-- Sheila Copps Plays "The Grinch" With New Tape Tax Effective January 1, 1999 --

Ottawa: The Canadian Taxpayers Federation (CTF) sent a letter today to Heritage Minister Sheila Copps pressing her to kill the new 'tape tax,' due to take effect January 1, 1999 - though the actual rate will not be set until later in 1999 by the Copyright Board.

"It's three days to Christmas and ten days 'til government grinches nail Canadians with yet another tax - this time on cassette tapes and blank CDs," said CTF federal director Walter Robinson. "The new tax could be as high as $1.50 per 90-minute cassette (analog) and $3.00 per 90-minute cassette (digital) if the Copyright Board adopts the recommendations of four artists' collectives."

"This means that a $3.00 Maxell tape could cost $4.50 at this time next year - and we haven't even factored in the extra GST and provincial sales tax," said Robinson. "Imagine if government hiked your gas from 50 cents a litre to 75 cents due to another tax, people would be enraged."

The CTF called on the Heritage Minister to dump the tape tax since the Copyright Board will not impose the new tax, including a retroactive January 1st portion, until later in the year.

"Artists and record companies deserve royalties from their products - which they already get from the sale, performance, and airplay of their music," added Robinson. "Taxing blank cassettes because some people use them for illegal copying is like taxing all photocopy paper because some people copy part of a book."

The CTF estimates that Canadians could pay from $16 million to $44 million every year in the new tape tax but these estimates are very conservative due to the potential of a higher rate of tax on digital cassettes and blank digital CDs.


PROPOSED TAPE TAX

(AS SUGGESTED BY FOUR ARTISTS COLLECTIVES TO THE COPYRIGHT BOARD)

For more information contact:
CTF Federal Director Walter Robinson (613) 234-6554 1-888-236-8490 (National pager)


BACKGROUNDER

Because of amendments to the copyright law passed in 1997 (Bill C-32,) the federal Copyright Board must levy a 'tariff,' a tax on blank analog and digital audio (cassette tapes and CDs) effective January 1, 1999. Due to over 3,000 submissions the Board received before the August 12 deadline for submissions on the proposed amount of the tax - including submissions opposing the tax - the Copyright Board may hold hearings in the spring of 1999 to hear from interested parties.

The Copyright Board will then decide on the levy per blank cassette/CD, possibly based on time per cassette as proposed by five artists collectives, the rates proposed by four of which are detailed on the previous page. The Copyright Board has the final say on the amount of the tax. The Board must levy a retroactive tax to January 1, 1999. Regardless of when the final decision is made, the Board has the power to set a cheaper retroactive rate than the final ongoing rate.

The Copyright Board also decides which artists' collective - i.e. the Canadian Musical reproduction Rights Agency (CMRRA), the Society of Composers, Authors, and Music Publishers (SOCAM) or other - will collect and distribute the tax to artists and composers.

The Canadian Taxpayers Federation opposes the tax on the principle that some illegal copying does not justify the taxing of a product that may or may not be used illegally. In addition, the government has argued that 90% of cassette tapes bought in Canada are used for illegal copying. Included in the definition of 'illegal' however, is the taping of one's own purchased CD onto a cassette for personal use - i.e. for use in one's car. When the tax takes effect, the consumer will in effect pay a royalty twice - once for the already-bought CD, and again for a cassette purchased for personal copying.

Some consumers will pay a royalty even when cassettes purchased are not used for taping previously bought music. Educational institutions and visually impaired Canadians can claim a refund, but churches who use cassettes to tape their pastor or priest's sermon, seminar tape buyers, and everyone else will have to pay the full amount.

One 1996 estimate put the number of blank cassette tapes sold annually in Canada at 44 million. If the average tax were equal to $1.00 per cassette, that would cost Canadians $44 million. The 44 million estimate should be looked at with some skepticism. According to the Copyright Board, it does not include tapes manufactured for federal or provincial Justice departments for example, which use tapes extensively. Where the tax exists in other countries, the average tax is 37 cents per cassette, much lower than that proposed by several artists' collectives. At 37 cents per cassette, the tax would cost $16 million annually. At $1.00 per cassette, the figure would be $44 million annually.

The tape tax will not be visible. It will be levied at the manufacturing and import level and then it will be passed on to retailers who will most likely pass it on to consumers.