A discussion I have had more than once in my life, is how DR should be financed. There are both political and economic arguments and in this post I will focus on the economical. The hypothesis is, that if you finance DR through the tax system we would as individuals pay less. The major reasons being, there will be no one who cheats, and DR could save money on the department that collects license fees.

Economics of the deal

The economics consist of the following separate items.

1. The total collected license fee. We assume that everything except the license department stays the same, so this will also be the amount DR should receive from taxes.
2. The number of people in Denmark, (there is a pristine opportunity to do a demographic split (age, income, households, etc.), but we will keep it simple, and decide that each person over 18 will pay the same amount
3. The number of companies in Denmark, yes, it came as a surprise to me also. We will assume that all companies with more than 5 people do not share address with a residential home

Total License fee and savings

DR share of the annual license revenue in 2012 was 3.554.600.000[nbnote ]According to the DR annual report it was: 3.534.600.000[/nbnote] DKK. There are additional receivers of license funds of  699.600.000 DKK [nbcite refID=”2″ refName=”kum” type=”website” title=”Licens” publisher=”Kulturministeriet”  year=”2013″ month=”07″ day=”31″  month_access=”07″ day_access=”31″ year_access=”2013″ url=”http://kum.dk/Kulturpolitik/Medier/Mere-om-medier/Licens/”].

Calculating the savings from closing a department within an organization I have no experience with is a total shot in the dark, but we will assume that 15 people with an average monthly salary of 37.000 DKK can be saved, this gives an annual saving of 6.660.000 DKK

This leaves 4.247.540.000  DKK in total to be collected via the tax system.

Number of people

In Denmark per Q1 2013 there are 1.920.415 people who are married or in a registered partnership, and 2.012.140 people who are not (both figures only people above the age of 18) [nbcite refID=”3″ refName=”statbanken” type=”website” title=”Statistikbanken” publisher=”Danmarks Statistik”  year=”2013″ month=”07″ day=”31″ month_access=”07″ day_access=”31″ year_access=”2013″ url=”http://www.statistikbanken.dk/statbank5a/default.asp?w=1280″].

We will give the only advantage to married people and say they only have to pay once (or for the ease of calculations we will say they have to pay 50% of the others)

Number of Companies

In Denmark in 2011 there were 88.681 companies with 5 or more employees out of a total of 284.417 companies [nbcite refID=”3″ refName=”statbanken” type=”website” title=”Statistikbanken” publisher=”Danmarks Statistik”  year=”2013″ month=”07″ day=”31″ month_access=”07″ day_access=”31″ year_access=”2013″ url=”http://www.statistikbanken.dk/statbank5a/default.asp?w=1280″]. We assume that companies with less than 5 employees are based out of a residential home, and thus do not have to pay license fee[nbnote ]http://www.dr.dk/OmDR/Licens/Erhverv/FAQ_Erhverv/Jeg%20har%20erhverv%20hjemme%20paa%20min%20privatadresse.htm[/nbnote]. For ease of calculation we assume that companies pay the same fee of regular people.

Results

The current license payment for companies is 768,80 DKK (without taxes), and the current license payment for individuals is 1218,00 DKK per half year, so a total of 2.436 DKK per year [nbcite refID=”1″ refName=”drlicens” type=”website” title=”Om Licens – dr.dk” year=”2013″ month=”07″ day=”31″ publisher=”Danmarks Radio”  month_access=”07″ day_access=”31″ year_access=”2013″ url=”http://www.dr.dk/OmDR/Licens/Licensforside.htm”].

Our calculation gives an annual license for both companies and single(non-married) people of 1388 DKK which is a saving of 43% and for married people an annual payment of 694 DKK.

The calculations can be found here: Virksomhed og befolkningsstatistik

Political

The current license agreement is an agreement between the Danish state and Denmarks Radio, I am sure there are reasons why someone would think it is more under political control if it is collected through taxes. Let me know in the comments section.