rel. Utilities Comm’n v. Carolina Util. Customers Ass’n, 336 N.C. 657, 683, 446 S.E.2d 332, 347 (1994), the State Supreme Court again explained what a tax is, saying, “This Court has defined a tax as ‘a charge’ levied and collected as a contribution to the maintenance of the general government . . . .[A tax is] imposed upon the citizens in common at regularly recurring periods for the purpose of providing continuous revenue.” Here, ferry tolls are charged only to those who use ferries, not to “the citizens in common.” Further, ferry tolls are charged at the time of usage and to compensate for usage and are not charged at “regularly recurring periods.” As Professor John Orth has explained, “A tax is a forced contribution to government; it differs from a fee in that it has no necessary immediate relationship to a benefit conferred.” Orth, The North Carolina State Constitution 88.
A ferry toll is a fee in that its assessment is related to the benefit of riding a ferry which benefit is conferred immediately upon payment of the toll. Unlike a payment of a tax which is compulsory, unavoidable and confers no special benefit on the payor, the payment of a toll establishes a kind of quid pro quo entitling the payor at his option the special benefit of riding a ferry rather than taking a less convenient or more expensive route to his destination.
In sum, the Supreme Court has been crystal clear: “Tolls are not taxes.” Turnpike Authority, 265 N.C. 116-17. Little doubt about the issue is warranted.
 One possible reason the Executive Order does not describe the ferry tolls as a “tax” could be that Article V, section 2 of the North Carolina Constitution mandated that the power of taxation “shall never be surrendered, suspended or contracted away” pursuant to.