Nova workboard

a blog from young economists at Nova SBE

The Danish media fee is regressive and should be changed

The Danish media fee has inequality consequences as it can be perceived as a regressive tax, meaning the poor pay a proportionally higher amount than the rich. This is argued in four parts, the first part being that the fee is in fact a tax on everybody. The second and third part is is related to why the tax is regressive. Finally, a common counter-argument is disqualified, before the post is concluded.

The media fee is not related to consumption, but is instead a tax on almost all Danish individuals, a tax framed by economists as being ‘lump-sum’. This is the case as the fee is to be paid by everyone with a TV or any device with access to the internet, which was 98% of individuals in 2016. As almost all are to pay, irrespective of their media consumption, the fee is effectively a tax on (almost) everyone.

The media tax is 330 euro annually irrespective of the individual’s income, wherefore it is regressive. Taking age-difference as an example, in 2015, people between 20–24 years had an average income of 14.100 euro annually, whereas people between 45–49 years had an average income of 39.000 euro. Thereby, the media tax constitutes 2.3% of a young persons income, but only 0.85% of a middle-aged persons income. The inequality consequences are not only in terms of age difference, but also between gender (men’s average income is 26% higher than women’s) and geographical regions (Northern Zealand’s average income is 35% higher than Northern Jutland’s).

Individuals in a couple and living together can share one tax payment, making the tax further regressive, as those with higher incomes also are more likely to live together as a couple. The inequality consequences becomes apparent with an example; a married (or unmarried) couple pays in total 330 euro for their household, whereas two friends co-habitating pay 660 euro. For the group of 20-24 years old mentioned earlier, only 32% live together as a couple, whereas for the richer individuals between 45-49 years, 64% lives together, and thereby gets the discount. As such, those who are already taxed a lower proportion of their income are more likely to receive the further discount of being able to split the tax with their partner, wherefore the regressive character of the tax is further enhanced.

To sum, the current media tax model is regressive. An argument for this model is that non-state financing ensures independent media. However, as the board of media institutions are largely politically elected, this argument seems redundant. As a matter of fact, 63% of Danish people agree to remove the media tax and fund media institutions directly through progressive income tax. The second largest party in Denmark advocate this solution as a ‘Robin Hood’ where ‘those with the broadest shoulders should bear the largest burden’. Other political parties should recognise the inequality effects, and change the model at the 2017 fall negotiation on media funding.

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Author: studentnovasbe

Master student in Nova Sbe

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