Proposal of 1% tax levy to fund the SABC is both unnecessary and unrealistic

Last week, the Democratic Alliance (DA), along with other interested stakeholders and members of the public, made written representations to the Minister of Communications, explaining the nature of our objection to the proposal made by the Minister to impose an additional 1% tax on income to fund the SABC.

Under such a proposal, a working South African earning just over R8000 per month would be compelled to hand over R1000 of his/her annual income to fund a state broadcaster that ought, by right, to be generating its own income.

The proposal is grounded on a number of false assumptions about the financial crisis facing the SABC:

1. "The SABC cannot support itself during difficult economic times"

The truth is that the SABC's financial woes are almost entirely the result of losses through bad management, criminal conduct and irregular, fruitless and wasteful expenditure, and have nothing to do with the recession. Income that might be associated with economic conditions - such as advertising revenue and the collection of license fees - has been left largely unaffected by the economic turbulence.

In fact, SABC advertising revenues grew between 2007 and 2009 by 10.3%, and licence fee collections were up 13.8% in that time period. Though there was a marginal 2% fall in advertising revenue between 2008 and 2009 (which amounted to a decline of R64-million) this does not come anywhere near to explaining the fact that the SABC went from making a R63-million profit in 2008 to a R913-million loss in 2009.

2. "The SABC is incapable of being self-sufficient because it has a public service mandate to fulfil"

The SABC is a public broadcaster with three national television stations, and competition in the national terrestrial market from just one other broadcaster. During her tenure as Chairperson of the Interim SABC Board, Irene Charnley was repeatedly at pains to point out that the SABC's content is consumed by over 27 million South Africans on a daily basis. And while the intricacies of running such a massive corporation are numerous, they are far from insurmountable - as we have seen under previous, competent SABC management. In such a position, the SABC ought not just to be able to break even, but in fact generate enough revenue to adequately fund its own public service mandate.

3. "This is the only alternative to the present system"

The DA agrees with the Minister that there are difficulties with the current television license regime; the fixed nature of the license fee, for example, effectively renders it a regressive tax - costing poorer citizens far more as a percentage of household income than it does citizens with higher incomes. However, we believe a far better option than adding to the already onerous tax burden on working South Africans might be to adopt a scaled license fee regime, which takes into account the financial resources available to the poor majority of our people, whilst also affording as many South Africans as possible the opportunity to take ownership of their public broadcaster. The current Broadcasting Act empowers the Minister of Communications to do so.

At present the SABC is in a state of crisis because of unaccountable spending. Yet the minister wants to introduce a funding regime that would effectively grant the SABC an annual windfall with very few strings attached. The precise reason that the SABC is facing such a crisis is that it has failed to hold its own people to account, particularly in terms of their misspending.

Although the National Treasury made it clear in November 2009 that it had not been consulted over the proposal, Minister Gordhan has been unequivocal in his opposition to such a proposal, pointing out in a parliamentary reply that earmarked taxes are inefficient, limit fiscal space, and make it difficult to hold departments accountable for their spending.

Under these circumstances, the proposal of a 1% tax levy to fund the SABC is both unnecessary and unrealistic.

Statement issued by Lindiwe Mazibuko, MP, Democratic Alliance deputy shadow minister of communications, January 19 2010

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