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This article was published on November 28, 2012

As Finland drops TV licence fees for a means-tested tax, what does the future hold for other nations?

As Finland drops TV licence fees for a means-tested tax, what does the future hold for other nations?
Paul Sawers
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Paul Sawers

Paul Sawers was a reporter with The Next Web in various roles from May 2011 to November 2014. Follow Paul on Twitter: @psawers or check h Paul Sawers was a reporter with The Next Web in various roles from May 2011 to November 2014. Follow Paul on Twitter: @psawers or check him out on Google+.

For some people, TV licence fees represent an archaic throwback to some prehistoric age when televisions were little more than bulky, black-and-white boxes. For others, however, a state-enforced fee helps ensure quality, impartial, ad-free public service broadcasts.

Naturally, your viewpoint on the above will likely be colored by a number of factors – such as where you live, your age and even your political leanings. It’s a highly divisive subject, and there are strong cases for both arguments.

For example, in an age where we have satellite, cable and Internet-based television, all of which is either ad-supported or subscription-based, why do so many countries still cling on to this annual TV tax? Conversely, with almost every avenue of information and entertainment these days built upon an ad-based ‘commercial’ business model, shouldn’t we value the likes of the BBC?

TV licence fees: A European phenomenon?

Everyone in the UK who watches or records TV as it is broadcast needs to be covered by a TV licence. This includes TV on computers and mobile phones – it’s probably fair to say that the very definition of what a TV actually is these days has led to an even louder anti-licence fee voice. Technology has evolved, therefore the business models should evolve too, or words to that effect.

The UK Government sets the level of the licence fee, and in January 2007 it was agreed for a six-year period with the amount being approved each year by Parliament. More recently, the Government decided to freeze the licence fee at its 2010 level of £145.50 per year (that’s £2.80 a week) until the end of the current BBC Charter period in 2016. The licence fee covers a commercial-free BBC, including TV, Radio and online services.

TV licence fees are fairly common across Europe, with 26 countries having some form of annual television levy in place. A handful of countries across Asia and Africa also have licence fees in place, including Japan and South Africa. But by and large, outside of Europe, licence fees have either never existed or have been abolished.

The curious case of Finland

Finland, though, is a curious case. It will soon start phasing out its annual licence fee – costing around €250 per household –  in favor of a ring-fenced tax, levied from each adult (rather than household) regardless of television ownership. This is to fund the Finnish Broadcasting Company (YLE).

The so-called YLE tax is essentially means-tested, whereby the poorest won’t have to pay anything at all, and median income couples potentially paying up to €280 in total.

The ‘Difference to TV licence’ column in the above table is clearly a little misleading, in that a flat-share with a group of adult friends would seemingly end up costing a lot more compared to the old system. And get this, it doesn’t just apply to people – companies too will be expected to pay something. Firms with sales below €400,000 will be exempt, but other companies could have to pay up to €600 a year. Even if there’s not a TV anywhere near the premises.

It’s worth also looking at Australia, which abolished all licence fees in 1974 to adopt a public-funding approach instead. This essentially meant that its ad-free public service ABC is funded through government grants, amounting to around A$1 billion a year, with support from its own commercial activities. So while Australia has no specific licence fees as such, it’s still funded by the taxpayer, indirectly at least.

So…what are the options?

Any country looking to move away from compulsory TV licence fees can follow one of three routes:

  • Implement a means-tested ‘tax-at-source’ system which safeguards the commercial-free nature of public service broadcasting, as Finland is deploying from next year.
  • Or, governments could follow Australia’s model and abolish all direct fees/taxes altogether, choosing to fund the broadcasters from their own coffers (well, you know what I mean).
  • We could completely do away with all the BBCs of the world and have entirely commercially-supported networks.

As I’ve written before, as a UK resident I’m a fan of the current licence fee model. I’d pay the £2.80 a week for iPlayer alone. But there are a lot of very vocal critics of this enforced model, so one feels it may only be a matter of time before some kind of reform will be pushed through by one of the political parties to appease the voters – but if you consider the other options, are they better?

Finland will soon make every adult pay an annual tax, irrespective of whether they own a TV or not. Personally, I’m not entirely against that, but I can definitely understand why someone might take umbrage at this. As for the Australia model, that really sounds a lot like what Finland is about to implement, except it takes the funding behind the scenes so it’s not directly attributable as a per-adult cost.

I can see why many argue for an entirely commercial approach, as is the case in many countries, as it’s in keeping with the way the industry has evolved. Let’s face it, there’s no way the BBC business model would be given the green-light today, it’s very much part of the old world order.

But there is still significant demand for quality, ad-free TV and radio that have genuine claims to impartiality, and the decision to lose TV licence fees shouldn’t be taken lightly…and I’m sure it won’t be.

That said, with the likes of Netflix, YouTube and the slew of other IPTV services that no doubt exist where you live, it’s hard to see TV licence fees existing in their current form for another ten years.

Feature Image Credit – Thinkstock

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