Broadcast industry to keep tax fees

he federal government has agreed to forgive $450 million in fees it is owed by the country’s broadcasters and cable industry, but will set up a new funding structure that would see them pay up to $100 million a year.

OTTAWA — The federal government has agreed to forgive $450 million in fees it is owed by the country’s broadcasters and cable industry, but will set up a new funding structure that would see them pay up to $100 million a year.

Ottawa said Wednesday it will not seek the money held in escrow by the broadcasting industry on the so-called “Part 2 Licence Fees,” which the government levies to raise money to help run Canadian airwaves and which have been bitterly disputed by the industry since they began in 1997.

“Under this settlement, our government is recommending that the CRTC develop a new, forward-looking fee regime that would be capped at $100 million per year,” Heritage Minister James Moore said Wednesday in a statement.

“The new fee regime is intended to provide stability and predictability for the industry and protect the interests of Canadians.”

In return, the industry has agreed to drop a court action that claimed the fees were unfair and illegal because they exceeded the cost to the government of running the airways; it has also complained that the money went into general government coffers, unlike other fees.

Moore said he has directed the federal regulator to develop a new fee regime that would be capped at $100 million per year, also acknowledging that the radio; conventional, pay and specialty television and cable and satellite distributors contribute about $20 billion a year to the Canadian economy.

The deal comes at a critical time for the industry, particularly over-the-air broadcasters, which have been hard hit by the current recession and the splintering of advertising dollars.

The Canadian Association of Broadcasters said it and other involved parties have dropped their appeal before the Supreme Court challenging the fees — which had been set for a hearing on Oct. 19. That challenge related to monies collected in the years 2006, 2007 and 2008.

“The agreement represents a reasonable compromise for both sides,” association chairwoman Charlotte Bell said in a statement.

“It resolves treatment of contested fees and reflects a fair fee regime going forward.”

“In addition, the government’s recommendation that the CRTC launch a process to revise the Part 2 Licence Fee and introduce a capped regime going forward is a positive approach,” adding the broadcasters are satisfied the new system will bring the predictability they have sought.

The CAB, which represents private TV broadcasters such as Global TV and CTV and radio companies as well, said about $910 million has been paid to the government since the fee regime began.

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