A third form of revenue that forms an important part of fiscal systems, especially those of municipalities, is what is known as the special assessment. It is a payment required from owners of property because the property has been specifically benefited by some public improvement. A special assessment might be defined as a compulsory levy against property in proportion to the benefits which have accrued to it because of some service undertaken for the public good. Usually the funds exacted are expected to be used in defraying all or part of the cost of the service. Examples most familiar to American students are the levies made upon property by municipalities when streets are paved or sidewalks built.

Special Assessments and Taxes. - In some respects special assessments resemble taxes, yet they are so dissimilar as to warrant a separate classification. The primary object of the levy, as in the case of taxes, is some common benefit. Special assessments are also similar to taxes in that the payment is compulsory, while the levy is a legal process according to some general rule. A marked difference appears, however, in the measure of the individual benefit which the payee receives. Taxes are paid without reference to specific individual benefits, while in the case of special assessments the basis of the levy is the benefit which accrues to the property. The purpose for which taxes are levied is usually more general and immaterial - that is for all sorts of general expenses - while the special assessment is for a definite purpose, usually of a material nature, which adds to the capital account of the government. In modern taxes much concern is given to the ability of the payee to bear burdens, while the special assessment is based entirely on the individual benefit derived from the improvement to property.

Special Assessments and Fees. - Certain similarities exist between the fee and the class of revenue under discussion, yet again the differences are such as to warrant a separate classification. Both are levied by government authority, and both represent a payment for individual benefit received. The field for the use of the special assessment is limited, however, while that for the fee is almost unlimited. The former is a local phenomenon, and always involves improvement to property; the latter is restricted to neither locality nor property, but is usually general and personal. Payments of a fee levy will continue to be made with each repetition of the service, which may be frequent or seldom, and there is no definiteness as to how much these levies will bring to the treasury. A special assessment is a definite levy made once for all, while the exact amount to be received is a part of the calculation. Because of these characteristics it adds to clearness to separate special assessments from both taxes and fees.

Special Taxes and Special Assessments. - One should be careful to distinguish between special taxes and special assessments. Special taxes are those which are levied, the expenditure of which will be for some particular purpose, such as school taxes, or road taxes. The expenditure is presumably made in the district where the tax is collected. The special taxes are usually levied upon the same base as other taxes, without reference to any individual benefit which might be calculated to arise from their expenditure. The wealthy unmarried man would be assessed for a special school tax, while a poor man with several children in school might escape. The special assessment is levied for a special purpose, but upon those whom the fulfillment of the purpose will benefit.