Wednesday, September 09, 2009

Another Attempt at an “iPod Tax”?

David Basskin, a director of the CPCC, and I, in my personal capacity, debated here on BNN at 5:20 PM today the CPCC's proposed "iPod tax", as it is commonly called and as BNN labelled the segment. As the BNN folks pointed out, it would apply to cell phones and other digital devices that store music.

I made several points - but these are the big ones.

  1. This would be seen as a "tax" and a bail out of a dying collective.
  2. It would create a huge grey market problem, since these products are so readily available through cross border visits and online. There is and will be no such levy in the USA.
  3. It would greatly hinder if not prevent WIPO ratification because the national treatment provisions in the WPPT treaty would double whatever amount the levy would otherwise be - and no Minister would want to take responsibility for shipping potentially hundreds of millions of Canadian "tax" - oops - I should say "levy" - dollars out of Canada for no good reason.
  4. The Canadian Recording Industry Assocation ("CRIA") has fought against an iPod levy in the Federal Court of Appeal because it would effectively allow for virtually unlimited legalized downloading. CRIA's President, Graham Henderson, is also on record as encouraging format shifting from purchased CDs to iPod type devices. In fact, Graham said in a speech in 2005 that "The idea that virtually everything that is on iPods is stolen is not true. Music fans, like me, in enormous numbers, are converting their CD libraries into a digital library."
  5. There is little evidence of any thought or an evidentiary basis for this. In fact, when the CPCC first tried this iPod levy on for size in 2002, it asked for $21 per gigabyte - which would mean that a 120 gig iPod Classic that now sells for less than $300 would have a $2,520 levy on it, if the CPCC had gotten its wish.
  6. The levy concept is an obsolete continental European socialist collectivist analog thing that has been rejected in the USA, UK and Australian and other like minded countries.
All in all, not a great idea. Indeed, I would guess that it's a non-starter.



PS - this is getting picked up here and here.


  1. Excellent points!

    The $2500 levy is particularly telling. However at the same time it may be worth noting that the CPCC levy proposals were revised later as follows.

    $11.50 on 1st gigabyte
    $7.98/gigabyte on gigabytes 2 to 5
    $5.98/gigabyte on gigabytes 6 to 10
    $3.99/gigabyte on gigabytes 11 to 20
    $1.99/gigabyte on gigabytes 21 or greater

    which would give a grand total of $31.44 in levies for the same iPod

  2. To Anonymous commentator. You are right that CPCC lowered its demands during the hearing - but your figures are wrong. What they finally asked for was “graduated structure of 1.08¢ for each Mb of memory up to and including 1 Gb, $7.76 per Gb for the 2nd through 5th Gbs, $5.81 per Gb for the 6th through 10th Gbs, $3.88 per Gb for the 11th through 20th Gbs and $1.93 per Gb for the 21st and all subsequent Gbs”. This would have generated a levy of about $300 on a 120 gig iPod Classic that now sells for less than that. The point is that CPCC went into the hearing asking for a flat $21 per gigabyte - with apparent indifference to Moore's Law and with no rational basis whatsoever for the calculation or its potential impact on technology.