Michael Taft: Thinking Outside The TV Licence Box

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From top: RTÉ Director General Dee Forbes and Minister for Finance Paschal Donohoe; Michael Taft

What is the Government doing with the TV licence? They have raised the prospect of charging computers and tablets while acknowledging they have no idea how to do it

They have talked about charging households, raising the memories of that pathetic and wholly unnecessary Household Charge. They have raised a number of questions to which they have no answers for.

Raising the prospect of a ‘device-independent’ charge and basing it on households is nothing new. It was first mooted back in 2013. Back then I put forward this suggestion which I’m presenting again.

In 2018, €221 million was collected in TV licences. Of this amount, 86 percent, or €189 million, goes to RTÉ.

The Broadcasting Fund (which funds independent productions and is administered by the Broadcasting Authority) and An Post (for the cost of collecting the licence fees) account for 14 percent of the licence revenue.

The licence fee is currently €160. The last increase was in 2008, when the fee went up by €2. There is an estimated 12.8 percent evasion rate. If there was 100 percent compliance, revenue would increase by €32.4 million. Or you could reduce the TV license fee by €20 per year.

The TV licence is, for all practical purposes, a charge on households. Over 95 percent of households own a TV, with 54 percent owning two TV sets or more. There is little distinction between high and low incomes, with an ownership rate of 97 percent at the higher end and 94 percent at the lower end.

Being a flat-rate charge, however, the TV licence is regressive. The Household Budget Survey provides data on weekly expenditure on the TV licence by income deciles.

Unsurprisingly, the lowest 10 percent income group pays the most when measured as a percentage of disposable income – eight times the amount paid by the top 10 percent.

The Minister has said he wants a new broadcasting charge that is ‘fair and sustainable’. I would add another objective: efficiency.

So is there a way of administering a new charge that would reduce evasion and collection costs, capture new developments in non-TV devices, and be fairer in terms of people’s ability to pay?

Yes. Administer the new broadcasting charge as a levy on all income.

An income levy would certainly be fairer – especially if it was levied on all income: wages, self-employed income, capital income and social transfers.

Based on the Household Budget Survey, a levy of 0.25 percent would be needed to raise the same revenue. This is fractional.

Actually, it would be less because this calculation assumes that households generate all license revenue. Businesses also pay the TV license fee. However, I don’t have a revenue breakdown between households and businesses (if anyone does, please send it along). Such a breakdown would result in an even lower levy on household income.

The key is that all income – including capital income – be subject to the levy. This would keep the rate low and promote equity.

Some might ask whether levying the income of social protection recipients is fair. Social protection recipients already pay the TV licence fee and because it is flat-rate it is highly regressive (as shown in the above chart).

A levy on income would actually reduce the cost for average and low income households.

The lowest 60 percent of households would benefit from a switch to an income levy. This is an addition to the current exemptions from the license fee for recipients of the Household Benefits Package.

The top income decile would see an increase of €134 per year, which wouldn’t be too onerous as it represents 0.1 percent of income in the top decile.

And as mentioned above, the levy of 0.25 percent would be less once business TV licence revenue is factored in; especially if some of the measures mentioned here are introduced.

There are other benefits.

It would help ensure 100 percent compliance. Taxing all income at source (by the Revenue Commissioners and Department of Social Protection) would reduce the opportunities for evasion.

Expenditure that now goes on licence collection, monitoring and compliance could then be re-directed into the Broadcasting Fund which could support more independent productions and even independent on-line journalism.

Revenue would automatically rise as aggregate income increases without the need for a Government-sanctioned increase in the TV licence fee.

One problem would be the negative impact on post offices and An Post. The Irish Postmasters’ Union said the licence fee is worth €3 million each year, and claims that if it is lost it would place hundreds of Post Offices at risk of closoure.

Post offices are facing greater problems than just the loss of revenue from licence fee activity. However, to ensure that post offices don’t come under greater pressure – and to keep them going until new and innovative policies are put in place to ensure their survival – a small amount from the levy could continue to go to post offices.

This is just a suggestion. There may be downsides that would make this income levy approach unworkable or undesirable.

However, on a range of issues we need to start thinking outside the ‘this-is-how-we-have-always-done-it’ box and come up with more equitable and efficient solutions.

Michael Taft is a researcher for SIPTU and author of the political economy blog, Notes on the Front. His column appears here every Tuesday.

Rollingnews

33 thoughts on “Michael Taft: Thinking Outside The TV Licence Box

  1. Ger

    Seriously

    The competence here seems to be raising taxation. Perhaps some time better spent on what is actually done with the tax monies raised and squandered

  2. Daisy Chainsaw

    100% compliance would not mean a reduction and it’s laughable and delusional to think it would.

