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Rent Seeking and Taxes

Intellectual monopolists have many tricks to get thegovernment and public to pay their bills. In case you are still capable of being astounded by the greed and chutzpah of the media industry, we submit the following. Canada levies a tax on blank media such as CD-R’s and CD-RWs, using the proceeds of the tax
to pay copyright holders for the presumed copying of their material onto these media. Toward the end of 2006, similar legislation has been approved in Spain and approval is pending in a number of European countries.

On January 1, 2001, the Canadian Copyright Board increased the tax from 5.2 cents to 21 cents per disk. Brian Cheter,a spokesperson for the Board in Toronto, described the new tariff as a valuable measure that protects artists. He described it as a preemptive measure to recoup losses from “piracy” and the peer-topeer exchange of music. Notice the perversity: you tax a general purpose item such as CDs that has many functions beside storing copying music in order to “enforce” some monopoly rents. Since the disks purchased in bulk only cost about 60 cents each (without the tax), the tax is pretty hefty. And now the chutzpah: the music producers are trying to prevent downloading of music in Canada, even as they collect the revenue from the tax designed to compensate them for this “piracy.”