The current election campaign has raised many tax related issues, yet the strangest must surely be the battle over the so-called iPod tax. Last week, the Conservatives launched a major initiative on the issue complete with commercials, website, and a Twitter account all geared toward claims the Liberals support a broad new tax on computer devices such as iPods.
A closer examination of the issue reveals that not only have the Liberals rejected a new levy on iPods, but the Conservatives copyright bill would have likely led to a doubling of the current levy on blank CDs.
The source of the Conservative campaign stems from an April 2010 vote that recommended creating an amendment to extend the current copyright law that establishes a levy on blank media to cover devices such as iPods. The levy, which adds 29 cents to the cost of blank CDs, has raised over $150 million to compensate for private copying of sound recordings.
The April 2010 vote was not on specific statutory language, but rather on the principle of extending the levy. In fact, the same motion received support from Conservative MP Gary Schellenberger when it was raised at the Standing Committee on Canadian Heritage. Months later, the Liberals explicitly rejected the creation of an iPod tax, instead favouring the creation of a fund to compensate for consumer copying.
Given the attention to the issue, it is worth noting the impact that Bill C-32, the Conservatives own copyright bill, would likely have had on the levy system. While all the parties have gone on record supporting the ratification of the World Intellectual Property Organization’s Internet treaties, none have acknowledged that ratification would come at a significant consumer cost since the treaties would either require dramatically increasing the levy or reducing revenues for Canadian artists.
Last November, Canadian Heritage Minister James Moore confirmed that Bill C-32 would allow for ratification of the WIPO Internet treaties, telling the Bill C-32 Legislative Committee that â€œwhat is in this legislation – the ratification of WIPO, the fair-dealing policy, the digital protection measures – is a huge victory for all Canadians.â€
Yet what Moore did not say is that ratification of the WIPO Internet treaties requires Canada to provide “national treatment” to all artists (in other words, treat Canadian and foreign performers equally). Since the current private copying levy system does not grant national treatment, this would likely lead to a substantial increase in payments from Canadian consumers to foreign performers and companies.
According to documents I recently obtained under the Access to Information Act, the Department of Justice has concluded that Canada’s current private copying levy system does not comply with the WIPO Internet treaties. In order to comply with the treaties, the private copying levy system would have to be expanded to include foreign record companies and performers.
A 2005 Industry Canada commissioned study estimated that this would result in either (1) a doubling of the current levy (at the time as much as $35 million per year) almost all of which would immediately leave the country, or (2) the current levy could remain unchanged, but Canadian record companies and performers would find their share cut roughly in half. In other words, Canadian consumers either pay millions more or Canadian creators lose millions in revenue.
Raising questions about the parties’ position on copyright and the private copying system is certainly fair game. But if the Liberals are asked to respond to iPod Tax claims, perhaps the Conservatives should explain why they left the existing system untouched in their copyright bill, thereby opening the door to millions more in consumer copyright fees or in lost revenue for creators.
Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at firstname.lastname@example.org or online at www.michaelgeist.ca.