Circle City Info

Tax revolt in South Africa around TV licence fees

The SABC is facing an uphill battle to increase TV licence compliance rates, as it faces a tax revolt against corruption and mismanagement at the state broadcaster.

SABC CFO Yolande van Biljon recently revealed that only 2.5 million of 9.5 million TV licence holders on their database paid their TV licence fees last year.

The SABC billed around R3 billion in TV licence fees per year but was only able to collect around R791 million.

What is even more telling is that only 68,000 of the 401,000 new TV licence holders in 2019 renewed their licences a year later.

This shows that most people only pay a TV licence because it is forced on them when they want to buy a new television. When given a choice, people do not pay this fee.

Organisation Undoing Tax Abuse (OUTA) CEO Wayne Duvenage said the low compliance rate is a clear sign that it is a tax revolt.

He said paying for a TV licence is a small annual fee, but that most people do not pay it out of principle.

“It is seen as an unnecessary tax, and nothing gets citizens onto a cause of defiance against a state that is steeped in corruption than a tax revolt that the government can do nothing about,” said Duvenage.

The TV license compliance rate is dropping year after year because the SABC cannot enforce the payment.

While it is technically possible, it will cost the SABC more to chase after the R260 licence fee than what it’s worth.

“As with any law, if you can’t enforce it, compliance will decline because there are no consequences,” said Duvenage.

In addition, many people don’t watch SABC as they either have DStv or Nexflix, so they don’t see the need to pay.

To increase TV licence fees, the Department of Communications wants South Africans to pay TV licences for laptops, tablets, and DStv decoders.

The department also has plans to force broadcasters like MultiChoice to collect TV licence fees from their subscribers.

This strategy, Duvenage said, is wrong.

“You can’t run an inefficient service and then tax other related industries to cover your costs,” he said.

By taxing other appliances, the state starts to interfere with pricing models and costs related to these businesses, which has all sorts of ramifications to competitiveness.

Similarly, asking MultiChoice to increase their fees and give some money to the SABC interferes with their business model and makes them less competitive against Netflix.

Instead of trying to squeeze more money out of TV licence fees, Duvenage said the SABC needs to fund itself through a normal commercial business model like advertising.

The state then needs to decide whether to subsidise areas that cannot be funded through commercial models, but which are necessary to keep the population informed with news and education programs in 11 languages. These areas can be treated as semi-essential state-funded services.

“In addition, the SABC needs to operate more efficiently and reduce unnecessary spending,” said Duvenage.

“Does the SABC need 4 TV stations and all its radio stations? Does it need all its staff, branches and regional offices and ancillary businesses?” he asked.

Duvenage said it is high time that the entire SABC business model is reviewed, and maximum efficiencies introduced.

“The TV licence as a partial income model is defunct, just as the radio, dog, and bicycle licences of yesteryear became defunct and were phased out,” he said.

Image credit – Richard Tanswell

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