tax

Update – Response on Netflix/Internet Tax

From my local Member of Parliament, Karen McCrimmon (Dated June 13th, 2018) :

“Hello Rob,

Thank you for taking the time to share your ideas with me.

Our government understands the importance of supporting our artists and creators. We also know that the way Canadians access content is changing. That’s why we have made historic investments of $3.2 billion, to support our artists and creators. It’s also why we will be modernizing our laws and programs to better support our artists in the digital era.

Netflix’s investment is a part of the transition. It secures 5 years of investments for our creators, as we modernize our laws and programs.

We, as a government have decided not to introduce a Netflix tax because we don’t want to raises taxes on the middle class, we want to lower them. We will always look at ways to strike the balance between a fair tax system and the investments we need in our culture, but in doing so, we’re not going to be raising taxes on the middle class through an internet broadband tax.

I will share your ideas with my fellow colleagues, including the Minister of Finance, Bill Morneau.

Thank your again for your engagement as a constituent.

Kind regards,

Karen”

I had suggested that if taxes on streaming services are absolutely necessary that they consider forwarding a portion of the federal taxes collected from these services to Canadian Content initiatives, instead of introducing an independent levy for that purpose.

As i’ve mentioned in a previous entry, these services will be taxed on New Years Day in Quebec and the Canadian Radio & Telecommunication Commission had made a proposal of their on in regards to levy to fund Canadian Content.

The publics views have been made clear by a February 2017 poll conducted by Innovative Research Group earlier in 2017. But I had thought to send my opinion and suggestions to my local MP and Heritage Minister Melanie Joly in response to the CRTC’s recent proposal.

If you wish to contact your local Member of Parliament on this issue, you can do so via the MP database by clicking here.

I will of course update this blog if the situation changes.

Thank you.

No to Internet Tax !

Apparently Canadian Heritage Minister Mélanie Joly is considering an Internet Tax to fund Canadian content, according to University of Ottawa professor Micheal Geist. And unfortunately for Canadians this tax may make internet access more expensive.

There are currently two taxes being considered ; One on content providers like Netflix and iTunes and another general sales tax on internet access. And although the previous tax may sound better than the latter, one has to wonder if all music, television programs and films purchased or rented online would be subjected to this tax, including those that are made available through the internet television providers.

SiriusXM subscribers are already subject to taxes and a “Music Royalty and Regulatory Fee of 14.2%”. But would the service also be subjected to this additional tax ? Will Apple Music subscribers need to pay for this additional tax ?

We currently pay nothing to listen to radio and to watch television offline. We also already pay taxes on compact disc, DVD and blu-ray purchases, which would not be subject to this new tax. It therefore makes no sense to charge people more taxes for the same content, especially when it involves the streaming of purchases matched or uploaded to a Cloud service.

Why does the government not fund Canadian Content by taxing Canadian broadcasters that run adverts online, when they stream foreign content ?

I’m sure Rogers and Bell would likely oppose this because they’d likely rather see the foreign services taxed instead. But the foreign services have no legal obligation to collect these taxes and the Trans-Pacific Partnership Agreement would disallow this requirement, if passed.

We also currently pay taxes on our internet provider subscription fees so any additional tax would simply make it unaffordable for many Canadians.

Canadians spent on average $203 per month on communication services in 2014, according to a CRTC Report released in 2015, an increase of approximately 6% from 2013 ($11.92). And according to CBC News, there was a 10% increase on wireless and internet services specifically from 2013.

To dissuade use of foreign services like Netflix and iTunes, Canadians are also already subject to data caps and the proposed tax would simply make the unlimited internet plans less affordable.

Many Canadians also still pay a “Digital Services Fee” on their cable, satellite and television subscriptions, a fee that cannot be justified now that an analog service has been fazed out.

Could the government not demand this fee be replaced with a Canadian Content Improvement Fund fee instead ? Or will this obsolete fee be buried like that of Bell’s $2.80 Touch-Tone fee, which netted Bell $80 Million in 2013 according to CBC News ?

At the moment Bell is claiming the Digital Service Fee is collected to improve their services. But isn’t that what their investors are paying for ? Why their customers are being asked to pay more per month for television ?

Prior to September 2014, cable and satellite television subscribers in Canada paid a monthly 1.5% fee to the Local Programming Improvement Fund, which netted $106 million in 2011 for television stations in markets smaller than a million. And although this fee was discontinued, these subscribers barely noticed because they were asked to pay more for their television subscriptions shortly after.

