OTTAWA – It was a quick decision issued by the Federal Court of Canada late today that will save Canadian private broadcasters hundreds of millions of dollars.
The Canadian Association of Broadcasters just a few weeks ago presented its case to the court that the $700 million or so paid over the past decade was an illegal tax. The court agreed.
"This is a monumental victory for Canada’s broadcasters, who have been forced for too long to pay an unfair and unjustified tax,” said Glenn O’Farrell, president and CEO of the CAB. “These fees have drained more than three-quarters of a billion dollars out of our broadcasting system since 1997. We are immensely pleased that the Court has seen the fees for what they are, and has declared that they are invalid.”
The CRTC Part II Licence Fees are paid over and above payments made to the CRTC to defray the cost of the regulation and supervision of the industry. Part II Licence Fees, which now exceed $100 million dollars annually, are levied by the CRTC, but go directly to the Government’s Consolidated Revenue Fund.
Judge Michel J. Shore of the Federal Court Trial Division said "one of the most fundamental principles of Canadian law is that taxes must be levied only with the authority of Parliament." The current legislative framework does not empower the CRTC to levy taxes. Judge Shore also stated that: "these levies are not connected to activities related to the broadcasting system but are in fact leakage out of the regulatory system."
Broadcasters have been paying the Part II fees under protest since 2001 and while judge Shore agreed that the fees are illegal, he did not order repayment due to an apparent uncertainty in the law.
The question concerning the right to recover payment of illegal taxes is the subject of a case on a different matter pending before the Supreme Court of Canada. Judge Shore did note in his conclusion that the feds have a duty to look at repayment, "from a moral standpoint."
The CAB is giving serious consideration to an appeal on the matter of the recovery of the Part II Licence fees paid.
