The BBC has been criticised by Sir Jacob Rees-Mogg, as plans for the broadcaster's licence fee will go up to £169.50 next month.
The decision follows two years of the price remaining stead amid a raft of cost-cutting measures at the television company.
The BBC's Director-General Tim Davie has said it is "not his job to simply to drive the licence fee higher", but "funding reform is necessary".
Defending the decision to raise the fee, Davie claimed that "currently nearly every adult uses the BBC every month", so they are "offering good value" for the service.
Jacob Rees-Mogg slams BBC's plans for new TV licence
PA / GB News
Speaking at a Royal Television Society (RTS) event in London today, Davie revealed the BBC will also be launching its "biggest ever consultation process" next year.
Davie told reporters: "I don't want to see our media market look exactly like America. This is a choice for all of us. It's not imposed by the BBC. It's a choice for what kind of media market we have."
Speaking to his panel on GB News, Jacob Rees-Mogg said that "television tax has surely passed its sell-by date" and that the main problem with the licence fee is that it has "harmed the broadcaster".
Former MP Jerry Hayes was in agreement with Jacob and said the BBC licence fee is going to be "redundant in five years time".
BBC Chief Tim Davie has said 'funding reform is necessary'
PA
Jacob admitted he has "sympathy" with the BBC, as its revenue has been "static for the last 20 to 30 years".
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Jacob explained: "Other people such as Sky, Netflix, which didn't even exist, have been able to grow their revenue into the trillions and become bigger than the BBC, and that if the BBC had freedom to raise revenue, it could be a world-beating organisation rather than sinking into becoming a small national player."
Broadcaster Michael Crick agreed that in the long term the licence fee "couldn't survive", but said the plan is a "good proposal" for the BBC "in the interim", while the authorities sort out what the future funding method is for the next five or 10 years.
Crick said: "The BBC is probably watched more by middle-class people, wealthy people, than it's watched by poor working-class people."
Jacob hit back at Crick, claiming that it would be "ridiculous" for the BBC to know consumer's incomes, and TV watchers can "watch ITV for free, or Sky for a subscription".
Michael Crick says the plan is a 'very good proposal'
GB News
In comparison to competing streaming services, Crick said that the BBC's fee is "extremely good value" for its "amazing range of output".
Crick argued: "I support broadly the BBC, it can be wasteful from time to time and in the long term the licence fee won't survive, but this is this is a fairer system.
"I suppose one way of doing it is saying anybody who pays the higher rate of tax has to pay a higher rate of licence."
Jacob disagreed with Crick's suggestion, claiming it is "monstrous" to charge a consumer a higher rate based on tax.
He fumed: "It's like saying you should pay more for a pint of milk because you've got an income above X, that this is rank socialism of the worst kind! The BBC should go for adverts, subscription, product placement instead, the works."