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Broadcasters overpaid government by $81.7 million

OTTAWA - The Canadian Association of Broadcasters (CAB) is calling on the Federal Finance Minister to freeze fees paid to the government at current levels, given a recent finding which says Canadian broadcasters overpaid to the tune of nearly $82 million.

The Standing Joint Committee for the Scrutiny of Regulations for undertook a study into the user fees paid by private broadcasters and arrived at that amount.

The CAB says there is a urgent need for adjustment to the current fee structure.

Section 11 of the Broadcasting Act, authorizes the CRTC, with the approval of Treasury Board, to set fees. According to the committee's report, Part I fees ($23 million in 2002-03) cover the operating costs of the CRTC. Of the $92 million (2002-03) collecting in Part II fees, "some $10.3 million are said to represent (the) cost to Industry Canada of managing the radio frequency spectrum, leaving a total of $81.7 million in general revenues that go into the Consolidated Revenue Fund," said the report, according to the CAB press release.

"The Committee correctly outlines in their report the conditions where� a fee constitutes a tax. The CAB feels the Part II fees meet all the stated conditions. Quite clearly the Committee demonstrated that $81.7 million of the Part II fees collected from broadcasters and distributors went directly to the government's general revenues [Consolidated Revenue Fund - CRF]. With the evidence before them, we expected the Committee to come out and unequivocally state that Part II fees are an unfair tax" said CAB president and CEO Glenn O'Farrell.

"Nonetheless, the Committee's findings demonstrate that this overpayment is unfair and must be addressed immediately."

The fairness of user fees have been the study of a number of committees over the past two years. Along with the Joint Standing Committee report tabled today, the Standing Committee on Canadian Heritage ("Our Cultural Sovereignty" � June 2003, Recommendation 8.4) and the Finance Committee, which has stated that "the raison d'etre of user charges is supposed to be improved efficiency of government-provided services, and not revenue generation, each have questioned the basis for these fees."

"In light of these findings, we are calling on the Minister of Finance to immediately cap Part II fees at their current (2002) levels and to strike a working group with the Department of Canadian Heritage, Industry Canada, Treasury Board and the CRTC that will propose adjustment to the current broadcasting license fee regulations." said O'Farrell

"Private broadcasters understand the need for cost recovery and find the cost for the operation of the CRTC and the management of radio spectrum to be reasonable. However, the overpayment in one year alone of $81.7 million by what amounts to an unfair tax is unacceptable. This is not a case of redirecting unlawfully collected revenues, but correcting a wrong."

Broadcasters and distributors are required to pay Part II fees by November 30 based on 1.365% of revenues of the previous broadcast year ending August 31. The overpayment of this unfair tax is a key priority with private broadcasters. Since 2001 broadcasters have been paying the Part II fees under protest.

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