John Menadue. Murdoch’s Media Tax. (Reposted from 29/12/2015)

Rupert Murdoch complains that he faces unfair competition from a taxpayer funded public broadcaster like the ABC and SBS. Yet in effect, he imposes his own consumption taxes on consumers.  

As consumers we make a contribution to Rupert Murdoch’s empire when we buy goods and services. This is because the producers of those goods or services include the cost of advertising that is spent to help sell the product. The advertising that Rupert Murdoch receives is loaded into the cost of the goods and services we buy.

Last year, over $13 b. was spent on advertising of which about $5 b. was for commercial TV and Radio, and more than $2.5 b. for newspapers, which is an important part of Rupert Murdoch’s media income. In broad terms we pay about $1,500 per year per household for advertising. That revenue goes to media companies such as Murdoch’s. Of the $1,500 per year per household, about $500 is for commercial TV and radio and $300 for newspapers. This excludes the cover price.

So we pay about $300 per year per household for advertising in newspapers and that amount is loaded into the price we pay for goods and services that we buy. With Murdoch owning about two thirds of metropolitan newspapers, this means that he gets about $200 per year advertising revenue from each household. This $200 is loaded into the price we pay for all goods and services. It is in effect a consumption tax which is a regressive form of tax. So in effect, my household pays about $200 per year to Rupert Murdoch for newspapers that he produces that I scarcely ever read.

By contrast we pay about $120 a year per household for the ABC through progressive tax.

In short, Australian households are getting a cheaper and better service compared to what Rupert Murdoch offers.

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John Menadue is the publisher of Pearls & Irritations. He has had a distinguished career both in the private sector and in the Public Service.

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