IT industry loses bid to quash recordable digital media levy

A plan letting information technology companies avoid paying a levy on recordable CD-ROMs has been denounced as a bureaucratic waste of business energy and tax dollars.

“”It seems totally unnecessary to create these types of regimes,”” John Reid, president of the Canadian Advanced Technology Alliance

said Tuesday of the final version of the so-called zero-rate scheme.

Still, Reid said it’s a “”victory”” that the industry will have a way of getting out of the levy.

However, Barbara Caplan, senior counsel for Hewlett-Packard Canada and spokesman for the Canadian Coalition for Fair Digital Access — which includes major computer manufacturers like HP, Dell and retailers like Futureshop — is less generous about the exemption.

“”We’re not endorsing it in any way,”” she said.

Their comments came after Ottawa and the music industry-backed Canadian Private Copying Collective (CPCC) officially rejected the IT industry’s call to drop the levy. Instead The CPCC said it will allow software and technology companies to apply for levy exemptions.

To get the exemption, companies have to register online with the collective; report annually on their quantity, sources and use of digital recordable media; and pay a $60 annual administration fee ($15 for non-commercial companies).

In addition, companies can only buy recordable CDs from the collective’s approved reseller list.

Otherwise, whatever recordable media they buy will include the levy, which goes to the CPCC for distribution to Canadian musicians, songwriters and music publishers. Since 1999 it has collected $28 million in royalties, largely from sales of audio media. The royalties are to compensate for lost music sales due to copying by consumers.

The levy has brought out the ire of the IT industry because this year a new levy has been proposed to extend to CD-Rs, CD-RWs, recordable DVDs and memory in MP3 players.

The zero-rate exemption plan will start this summer when the federal Copyright Board sets the levy for 2003-2004.

“”It’s a victory,”” said Reid, whose association has been trying to find a way for business to do away with the levy, “”but one with so much red tape built into it, it adds to the cost of doing business.””

“”It’s not a very elegant way of solving the problem, which is a levy that shouldn’t be there in the first place.””

But a spokesman for the Toronto chapter of the Canadian Information Processing Society says the zero-rate plan is a sop to business but one that hurts IT consultants and programmers who use digital media for backups.

“”It’s a little bit of gamesmanship to take the biggest opposition out of the way so they don’t complain as loudly about the levy,”” he said.

“”You have to do a fair amount of paper work. It screws up your purchasing plans because you can’t use your supplier.””

Both the alliance and Black believe the plan will lead to Canadians buying digital recordable supplies from south of the border. In a press release, alliance spokesman Dave Paterson wrote that “”members are reminded they can avoid the levy by importing CD-ROMs directly for their own use.””

“”People will just buy their (recordable) CDs in the ‘States and bring them up here,”” said Black.

“The requirements set by CPCC for participation in the zero-rating program are reasonable and necessary,” replied collective spokesman David Basskin.

“For the convenience of those wishing to use the program, companies are able to register online and to report online. It’s not reasonable to suggest that CPCC should establish a program allowing buyers of blank media to be excused from the obligation to pay a legally sanctioned levy with absolutely no control and no reporting requirements.”

“It’s difficult to understand the concern expressed by Rob Black of CIPS that the program will in some way hurt consultants. Any registered business, whether it is an individual proprietorship, partnership or incorporated company can qualify to participate in the zero-rating program.

“Naturally, CPCC would be pleased to hear from CIPS to clarify what its concerns are. CIPS was provided earlier with copies of the detailed information concerning the revised and expanded program, but has not made its concerns known to CPCC.”

“Finally, it’s important to point out that CPCC’s zero-rating program was voluntarily established originally in 1999, when the levy came into effect. It is a serious, long-term initiative both in its original and its revised form and there is no basis for dismissing this initiative as “”gamesmanship and maneuvering””.

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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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