The average monthly rate for television services paid by Canadians climbed from $65.25 in 2014 to $66.08 in 2015, according to CBC News ; A difference of 83 cents per month when the average monthly rate for Canadians for the Local Programming Improvement Fund was 50 cents. And with the mandated “skinny package” changes some have seen their monthly rates rise significantly since the spring of 2016.

I believe it makes more sense to apply a Canadian Content fee of a dollar or two to the sale of television antennas, digital converter boxes, digital television receivers/set top boxes, satellite/internet radio receivers and streaming media players in Canada, although some members of the public would likely not enjoy the prospect of paying it in addition to a Provincial environmental handling fee and having both fees taxed.

Perhaps a monthly fee of 1.5% on unlimited internet packages or bundled packages over $150/month would be the path of least resistance because it would likely be negligible to the subscribers of these specific bundles or packages.

Warning – Gift Card Scam

The Canada Revenue Agency does not accept or solicit iTunes gift cards as payment.

Apparently the scammers now ask for payments using iTunes gift cards, that they resell online using legitimate services.

If you receive a call instructing you to pay back taxes in gift cards, bitcoin, prepaid credit cards or prepaid debit cards, hang up and call 1-888-495-8501 from 8:30 a.m. to 5:00 p.m. Eastern time, Monday to Friday.

What Netflix Tax ?

It should be noted that the CRTC ruled against a “Netflix tax” in March 2015, as stipulated in a March 12th, 2015 thestar.com article. And that all of the major parties have categorically denied wanting such a tax.

Apparently the only major proponent of this tax was the provincial government of Ontario. But they have since changed their minds according to University of Ottawa Law professor and internet columnist Michael Geist. His March 10th, 2015 blog entry on this issue can be found by clicking here.

Excellent News For Music Fans

I have just received word that the “Tour Tax”, a prohibitive fee that international artists were subjected to when performing in Canada, has been scrapped.

This counterproductive fee kept newer artists out of Canada, especially independent and unsigned artists, and has caused many clubs to stop featuring live acts altogether. 

Over 143,000 signatures had been registered on a change.org petition promoted on this blog in 2013, which was presented to Jason Kenney, Canada’s Minister for Multiculturalism.

Retail Council Wants Levy Scrapped

According to The Wire, the Retail Council Of Canada has formally asked the Conservative government to scrap the blank audio media levy.

The group had previously stated in a March 12th, 2010 press release that they oppose any extention of the levy, stating that it would disadvantage Canadian retailers. And in this press release they stated they believed this “anti-competitive tax should be repealed altogether” :

Retailers contend the levy system is obsolete in an age of rapid technological change and does nothing to support and protect Canadian artists.”

I agree. And strangely enough the proponants of the levy also agree because they’re constantly trying to levy the next technology by stating the previous technology is no longer being used to copy music.

In less than five years the current levy was made obsolete, resulting in the following question on the savethelevy.ca web site : “It’s 2011 … who uses CD-Rs to copy music anymore?”

Well, cell phones and tablets are now being used to play back music files and cloud services will stream music to these devices shortly in Canada, making mp3 player obsolete soon. But of course like the Retail Council of Canada I believe the CPCC’s arguements are fundementally flawed :

Retail Council of Canada calls for changes to the Copyright Act to provide an explicit exception recognizing that private copying for archival or backup purposes and for format shifting purposes by individuals of legitimately acquired copies of works or sound recordings and movies is legal. This should include private copying for such purposes as platform shifting, backup purposes, or the avoidance of obsolescence.”

Remuneration is not required from consumers that have purchased music from online music retailers whose formats imply use on portable music devices in which electronic memory cards can be placed or embedded. And individuals that make personal copies for private use from recordings they’ve purchased fail to qualify as distributors because the recordings and resulting copies remain in their possession, regardless of the format shifting involved.

Private copying in no way infringes copyright, as defined by Part III, Section 27 of the Copyright Act. And a levy is not required because royalties have already been collected from the sale of legally purchased compact discs or music files, from which the private copies are made.

The alledged prominence of piracy on the internet in no way make devices like mp3 players conform to the term “blank audio media”, as defined by the Copyright Act. And the Copyright Board have already ruled that memory cards also did not qualify in a December 12th, 2003 decision.