Source: Montreal Gazette

OTTAWA — Canada's private television and radio broadcasters won the right Thursday to appear at the Supreme Court of Canada to argue they are being charged what they feel to be an illegal tax that amounts to more than $100 million annually.

The court, in keeping with convention, did not give reasons for its decision to consider an appeal from the Canadian Association of Broadcasters, and more than 20 national and regional TV networks and cable and satellite operators.

The broadcasters want the Supreme Court to reverse their defeat earlier this year in the Federal Court of Appeal, which said that those who object to the fees "are free to go into some other line of business."

In an application filed in the Supreme Court, the broadcasters invite the bench to take up the case because "it provides the first opportunity to address the important constitutional question of how to determine whether charges are properly classified as fees or as taxes."

The broadcasters' loss in the Federal Court of Appeal overturned a win two years ago in the Federal Court, which ruled that they had been paying an unlawful tax in the form of a licensing levy to the Canadian Radio-television and Telecommunications Commission, which regulates the industry.

The broadcasters had successfully argued that the fee amounted to an illegal tax because it went into general government coffers instead of the CRTC purse.

They contend the extra payments, which began in 1998, are over and above fees they pay for industry regulation and supervision.

The CRTC has suspended the disputed fees while the legal battle winds its way through the courts.

Since the levy is charged by the CRTC for no clear service, it amounts to taxation without representation, because taxes can only be approved by elected officials in Parliament, the broadcasters say.

With a Federal Court victory in hand, and buoyed by a 2007 Supreme Court of Canada ruling that illegal taxes must be repaid, the broadcasters went to the Federal Court of Appeal seeking to retrieve their money.

In overturning the victory altogether, the appeal court ruled last April that it is a "privilege"to hold a broadcasting licence and that Ottawa can charge fees for licences that exceed the cost of regulating the industry.

"The fact remains that in return for payment of the fees, the payer acquires (or maintains) the right to engage in a highly regulated, highly sheltered industry with a significant potential for economic gain," said the decision.

"No one is bound to acquire a licence; those who feel the fees are too high are free to go into some other line of business, or to sell their licence on such terms as the regulatory scheme permits," the decision said.

Pierre Pontbriand, a spokesman for the CAB, said the organization is "very pleased"that the case will be heard by the Supreme Court.

In their application filed in the court, the broadcasters say the Supreme Court needs to clarify the issue, since the Federal Court of Appeal has taken three different approaches in separate rulings.

"There is confusion as to how a fee that is allegedly charged to extract economic rent for a privilege is to be distinguished from a tax," said the CAB.

The appeal, which has not been scheduled, likely will be heard in 2009 or early 2010.

© Montreal Gazette