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The TV License – An Ancient Analogue Tax

Broadcast Television is a relatively new household technology, which was only introduced in the latter half of the 20th century. But in today’s rapidly evolving technological environment, broadcast television might as well be as ancient as Socrates himself. Television has gone through many different technological leaps itself, from black and white to colour, from CRT to LED, analogue to digital and yet the legal framework for television has not evolved with the technology.

In fact, the age of broadcast television may be coming to an end, while radio is making a comeback. The reasons are quite simple. Radio not only allows people to speak more freely, due to varying degrees of anonymisation, but also because radio shows tend to have a more open-ended format and are not as time constrained as television programmes tend to be.

In addition, there are fewer advertisements and segments are usually only interspersed between different music performances. Television on the other hand is very uncomfortable, as in most cases, the programmes are being interrupted by advertisements, or at the very least advertisements are played in between programmes. Only the British, Swedish, Norwegian and Danish public broadcasting companies do not rely on advertisement for their funding mix.

Television is also inconvenient, because without a DVR, viewers are bound to tune in at a particular time to watch shows and films. Radio has long since made the jump to the world wide web, allowing its listeners to tune into particular shows on demand online if they choose to do so. In recent years, Television has slowly caught on, but there are still many hurdles to overcome, such as licensing of foreign films and geoblocking. This is where high-speed internet comes in.

At the dawn of YouTube’s popularity around 2005, internet speeds were still very limited and videos were still streamed at 360p resolutions, with constant buffering in between. Today, nearly everyone in Europe can afford to stream HD or even 4K resolution content directly to their flat screen TV, their computer or their smartphone. Not only that, but production quality of shows on YouTube and its growing base of competitors has also gone up significantly; so much so, that many younger viewers prefer to stream their news (which is more targeted on the internet) from smaller online channels, rather than tuning in to generic short national news broadcasts every evening. The same can be said for entertainment programmes.

With the introduction of dedicated streaming services like Netflix in 2010, video rental stores slowly started dying out, but it may just as well end up killing public broadcasting and broadcast television in the long run if broadcasting companies do not find a way to attract younger generations to their programmes. But conversely, big US broadcasting companies are actually encouraging viewers to tune out, as they make their programmes readily available through streaming services like Netflix. Amazon and Netflix, amongst others, have also recently started creating their own exclusive television productions for their respective platforms, as more and more streaming platforms join the competition. Meanwhile, public broadcasters (with notable exceptions, like the BBC), often rely on broadcasting reruns from old shows from the 90s and early 2000s, further alienating young viewers.

But as broadcast television is seemingly on the decline, why do policymakers insist on an even older financing model for their outdated programmes?

In Austria, every citizen with access to a television or radio receiver (this does not include phones or laptops with internet access, as the Austrian High Court decided) in their apartment, must register with the GIS (Ger.: Gebühren Info Service; Eng.: Fee Info Service) to allow it to charge them 34,42€ every two months for the usage of said devices. Not only does that make Austria the most expensive country in the EU, but the second most expensive country to watch television in on the entire European continent.

Annual fees for TV licences across Europe. Source: Euro Babble

The majority of countries in the world and in Europe have either never had a dedicated TV tax, or have since abolished it. Even 12 of the 28 EU member states have no television tax, whereas the rest of the countries have starkly different prices assigned to television, with just as much variation in the quality of public television; although more money spent does not necessarily equal better quality in this instance.

The main driver behind this discrepancy is the distribution of the money that was taken in. For example, the BBC spends around 94% of its budget on content production of which two thirds are spent on television, with only 6% used on general support expenses. This allows the BBC to create numerous hit television series and films in house and distribute them worldwide, generating further revenue, making up about one quarter of their annual budget.

By contrast the Austrian ORF only takes in around one third of the BBC’s annual budget. But considering the UK has over 65 million inhabitants and Austria has around 9 million, the ORF actually has a proportionally extravagant budget. Of those roughly billion € around 60% stems from the TV licence, a quarter from ad revenue and 17% from other sources. However, the ORF uses only around 35% of its budget for television productions and 9% for radio productions, while 40% of its budget is used to pay its staff. This explains why there are far fewer noteworthy productions coming out of Austria. In addition to that, Austrian governments have continuously asked the ORF to impose austerity measures on itself and the ORF has a policy of not actively promoting sales of their own productions.

What is most surprising about the ORF’s financing model, however, is the way the TV license is distributed. In the UK the TV license is sold on a voluntary basis. It can be ordered online and also includes online streaming services in the package. In Austria, online streaming of television programmes is completely free, but regular television and radio channels require a license. The aforementioned GIS exists solely to inform citizens about the fact that they are obligated to register with them and pay for the license if they own a radio or TV enabled device at home and to collect the tax from them. This is done through TV and print media ads. Additionally, every few months, a letter is sent out to all non-registered apartments, requesting information on why the apartment is not paying for a TV license. Every now and then, a GIS officer will show up at people’s homes, inquiring about it and asking to see inside the person’s home to ensure there are no applicable devices. The officers are not authorised to enter a home without consent, but often try to convince citizens otherwise.