  3. Cian

    Another great article Micheal, which could be summarised as “Pay RTE from general taxation”

    One query though (there’s always one). There are over 370,000 pensioners that get the household benefits package – which includes a free TV licence. Have you excluded these from your “TV licence by % of disposable income deciles”? 40% of those in the lowest decile are pensioners. Or is this amount included as a State Transfer?

  4. paul

    they’re upset at license avoidance (legal) so they label it as evasion (illegal).

    even with whatever extra this would provide RTE, they’re still a dreadful organisation being driven even further into the toilet by Dee and will need further top-ups in the future if they continue as they are.

  5. Michael Taft

    Cian

    Recipients of the Household Benefits Package are excluded from the data presented by the Household Budget Survey as they don’t spend any money on the TV license.

  6. Dr_Chimp

    Instead of proposing ever more taxation, why are we not seriously considering getting rid of the tax completely? Give consumers a choice. If having a state broadcaster etc is valuable then people will willingly subscribe to it and pay for it. Personally, I have zero interest in it and therefore do not feel I should be forced to pay for something I don’t want.

    In any event, if they insist on levying this charge why not apply it to the providers ( virgin, eir, sky etc) who will ultimately pass it on in their billing to customers?

  7. Jake38

    More taxation, more confiscation of the taxpayers money for public service mediocrity from SIPTU. No thanks.

    Make it a subscription service and I’ll pay for it if I want it.

    That should sort it out.

  8. Spaghetti Hoop

    A pay-per-use policy would be fair, treating broadcasting as a utility. Device-owners should not be paying for RTE if they don’t consume its content. I don’t pay for my neighbour’s electricity – why should I pay for their Fair City? And there is an opt-in / out of channels from service providers which seems the logical way to go about this charge. The technology is already there.

    1. Listrade

      My house isn’t going to burn down so why should I pay for the risk of fire for others?
      I’m fit and healthy, so why should I pay for health services for others who don’t look after themselves?
      I have no kids so why should I pay for education of others?
      etc, etc.

      I’m happy enough with public funded broadcasting, whether I use it or not. The issue to me is on the quality and how that funding is used rather than if I mind paying. Current format is regressive as Michael states. UK have a system that accounts for those who are “cord cutters” and who don’t use BBC services.

      1. Cian

        In the UK you need a TV licence if you watch or record live TV programmes on any channel, or download or watch BBC programmes on iPlayer. If you don’t own a TV, but you use a iplayer on you phone – you need a licence.
        In Ireland you need a licence if you have a TV (set capable of receiving television broadcasts) but NOT if you have a phone and use the RTE player.

        1. Listrade

          Yes, but you can own a TV and only use it for streaming (excluding IPlayer) and you are exempt. That’s a big difference and that’s the difference I was talking about.

          1. Cian

            gotcha – in the UK you can have a smart TV (without aerial or cable) and use it to watch Netflix – no licence needed.

          2. Listrade

            Any TV. Doesn’t have to be Smart. Roku, Amazon, Apple TV, Now TV only require HDMI. Xbox and PS same.

            Old old school just watching Blu-ray’s/dvds

  9. BS

    Make RTE subscription based. Easily implemented with current technology seeing as all terrestrial signal is now digital.
    Allow RTE to manage their budget based on their subscriber base. As for funding TG4…either get rid of it or go the same route. The money that’s used to pay home grown content makers can probably be found in the general taxation bucket, if not then the increase would me tiny to income tax.

    Forcing people to pay for something they don’t use out of general taxation is regressive, it’s not in the same “social cohesion” vein as funding busses even though I don’t use busses. RTE provides nearly zero social gain to the country. Their sports coverage is adequate, depending on which sports you like, news and current affairs are hit and miss – they have headline making episodes of prime time once or twice a year, but then are a government mouthpiece and place for soft interviews the rest of the time.

    1. B9Com From No

      They also do some nice radio documentaries
      And lyric for what it does, is decent enough

  10. Mr.Fart

    If the extra money was going to go into sourcing some of the real talent we have in ireland, that gets blocked out by the old outdated overpaid crowd they use all the time, i’d be up for generating more money. but all they’ll do with it, like every irish institution, is corruptly divide it amongst the pigs at the trough. everyone knows that, and thats why no one wants to pay. if they had millions extra a year, it would not show in what they deliver on telly.

  11. Cian

    A lot of people here think RTE should be subscription based (which is missing Micheal’s main thrust of it being socially regressive that poor people pay much higher percentage of their disposable income than the rich).

    What about broadband? Urban folk get to pay for their own, rural folk get it paid by general taxation?
    What about Water? Urban folk get it out of general taxation, rural folk get to pay for their own?
    There is no consistency.

  12. MaryLou's ArmaLite

    Imagine the wages in RTE once they have direct access to our income!!!

    No fupping way !!!!!

