CRTC Says ISP and Streaming Taxes Will Protect Traditional Media Systems

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Canadians already pay among the highest rates in the world for internet service—especially at very high speeds—and a new report is saying the country should be billed even more.

The Canadian Radio-television and Telecommunications Commission (CRTC) wants to implement an internet tax and raise costs for anyone who goes online in Canada, according to a new report. The report was prepared as a response to an Order of Council from Heritage Minister Mélanie Joly that asked to study what the future of programming in Canada may look like.

The CRTC is looking to see if it would be viable and necessary to institute two distinct taxes to online services: one to broadband ISPs, and another to over-the-top (OTT) providers. The first tax would be levied towards service providers and force them to pay an extra amount on top of their normal services, which would more than likely be passed down to consumers. That second tax would treat OTT services including Netflix just like broadcasters, forcing them to contribute to tax funds.

The CRTC calls these taxes “new funding opportunities” in the report, and warns that “the economics of financing production means that a declining traditional system may be unable to support the production of important programming and promote and make it discoverable by Canadians.”

The report goes on to say that “all players” in Canada’s media ecosystem “should participate in an appropriate and equitable manner.”

“This proposal is a disastrous idea that will raise monthly bills and force the most vulnerable Canadians offline,” said OpenMedia Digital Rights Advocate Katy Anderson. “The proposal to apply a tax on Internet Service Providers will be a cost sure to be passed to Internet users. Canadians have said in no uncertain terms that they cannot afford for the cost of Internet access to raise any higher. Any Internet Tax disproportionately punishes low-income Canadians, and will inevitably worsen and deepen our digital divide.”

That digital divide Anderson is talking about comes from the fact that one in three low-income Canadians does not have a home internet connection, and higher ISP prices would drive that divide deeper rather than fix the issue at hand. First Nations leaders have also warned that an internet tax would hit Indigenous communities hardest.

More internet taxes are widely disliked by Canadians, as a 2017 poll showed that 70 per cent of the country is against a levy on current internet services. The idea of a “Netflix Tax” is also disliked, considering it has already been rejected by Minister Joly and other levels of government in Canada before.

“We’re not going to be raising taxes on the middle class through an Internet broadband tax. That is not an idea we are taking on,” Prime Minister Trudeau said in 2016.

“Broadband coverage is uneven across the country. We pay some of the highest rates in the world,” said Joly in 2017. “Our government won’t increase the cost of these services to Canadians by imposing a new tax.”

Experts have noted that the passing of these kinds of taxes would be a win for telecom companies, as they would gain control in determining how content is regulated and access by Canadians. Binding service agreements with new players on the scene like Netflix, Spotify and others would limit free competition on the market—and considering Netflix is doing pretty well in Canada right now, the big providers are likely scared by the notion.

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