Dispatches from the Asylum

Canada considers taxing broadband internet services to fund Canadian Content.

A Liberal-dominated committee will be calling for a 5-per-cent tax on broadband Internet services to fund Canada’s media industries, which are struggling to adapt to technological changes and evolving consumer habits, sources said.

The move would add hundreds of millions of dollars in revenues to the Canadian Media Fund, which already receives a levy on cable bills to finance the production of Canadian content. However, it would open up the government to accusations that it is once again raising taxes on consumers.

Liberal and opposition sources said the new levy is the central proposal in the majority report of the Canadian Heritage Committee of the House of Commons, which will be released on Thursday. The sources spoke on condition of anonymity as the report is not yet public.

If there's some public good case for funding the creation of Canadian content, the burden of providing the public good should fall through the tax system on the public at large.

The Liberal proposal for a new levy would build on the current 5-per-cent charge on cable and satellite TV bills across the country, sources said.

A source explained the revenue stream generated by the current cable levy is no longer sufficient in an age of cord cutting and “over-the-top” services that stream content over the Internet.

Under the new proposal, an additional tax would be levied on “broadband Internet providers.” It would ideally apply to high-speed Internet services that allow for the streaming of music, movies and TV shows, but not to slower and less costly services, the source said.

As such, proponents of the proposal are branding it as a “streaming tax rather than an Internet tax,” designed to bring the existing cable-based system in line with recent technological changes.

“People will say it’s a new tax, but it isn’t a new tax,” a source said. “The goal is to update the current levy on cable companies to include other services that they now also provide.”

It isn't a tax. It's just a compulsory fee levied on a particular consumption good, with the money going to the government. That's totally different from a tax.

We don't know how lucky we are in New Zealand... a continuing series....