Canada Increases Private Copying Levy

by Mike Godfrey, Tax-News.com, Washington

12 December 2008

The Copyright Board of Canada has issued a decision that will increase the private copying levy on all blank CDs to CAD0.29 (USD0.24) from CAD0.21 for the years 2008 and 2009.

The decision increases the tax on blank CDs for the first time since 2001. The Board has also decided to maintain the rate for audiocassettes at CAD0.24.

The case was heard by a panel chaired by Mr. Justice William J. Vancise.

“Two main factors led the Board to raise the CD levy rate to CAD0.29,” said Claude Majeau, Secretary General of the Board. “First, the mechanical royalties that record labels pay to record a song onto a prerecorded CD have increased. Second, because consumers now use compression technology when they record music, the average number of music tracks copied onto a CD went from 15 to more than 18.”

Manufacturers and importers of blank audio recording media are required to pay private copying levies to the Canadian Private Copying Collective (CPCC) when these media are sold in Canada. The amounts collected by CPCC are distributed to eligible authors, performers and producers of recorded musical works copied by individuals for personal use in Canada.

While the CD levy rate has increased, the Board expects that the total amount of royalties CPCC collects will remain relatively stable, at about CAD30m per year. This is because the sales of both blank audiocassettes and CDs are expected to decline, as individuals abandon these media for digital players, which cannot be levied as part of the private copying regime.

The Board is required by the Copyright Act to set rates retroactively to January 1, 2008. However, in a correspondence of November 14, 2007 and in a press release of December 18, 2007, CPCC indicated its intention not to collect any increase in the rates retroactively when the certified tariff for 2008-2009 is issued.

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