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Canada to tax legal digital music downloads

updated 10:55 am EDT, Fri October 19, 2007

Canada Taxing Music Sales

Canadians may soon pay a small tax on every legal music store download, says a new measure (PDF) sanctioned by the Copyright Board of Canada. Requested by the Society of Composers, Authors and Music Publishers of Canada (SOCAN), the tax would apply at least 2.1 cents to every individual song download and 1.5 cents per track for complete albums. Subscription download and streaming services would themselves be charged between 5.7 and 6.8 percent of a user's monthly fees. Minimum fees would also apply for every larger download or subscription.

The surcharge would help compensate artists for piracy, according to SOCAN's reasoning. The publishing group draws similarities between this and a 21-cent fee already applied to blank CDs in the country; the right to copy a song from an online store demands the same sort of levy applied to copying a retail CD, SOCAN argues.

The tax may have a significant impact for online stores such as iTunes and Canada-based Puretracks, which will have to factor the amount both into future and past sales. The new tax would be retroactive to January 1st, 1996 and would effectively cover all sales and subscriptions from such services since their beginnings, which typically followed shortly after those in the US. Free services are not currently subject to the added cost.

While no public responses have been made, the Copyright Board report notes that both Apple and the RIAA-equivalent Canadian Recording Industry Association were heavily involved in resisting proposed rates. Higher rates that had been initially suggested, as well as minimum fees, would "handicap" a digital music business that already has to compete with pirated tracks that users can find for free, both Apple and the CRIA said.

The decision has not set a fixed date for when stores would begin paying the fee, but said it would roll out any tariffs "gradually" to soften the immediate blow.

This decision follows a related move in July, in which the Copyright Board had tentatively approved a media player and memory levy that would add to the price of iPods and removable flash storage under the assumption that the devices were being used to carry copyrighted material.



By Electronista Staff
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  1. trevj

    Fresh-Faced Recruit

    Joined: Dec 1999

    +1

    Heck...

    They'd tax breathing here if they could. Why the Canadian public continues to accept this lunacy is beyond me.

  1. chaaalie

    Fresh-Faced Recruit

    Joined: Sep 2002

    0

    Retroactive to 1996?

    Good lord. How can that even be legal? Taxing a transaction that long after it is completed? That type of approach should scare the heck out of everyone who has ever considered doing business in Canada ... what happens if in a decade they decide you should have paid more taxes?

  1. sixcolors

    Fresh-Faced Recruit

    Joined: Oct 2001

    -1

    f*** Canada

    No wonder my goal is to move the f*** out of this s*** hole of a country!

  1. ViktorCode

    Fresh-Faced Recruit

    Joined: Jan 2006

    -1

    Tax legal downloads?

    What for? To give more people an excuse to turn to piracy?

  1. ajhoughton

    Fresh-Faced Recruit

    Joined: Mar 2004

    0

    retroactive taxation

    Retroactive taxation is allowable under U.K. law too, though for a maximum of six years prior to any changes to the taxation system.

    It's pretty scummy, frankly; no legitimate business could ever get away with a contract that said that they could go back to people who had already paid and demand more money from them for transactions that had already concluded. It'd be ruled "unfair" and therefore invalid if it went before a court.

    But then, here in the U.K., we even have to pay tax in advance (euphamistically referred to as paying "on account") in many circumstances.

    Is this crazy? Yes. Is it illegal? Sadly not.

  1. TylerDurdenesk

    Fresh-Faced Recruit

    Joined: Apr 2001

    -2

    Limewire

    That's why all my relatives up there think it's ok to download via Limewire. The tax has provided a false sense of legality.

  1. zehspoon1

    Fresh-Faced Recruit

    Joined: Mar 2007

    0

    Something to

    ...look forward to.

    If we (in the US) don't watch it, we will be next. Our elected officials are more than happy to be lobbied/paid for legislation like this.

  1. sixcolors

    Fresh-Faced Recruit

    Joined: Oct 2001

    -1

    It is legal to download

    Since you can't be taxed to commit a crime they had to make changes to the law so that is now legal to copy. It is still illegal to distribute, so as long as you are a leeching b****, download all you want [so says the Ontario Court of Appeals!]

  1. ender

    Junior Member

    Joined: Mar 1999

    0

    Logic?

    So let me get this straight...in order to compenstate artists for stolen music, you are going to punish the poeple who are willing to pay for it?

    I can see the logic behind a tax on blank CD as they are in fact used to make copies of music (amoung many other legit uses). Note, I'm still against it. There is less logic behind a tax on portable music players because one of the intended uses of an iTunes song is to play it on an iPod. But even there there is at least a trace of logic behind it, weak though it may be. At least you are still talking about a storage medium that could potentially be holding pirated songs.

    But there is absolutely NO LOGIC behind taking the songs themselves. The legally purchased song can't hold a pirated one. It can't play pirated music. It's got DRM, so it can't be easily shared (is there a tax on the songs on a store bought CD? That's were most of the pirated music comes from.)

    So you are going to tax the music I buy from iTunes, tax the CD I buy to back it up, and tax the iPod I use to play it on. Yup, seems to be I now have a license to use pirated music.

  1. trevj

    Fresh-Faced Recruit

    Joined: Dec 1999

    -2

    re. Limewire

    That isn't a false sense of legality your relatives are feeling in downloading music off Limewire. The courts ruled that those downloads are, in fact, perfectly legal here. It is the sharing of those tunes that'll get you in hot water. The Copyright Board is most likely now trying to "recoup" some of that lost income by going after legitimate downloads.

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