Proposed “Netflix tax” divides Canadians at key TV hearings

Should Netflix and other U.S.-based companies that provide “over-the-top” internet services be subject to a TV tax that subsidizes Canadian culture? The issue has been a source of contention as Canada’s broadcast regulator holds hearings over how to revise TV regulations for the digital era.

The notion of special taxes to subsidize national culture is a strange idea for many Americans, but such fees have long been the norm to the north, where “high quality Canadian content” is considered by some to be a prophylactic of sorts to help ward off U.S. mass culture.

[company]Netflix[/company] warned the Canadian government this summer not to apply the cultural levy, and is likely watching the issue with unease, especially as it expands to Europe where some countries also use such subsidies.

At the “Let’s Talk TV” hearings now underway before Canada’s broadcast regulator, provincial governments like Ontario and Quebec have argued that Netflix should be subject to the levy. The country’s powerful cable industry and the national broadcaster, the CBC, have made the same arguments, arguing that companies like Netflix and [company]iTunes[/company] should not get a free pass when their own services must pay for Canadian content.

Canada’s Prime Minister, however, has been denouncing the idea of a “Netflix tax” and some, including internet law professor Michael Geist, have suggested the idea is too politically toxic for the broadcast regulator to implement.

The regulator, known as the Canadian Radio-television and Telecommunications Commission, is an independent agency akin to the FCC or Great Britain’s Ofcom. At the current round of hearings, it is examining not just the “Netflix tax” issue, but also issues like a proposed “pick and pay” system for TV that proponents hope would let Canadians have more choice over how they pay for TV channels.