  13. eoin

    You need to be careful with the state aid funding of organisations like RTE which competes with other providers of linear video (Virgin, TG4, Sky, Netflix, etc). The state aid can only be for public service broadcasting, which is a tiny fraction of RTE’s output. So, you could collect a fee from taxation, but it would probably be around €20 for some of RTE TV news and current affairs.

    RTE is already on thin ice with the licence fee.
    http://ec.europa.eu/competition/state_aid/cases/254086/254086_1921800_301_2.pdf

    And I am expecting a state aid complaint for the €8m which the disgraced ex-minister Denis Naughten gifted RTE the day before he was fired.

    1. eoin

      Also, can anyone who mentions RTE last had a licence fee increase in 2008 please also mention (1) inflation has been flat since and (2) the population and number of households presumably have increased by 10%+ since, so there should be 10% more households paying a TV licence.

      1. Cian

        The % change in the CPI from Jun 2010 to Jun 2019 is 7.0%. (CSO cpiinflationcalculator)

        Population increased from 4,533,400 (2009) by 323,600 (to 2018) this is a 7.1% increase (CSO).

        Any increase in inflation was matched by population growth.

        1. eoin

          Hi Cian,
          I’m not sure why you’re citing 2009 or 2010 as the base point, it’s 2008 (see article above, that’s when RTE last had an increase in the licence fee).
          Inflation index in June 2019 is 102.5, in 2008 (Sept), it was 102.6, ie today, it’s minus 0.1%, or 0% if you’re rounding.
          Population estimate April 2008 (CSO) 4,485,100
          Population estimate April 2018 (latest published) 4,857,000
          Estimate population increase 2017-2018: 64,500
          Estimate population April 2019, 4,911,500 (4.857 +64.5)
          Increase 9.507% (or 10% if you’re rounding!)

          1. Cian

            Mea Cupla, you are correct.

            I got the dates wrong.
            From 2008 CPI is, as you said, 0.4%.
            And I stopped counting population in 2018.

    2. Michael Taft

      Eoin – the document you attached states that the complaint was dismissed and that RTE is compliant with the relevant directive. Am I reading that right?

  14. Zaccone

    RTE doesn’t need more funding (from any source), it needs to spend less. The salaries are insane.

    The idea that RTE luminaries are about to be headhunted by the BBC or CNN is ludicrous. There is no need to pay 500k a year to any RTE presenter. They should be capped at 100k.

    100k p.a. is still a fantastic wage. And media jobs are interesting enough, and have enough social status, that most people would happily do them for that wage. Its a bit like being a TD in that respect.

    And if one or two hosts retire… so what, there is plenty of young talent out there to replace them.

  15. Liam

    I’ve no problem with public service broadcasting – the alternative is media entirely owned by moguls and foreign organisations. The Broadsheet massive are no fans of DOB, you want him to own every media outlet?

    But a big chunk of what RTE does is not PSB – some of this is justified in a circular fashion by saying that they have to broadcast material that gets big ratings in order to justify the license fee, but I can’t see the justification for 2FM, or for RTE2 showing mostly US imports. Sell those 2 channels then come back to me with your license proposals.

  16. Mountain Talk

    Broadsheet thank you and please keep this issue front + centre. For whole host of reasons. Being here illustrates old versus new media. Objective balance versus… well, what can one expect from the state media machine, impartiality!!! And desperate (antiquated) insular protectionism in the face of modern access / modern tools.

    Points… if anyone would like to consider

    Even if a broadcasting entity makes Martin Scorsese gold every night – shouldn’t we have a choice whether we want to buy it or not.

    If they (lobbyingly) decide we have no choice. We’re enforced to pay. Is it right to attach it to a utility bill like electricity. Electricity, Water, Food are fundamental elements for survival. Is the a broadcasting network now to be considered the same.

    Digital Rights. The right to access. To be online. To access information. Like Wikipedia. Versus a semi-commercial body within the state dictating you pay for certain content. How does that measure up in terms of rights and liberty in the modern digital age.

    Personally : Don’t have, watched a TV in/must be 25yrs. RTE content, like UTV, or TV3 is completely meaningless to me. In a vast world of choice. It’s like driving around in a Tesla – now suddenly have to subsidize steam vehicles. But that’s personal. To someone else it could be great. Fine. But where’s my choice, gone???

      1. Mountain Talk

        Totally, Yes and thanks…. I mean, last week I listened to (as I worked) 3hrs of Chris Wylie’s testimony. Then 2hrs of Brittany Kaiser. Then a bit of Alexandre Nix’s and Arron Banks. The Cambridge Analytica thing. Then I thought of our director of communications. What he understands. All the Tech giants operating here. Digital Rights. Right of Access. And now this. A failing old medium broadcasting model. Demanding money from anyone with a Phone, Tablet or Computer on the island… wow

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