FEE: Britain's BBC Tax

            by EMMA FREIRE

            Last year, over 180,000 people in Great Britain were prosecuted for failing to pay the tax levied on their TV signal. This comprised 12 percent of all criminal prosecutions in Great Britain. Of those prosecuted, 155,000—two-thirds of them women—were convicted and ordered to pay fines of up to £1,000 ($1,600). Each walks away with a criminal record. 

            The tax in question is known as the "license fee." It is unusual in that it goes entirely to fund the British Broadcasting Corporation (BBC). "The license fee is, in effect, a television tax," explains Philip Booth of the Institute of Economic Affairs, a free-market think tank based in London. "It's a sum of money that everybody has to pay if they have a television which they use for receiving television signals. All the revenue of the license fee goes to the BBC, regardless of whether or not you watch BBC programs at all."

The BBC has an annual budget of $11 billion—$8 billion from license fees and $3 billion in the form of free spectrum granted by the government.

The license fee is currently set at about $226 annually for color TV and $76 for black-and-white. The level of the fee is set by the government, but the BBC collects the money itself. It does this under the trading name "TV Licensing," presumably so that the BBC brand is not associated directly with the dirty work of collecting the fee.

And that work can be quite dirty. TV Licensing starts by sending threatening letters to suspected offenders. These are worded to imply that their inspectors have the right to enter private homes (in fact, they need a warrant). The next step is a home visit from an inspector, who will try to gain entry with permission. If that fails, TV Licensing has technology to detect if a house is receiving a signal. They use this to gather evidence to apply for a search warrant. TV Licensing's inspectors have targets for the number of offenders they are supposed to catch, and they earn bonuses for exceeding their targets.

TV Licensing's policy stipulates that the first adult resident of the house that the inspector encounters becomes liable for prosecution. This is the reason two-thirds of those prosecuted last year were women. Inspectors usually come calling during the day when women are more likely than men to be at home.

Up to now, various campaigns to demote the license fee to a civil matter have been unsuccessful, though punishments have grown less severe. "The criminal aspect if anything has gotten slightly better," says Booth. "People are very rarely now sent to prison for not paying the TV license." In 1993, over 800 people were jailed for failure to pay their license fee, typically for sentences of around two weeks. Today, only fines are imposed. However, failure to pay the fine can land a person in jail.

As a regressive tax, the license fee falls heaviest on the low earners. Journalist Charles Moore wrote in The Spectator, "The licence fee is the most regressive and most ruthlessly collected of all government imposts, and the annual sum of "145.50 is a seriously painful sum for the social groups who watch television (though not, usually, the BBC) the most.

Moore, author of an acclaimed biography of Margaret Thatcher, decided to stop paying his license fee to protest a segment on BBC Radio that offended him. The segment involved Jonathan Ross, who was being paid $9 million a year by the BBC to host various shows. Moore wrote to the BBC to say he would start paying again when Ross was fired. The BBC responded by taking Moore to court, where he was fined $260.

This regressive and ruthlessly collected "impost" doesn't just pay a generous salary to stars like Ross. Over the past three years, $39 million was paid out in severance to 150 BBC senior managers. That's equivalent to 400,000 license fees. In at least a quarter of the payments, the person received more than what was required in their employment contract.

The BBC's large, guaranteed revenue gives it an overwhelming advantage in Great Britain's media landscape, particularly for news coverage. According to a government study, in 2011 the BBC spent $669 million on its news division, more than all other English radio and TV news providers combined. Also, 73 percent of all TV news hours watched in Great Britain were produced by the BBC. The BBC's news website attracts 14 million unique visitors each week (between 60 and 70 percent of them in Great Britain).

This is troubling for many reasons, not least because the BBC is biased against free-market views. "There is a sort of mainstream opinion in the BBC which is left leaning," says Booth. "It's not that they sit around at their desks thinking "ah, we must present this in a left-leaning socialist way. "They don't actually see that there could be another rational worldview from their own."

As an example, Booth points out that Paul Krugman is a frequent guest on the BBC's flagship news show "Newsnight," where he gets long segments to air his opinions without any presentation of alternative viewpoints. Also, until recently, one of the show's chief economics correspondents was Paul Mason, a former member of the Socialist Workers Party.

New research from the Centre for Policy Studies shows that BBC News was far more likely to cite ideas from left-leaning think thanks than right-leaning ones. The study also found that BBC anchors are far more likely to point out the political ideology of a right-leaning think tank than a left-leaning one.

And then there is the matter of BBC News's failure to investigate Jimmy Savile, a pedophile who is accused of raping hundreds of boys and girls. Savile was a BBC radio and TV host for over 40 years, and some of the rapes are alleged to have taken place on BBC premises. In 2012—a year after Savile's death from pneumonia—British channel ITV aired a documentary revealing Savile's crimes. Subsequently, some BBC staff indicated there had been office gossip about his pedophilia for years.

At the time of Savile's death, "Newsnight" journalists were investigating rumors about him, but the story never made it onto the air. The BBC commissioned an independent review, which found that the "Newsnight" story was axed because of "chaos and confusion" among BBC management who had no idea how to handle the situation. Several employees were disciplined as a result, but no one was fired.

The review cost over $4 million. The BBC's general director received $166,000 for testifying. The BBC's legal costs over Savile are already above $20 million. The one area where the BBC is getting off relatively cheaply is the victims. Under a settlement currently being finalized, 120 individuals who were raped as children by Jimmy Savile will be paid $52,000 each.

All these costs are adding up quickly for the BBC. TV Licensing inspectors will have to work hard to keep the revenue coming in.