Not only is a television tax only for broadcast television extremely archaic, but so is the Austrian collection method. Most other countries have moved on to voluntary purchases (combined with actual services rendered), or integration of the license into regular taxation systems. For example, Bosnia has integrated the fee into the telephone bill of each household. Greece and Italy have included the fee in their electricity bills and Turkey uses a mixture of electricity bill surcharges and additional fees for purchases of appliances (i.e. you pay for it when you buy your TV and when you use it).

Poland has the exact same system as Austria and it is estimated collection evasion is around 65%, way above the EU’s average of 10%. Sweden also has the same system in place, with a similar court ruling about streaming services like in Austria. The main difference to Poland is that 90% of households actually reported they owned TV sets. Croatia has a similar system to Austria in that officials come to check on you if you chose not to pay your fee, however, these officials do actually have the authority to check the premises and only do so when someone actively unsubscribed from the service. Ireland also has a similar system to Austria, as several attempts at reform have failed over the years.

Norway solved the collection issue by forcing all shop owners to report to the government if they sold a person a TV or receiver, allowing the government to issue a new license to that particular household. However, a new problem has arisen from this method, as now citizens have to actively write to the government and prove to them that they have replaced their old device with a new one. Otherwise, they will be forced to pay for an additional license. Certain types of institutions, such as nurseries are excluded from licensing.

Czechia has turned their license into a TV tax, which is levied together with other taxes. Germany has also changed their license to an unconditional contribution paid by every citizen, although Germans are not too happy about it. Finland has replaced its license with a direct income tax in 2013. France also collects its TV fees via local taxes. Denmark has recently decided to abolish their fee from 2019.

It seems the trend is going in the direction of abolishment or incorporation into general taxation systems and for good reason. Paying another body for the collection of taxes, greatly reduces the amount that ends up going to the public broadcasting companies. However, there is still resistance to this model in Europe. Switzerland, the most expensive nation for TV viewers worldwide, recently had a referendum on abolishment of their collection agency and overwhelmingly voted in favour of keeping the old system.

In Switzerland and Austria especially, the law attributes to public broadcasting something called “öffentlicher Bildungsauftrag” (public educational mission)  which gave way to justifications of why high fees are are not only mandatory but also a key pillar of democracy. How the achievement of said mission is to be measured, however, no one is able to say.

Some like Austrian Anchor Armin Wolf have argued that the introduction of the fee into the general budget would compromise the political independence of the broadcasting company. Wolf cites the BBC as a renowned example, however, the BBC doesn’t actually receive the money levied from TV licenses directly. It first goes into the general budget and is later transferred to the BBC, therefore his defense does not hold up, as a similar system could be implemented in Austria to keep the ORF financially independent. At the same time, the ORF has widely been criticised for being biased, a claim that is underpinned by the fact that over time multiple anchors have run for political offices (frequently for the Social Democrat SPÖ). The ORF’s supervisory board also includes nine members appointed by the Austrian government, which does not necessarily speak for its independence. A similar case can be made for the transformation of Polish public media, which still remains financially independent, but is run by political appointees.

The independence of the public media is a big concern, but does not justify a medieval taxation system. One could use the same argument to prevent governments from cutting funding from schools or universities if they choose not to promote their policies, which are also paid from the general budget. A potential solution might be to involve the different parties in parliament (rather than the government) in the board, or even the complete depoliticisation of the board. The Austrian judicial system is world-class in ensuring the complete independence of the judiciary. Why should the same not be possible for the public media?

The ageing physique of broadcast television put aside, media in general wields great power and holds great sway over the public. The inventors of our political systems did not conceive of the influence mass media would have on our political discourse and therefore did not seek to separate the power of media from other state powers, such as the legislative, the executive and the judiciary. We need to recognise media as a fourth power to be separated from other state actors, both to protect the media from political abuse, as well as to protect political and judicial actors from media abuse. It cannot stand that the Daily Mail accuses British judges of treachery on its front cover or that it points out particular MPs to be attacked by the public. Above all, media powers must be separated so they continue serving the people and not themselves. But this will not be achieved by holding on to ancient taxation models, but by creating new checks and balances and potentially enshrining them in a given country’s constitution.

Dominik Kirchdorfer
Dominik is a European writer and entrepreneur of Austrian and Polish descent. His passion is storytelling and he wants to do everything in his power to give the story of Europe a happy ending. He is currently the President of the EFF - European Future Forum, Editor In-Chief of Euro Babble and EU Adviser to the Austrian Savings Banks Association. Dominik recently published his first SciFi novel, The Intrepid Explorer: First Flight under the nome de plume Nik Kirkham. Twitter: @NikKirkham

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