Stuck between Principle and a Policy

By Alan Minton, Senior Vice President of Marketing for Cornerstone Information Systems

I recently read an article by Chris Elliott on the Transparent Airfares Act of 2014. The legislation is supported by airlines and would allow them to remove the taxes and fees from the advertised price of the airfare. The spokesperson says it is about “restoring transparency and truth in advertising.” I can see her point. A lot of products you buy, think cars and TVs, have the taxes and fees excluded from the price tag, and these are then added on when completing the purchase for a total price.

On the other hand, the proposed law flies right in the face of the DOT’s full fare advertising rule, which requires all fees and taxes to be included in the advertised price, just like gas prices, so the consumer knows what they will be paying. I can see that point as well.

There are a lot of other subtle nuances to the story and I encourage you to read it. My quandary here is about whether we should require government taxes and fees to be itemized so that the consumers know where their money is going. ip info I think we should, and here’s why:

Price transparency is a bedrock principle of economic freedom. Understanding who benefits from the purchase of product enables the consumer to make informed buying decisions. These buying decisions go beyond the basic endorsement of a product or service. Active and conscientious consumers can choose whether they want to support a company and its related business practices. It also provides necessary information for the consumer to be better informed on public policy.

Full disclosure, I am a free market capitalist, although not quite to the Ayn Rand level, and thus I support policies that produce more informed consumers. The argument that the consumer will make a purchasing decision without considering the addition of taxes and fees is too patriarchal. Even my daughters understand that you have to add 7% to the price of a product before leaving the store. I think a business should be able to show its price to the consumer, and I also think that government fees and taxes should be exposed. In this case, I am hard pressed to understand how more information is a bad thing.