Canada Decides to Tax Blank Media

In a move that is sure to enrage users of blank digital media, Canada's Copyright Board has finalized plans to add a levy of 5.2 Canadian cents on CD-Rs and CD-RWs, 23.3 cents on audio cassettes over 40 minutes in length, and 60.8 cents on MiniDiscs and recordable audio CDs. In a market in which blank CD-Rs used for computer backup typically cost less than C$1 each, this represents an increase of at least 5% per disc. Interestingly, DAT tapes are excluded from the tax, as they are not seen as a threat to the music business.

Predictably, Canada's high-tech sector is outraged about the fees, which are intended to compensate Canadian music artists for lost royalties as a result of private recording. Pointing out that the levy will affect computer users, the majority of whom do not copy audio discs, John Reid, president of the Canadian Advanced Technology Alliance, states that "as a public policy tool it just is the wrong direction for Canada to take. It really goes in the face of the government's move to basically lower the cost of business. It's bad public policy."

The CATA attempted to persuade the Copyright Board to exempt the computer industry from the tax, which came as a result of public hearings earlier this year. The Board says that the levy is expected to raise C$9 million (US$6.1 million) for performers in 2000 from the 88 million recordable CDs, 18.5 million audio cassettes, and 500,000 MiniDiscs and recordable audio CDs expected to sell in the coming year.

For its part, the Board states that they have "set a levy which it feels is fair and equitable, appropriately compensates owners of copyright, but that will not unduly disrupt the marketplace." But Reid adds that "it's just a very bad precedent to again add to the set of user fees which the consumer has to face."

The new levy has even inspired a website, www.canthetax.com, whose creators hope to appeal to the public to put pressure on the Board. According to website literature, "this website is a hub of organized opposition to the levy, which has been dubbed 'The Tape Tax.' Here you will find the legal text of the amendments, newspaper articles from across the country, contacts on both the pro and con sides of the debate, and an electronic petition against the levy."

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