There was no surprise at the decision by the new Minister for Communications Denis Naughten not to proceed with the new public broadcasting charge.
The plan had actually been shelved some time ago but it was left to Naughton finally to put it to bed on the basis that the minority government wouldn’t get it through a vote in the Dáil, given the strength of current party numbers post the general election.
The charge would have been paid by all households in the State, regardless of whether or not they owned a television. It was designed to capture the Netflix generation and was intended to reflect the changing patterns of consumption of audiovisual content.
It was also meant to cut down on the level of evasion under the current system, which is estimated at up to €30 million in lost revenue each year.
But the fuss over water charges resulted in the last government backing away from imposing another charge on households before the election and it has now been consigned to the bin.
With the current licence fee at €160 a year, the figures on lost revenue suggest that 187,500 households are dodging the payment out of a national total of about 1.9 million. And that’s after you include the exemptions for pensioners and other groups that are paid for by the Department of Social Protection.
This is against a backdrop where RTÉ estimates that about 99 per cent of households have a television, not to mention the many corporate premises that have sets.
It is quite an evasion rate and raises questions about the effectiveness of the current collection model operated by An Post. Every household, business or institution that has a television set (within the meaning of the Broadcasting Act 2009) must by law have a TV licence or face a fine. Yet the evasion rate remains high and, over the years, some people have opted to go to prison rather than pay the charge or fine.
Of the €214 million licence fee revenue collected in 2014, €179 million, or 84 per cent, was received directly by RTÉ. Some 79 per cent of the total licence fee was invested in RTÉ services and activities with the remaining 21 per cent spent on non-RTÉ activities, including the BAI Sound and Vision fund, TG4’s deduction and support, and An Post collection fees.
Of course, many will argue about the quality of our public service broadcasting and whether or not it is worth €160 but that is besides the point.
It now remains to be seen what scheme the Government comes up with to replace the licence fee arrangement. There have been calls from across the media sector for a complete overhaul of the system, with some even suggesting that print media should receive a piece of the pie. Given that we have a minority Government in place, it’s probably fair to suggest there won’t be a quick-fix solution to this issue. But there is one way that the Government could improve the collection rate: hand over responsibility for it to the Revenue Commissioners.
We already have a template in place from the experience of the local property tax (LPT), which was introduced in 2013 and replaced the €100 household charge that was brought in by the Fine Gael-Labour Party coalition in the teeth of the recession.
That charge was initially ignored by hundreds of thousands of households. In 2014, Revenue wrote to the owners of about 274,000 properties who had not already brought their affairs up to date and, by early 2015, some €40 million had been collected in respect of about 253,000 of those properties.
In the absence of a return from a taxpayer, a deduction at source is the Revenue’s default means of collection for the LPT. In the case of the self-employed, Revenue will not issue a tax clearance certificate where there is an unpaid bill. And where property tax remains outstanding, a charge will attach to that property, which must be discharged on the sale or transfer of the house.
These measures make it difficult to avoid paying the LPT and compliance has shot up. According to Revenue’s annual reports, compliance was 98 per cent in 2014 and 97 per cent in 2015.
People might be willing to ignore a knock on the door or warning letter from the TV inspector, but experience shows that they won’t mess with the Revenue.