Forget the iPod Tax, Canadian Copyright Collective Demanding Memory Card Tax

During the most recent election campaign, there was no shortage of debate over the so-called iPod Tax, a proposed levy on iPods and similar devices to compensate for copies of sound recordings. While the prospect of an iPod tax in Canada died with the Conservative majority, the existing private copying system remains unchanged. Canadians currently pay levies on blank CDs (and cassettes) and now the Canadian Private Copying Collective, which collects the private copying revenues, would like to establish a new levy on blank memory cards used in a wide range of devices such as smartphones and digital cameras.

As Howard Knopf notes, the CPCC has just filed for the following levy:

50¢ for each electronic memory card with 1 gigabyte of memory or less, $1.00 for each electronic memory card with more than one gigabyte of memory but less than 8 gigabytes of  memory, and $3.00 for each electronic memory card with 8 gigabytes of memory or more

The financial impact of the levy would be significant. A 2GB SD card currently sells for about $6.00 and this would add an additional dollar or almost 15% to the cost. Given that the levy would remain static (or even increase) but the costs of SD cards are dropping by roughly 30% annually, the percentage of levy in the overall cost would likely gradually increase over time. Moreover, music plays a small role in the use of memory cards. A recent report indicates that digital cameras are the primary market for SD cards with smartphones the second biggest (and fastest growing) market. Music is a small part of the equation, yet the CPCC is demanding payment for every memory card sold in Canada regardless of its intended or actual use.

There are many problems with the current private copying system, but this latest attempt to extend the levy should serve as a wake-up call to the government. While there may have been a sense that the private copying levy would gradually diminish in importance, the CPCC (which has been sharply critical of the Conservatives in the past) has made it clear that it will work to extend the levy within the full extent of the current law. Even without iPod levies, there is still room for the collective to expand the levy system, despite the weak linkages to actual copying of music. If the government is broadly against iPod taxes, it may be forced to take legislative action to stop extensions that can still occur within the current legal framework.

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