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Aaron McKenna: It’s time for voluntary income taxes to fund frivolities like RTÉ

A voluntary income tax system is not one where citizens choose whether to pay any tax at all, but instead gives the option of paying additional contributions services that go beyond the basic function of government, writes Aaron McKenna.

Aaron McKenna

RTÉ RELEASED A report during the week crowing about their financial contribution to the economy and cawing at the fact that the licence fee we pay for the privilege is good value for money. Apart from the fact that the report is a rather rose-tinted view – something it itself acknowledges at several points if one, as most reporters seem to have neglected to do, reads past the executive summary – it got me to thinking about the great regressive tax that is the license fee.

As a tax that is levied on all households in the state that have a television – and when replaced by the broadcasting charge in the near future, all households regardless – it is an extremely unfair tax. A tax that bears no relation to any ability to pay or value of assets or, well, anything at all really is extremely regressive. It’s doubly unfair in that it is essentially a frivolous extra tax on the people of Ireland. Gardaí, nurses and social protection are one thing. Fair City and The Voice of Ireland are another. Yet the government mandates that you will pay tax for one as surely as for the other.

The TV licence contributes little or nothing to the Irish economy

The central argument of the Pricewaterhouse Cooper report that RTÉ commissioned is that the body made a contribution of €384 million to the economy in 2011. Loaded at the front of the report are figures about jobs created and industry supported, alongside lamentations that the license fee is lower in Ireland than elsewhere in Europe. The report has landed at a time when the Minister for Communications, Pat Rabbitte, is considering the roll-out of this new Broadcasting Charge on all households. It is an attempt at front-loaded spin by RTÉ’s management before the inevitable avalanche of criticism of this broadening of the RTÉ Tax.

Page 7 of the report has lovely colourful boxes full of facts and figures about how much RTÉ does for Ireland. A €384m contribution to the economy. A zero per cent increase to the license fee between 2008 and 2012, you lucky devils. And, best of all, 42 per cent of the license fee goes back to the exchequer in taxes – €78m in all. Arrive at Page 22 of the report, however, and PwC lays out clearly that the TV license portion of its funding contributes little or nothing to the Irish economy.

“With regard to the licence fee income, it is reasonable to assume that the benefits which derive from RTÉ’s expenditure of these funds in the Irish economy is limited to negligible. This reflects the fact that if Irish households were not required to pay the licence fee, they most likely would spend the money elsewhere in the Irish economy.”

Public service broadcasting and commercial elements

We know that many households in this country are hard up for that €160, which is used to subsidise RTÉ’s commercial operations that brought in €167m in 2011 (€17m less than the license fee). Though they pretend there’s a brick wall between the public service broadcasting and commercial elements, the scale that RTÉ operates means the public subsidises the private. There’s no brick wall between the two when RTÉ is selling advertisements.

Because we pay a direct tax to fund RTÉ it comes in for special attention and has to try and justify itself with propaganda pamphlets like the PWC report. In reality the broadcaster is but one of many sectional interests funded by taxpayers, with most of it lost in the tens of billions of taxes we pay through so many sources we can’t distinguish one from another.

Government exists to provide the basic structures of society: law and order, education, a social safety net. Everything beyond this are additional extras we’ve picked up along the way. Much of it is very positive, adding to the life and soul of the nation. A great deal of it is frivolous or to the benefit of a select few, monies apportioned by politicians in vote-grabbing exercises. Because there’s a giant pot of taxation, it’s difficult for you to pin down that the tax paid on petrol or on a new laptop or just plain taken from a pay packet is going to pay for a hospital, a public park or a Patrick’s Day junket for county councillors.

Voluntary income taxes

I’m a believer in voluntary income taxes, which is not to say choosing whether or not to pay any tax at all; but to pay additional tax for specific items that go beyond the basic function of government.

At the end of each year every taxpayer – including those on social welfare, who can choose how to spend their money – should receive a form to fill in; containing details of various programmes, projects or events that need paying for. They could be anything from longer opening hours for museums to subsidies for city bicycle programmes or the beautification of towns. Anything, really. We could do it on a local and national level, with taxpayers in different councils getting a say on how their property taxes are spent as well as the money that goes into national pots.

Taxpayers would select the items that they’re happy to contribute to, paying either a fixed euro amount or a percentage of income, and if enough people sign up to pay for the measure it is passed and paid for by them. This is voting with wallets, usually the very best kind of voting to figure out where people really stand on something. To coin a phrase, it’s very easy to spend other people’s money. The trouble is you eventually run out of it. This type of a measure will move people to consider just how much they value public amenities: no more protesting loudly that the government must do something about X or Y. If you want it, pay for it and convince others to do likewise.

Temporary taxes to pay for specific items

We could also introduce the American idea of ballot measures, raising new or temporary taxes to pay for specific items. For example, County Wherever could raise a levy on restaurant covers to pay for improvements to its school buildings where central government money is lacking, or cut local taxes with a corresponding reduction in services.

Ballot measures aren’t appropriate for taxes on income because it’s easy to take other people’s money. Rather if they’re focused on things like local levies, and would force people to make choices that will affect their own pockets through the money they spend in the same way as voluntary income taxes.

This would allow people to control their own destinies better than central government has been managing of late. One county could decide to become a more competitive low tax economy in the hopes of attracting businesses and residents; while another will take its chances as a high tax socialist haven. The key thing is that people won’t be screaming about how government should pay for this or that, but they will have to decide if they really want to pay for it themselves – as they currently do, though it’s masked because it all goes into one big pot – and try to convince others.

Personally speaking, I actually don’t mind paying the license fee. There are plenty of benefits in having RTÉ as a patron of the arts, and I can afford it. But I want a choice in paying for it and plenty of the other things government demands of us, because not everyone can afford it or see the benefits in it. If there’s enough folks like me (and their report says 85 per cent of Irish people are proud of RTÉ), they’ll get their money fair and square.

Aaron McKenna is a businessman and a columnist for TheJournal.ie. He is also involved in activism in his local area. You can find out more about him at aaronmckenna.com or follow him on Twitter @aaronmckenna. To read more columns by Aaron click here.

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