I don’t have a TV, but I’m wondering whether I should get a TV licence, and it’s all because I’ve been thinking about tax avoidance.
The TV licence is an example of a hypothecated tax – a tax that is spent on a specific bit of government expenditure. In the UK, that’s the BBC. Economists dislike hypothecated taxes, but intuitively it’s very attractive to know what you’re getting in return for handing over money.
My dilemma is this: I watch all my TV online using the BBC iPlayer. As the iPlayer site explains, legally you need to pay for a TV license if you’re going to “watch TV live as it’s broadcast” on your computer, but not if you just watch things afterwards. So I can save £150 a year simply by waiting around until a programme has finished before I watch it on the iPlayer.
Now, you can see this two ways. One way, it’s the world’s worst-value ‘freemium‘ business model. There’s little incentive to upgrade from the free version to the paid-for version, so I’m being smart by not paying for the premium version.
The other way, I’m taking advantage of a tax loophole! I’m in a minority of people who don’t have a TV but do watch BBC programmes, which means I’m free-riding on everyone else by getting all of these amazing BBC programmes without paying anything. That’s not what parliament intended, it just hasn’t updated the legal framework yet to take account of people like me.
What should I do?