Supreme Court to hear $100 million broadcast fee dispute

After winning one court battle and then losing another in April, the Canadian Association of Broadcasters (CAB) has persuaded the Supreme Court of Canada to hear its case into whether - in effect - the CRTC is a de facto tax collector for the federal government.In a decision released without comment today, Canada's highest court granted permission for broadcast networks, cable and satellite operators to appeal an April 28 Federal Court of Appeal (FCA) ruling that Part II licence fees are legal. At the core of the issue, CAB lawyers say the CRTC has confused regulatory charges with taxes, contenting that regulatory charges "must be tied to a regulatory scheme and either used to finance the scheme or alter individual behaviour."Furthermore, CAB lawyers claim 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 schemeThe CAB has long maintained that Part II licence fees are primarily intended to raise revenues far in excess of what it costs to manage the broadcast regulatory and broadcast spectrum management regimes in Canada.Citing the FCA ruling on April 28, CAB lawyers said three separate judgements rendered by the court create confusion because they don't clearly determine if a charge imposed to "extract economic rent for a privilege is properly a fee or whether it is a tax.""This confusion, if left unaddressed by this court, will affect the assessment of fees charged by every level of government in every province and territory of Canada," states the appeal notice.In addition, CAB lawyers stress that by appealing to the Supreme Court, they seek 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, the lawyers argue, are also not consistent with government policies and the Auditor General's approaches of reviewing fees levied by the government.Part II licence fees-which amount to $100 million a year-are charged on the basis of 1.365% of a broadcaster's gross revenues and are deposited into the Consolidated Revenue Fund, a general pool where all the federal government's income , such as tariff and licence fees, taxes and windfalls from crown corporations are deposited. Part II fees are charged in addition to licence fees and as such have been labeled by the CAB as an "illegal" tax since 2001.

Supreme Court to hear $100 million broadcast fee dispute

Broadcast | December 18, 2008

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