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The Canadian Association of Broadcasters (CAB) has persuaded the Supreme Court of Canada to hear its case on whether the CRTC is a de facto tax collector for the federal government.
The Supreme Court allowed the CAB to appeal an April 28 Federal Court of Appeal (FCA) ruling that Part II licence fees are legal. These fees are charged on the basis of 1.365% of a broadcaster's gross revenues and are put into the Consolidated Revenue Fund, a pool where all the federal government's income (ie. tariff and licence fees, taxes, money from crown corporations) are deposited. Part II fees are charged in addition to licence fees, and have thus been called by the CAB an "illegal" tax since 2001.
The CAB argues that the CRTC has confused regulatory charges with taxes, and contend that regulatory charges " 'must be tied to a regulatory scheme and either used to finance the scheme or alter individual behaviour.' "
According to the CAB, the CRTC has created a third category of regulatory charge, " 'one allegedly imposed to extract economic rent in return for a privilege, and eliminated the need for the charge to be tied to the regulatory scheme.' " It has maintained that these Part II fees are mainly intended to raise revenues far above what it costs to manage the broadcast regulatory and spectrum management regimes in Canada.
Three separate judgments handed down by the court create confusion because they don't determine if a charge imposed to " 'extract economic rent in return for a privilege is properly a fee or whether it is a tax.' " The CAB says that " 'this confusion...will affect the assessment of fees charged by every level of government in every province and territory of Canada.' "
By appealing to the Supreme Court, the CAB seeks guidance because the FCA has " 'misunderstood the issue and has articulated differing and unworkable frameworks for making the distinction' " between taxes and fees. The frameworks are also not consistent with government and the Auditor General's approaches of reviewing fees levied by the government.
Source: Tech Media Reports, 12/18/2008
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