The rise and fall(?) of the Harper government's iPod tax

A uniquely ridiculous matter of public policy

A month and a half ago, the Canada Border Services Agency refused to clarify for me whether an “end user certificate” was required to import an iPod duty free. Yesterday, the CBSA announced that an end user certificate would no longer be required to import an iPod duty free.

And so ends the Great iPod Tax Crisis of 2013. Maybe. Sort of.

There was never any question that an exemption existed to import iPods without paying a tariff. At issue was, first, whether or not a user certificate had to be acquired to qualify for that exemption and, second, whether or not obtaining such certificates from the users of iPods was feasible. Here, from April, is Mike Moffatt’s review of the rules. If certificates were required and collecting such documentation was not feasible, an iPod tax could be said to exist.

The case of Sony suggested that such certificates were required. In May, the Finance Minister said there essentially was no iPod tax and deferred to the need for certificates, an explanation that raised more questions about the rules. And then, in June, importers accused the CBSA of effectively attempting to impose a retroactive duty on iPods.

Further complicating matters were the Harper government’s politics and policy. In this spring’s budget, the Conservatives increased import tariffs on a number of items from a number of countries, including, pending that possible exemption, iPods. But the Conservatives did not particularly want to acknowledge that the budget contained tax increases. In March, Ted Menzies told the House that “no one will find tax increases” in the budget—Mr. Menzies apparently gambling on everyone’s illiteracy or at least unwillingness to read the budget. The Prime Minister later tried to explain it all as a matter of eliminating special reductions for China, a claim that was complicated by the economics of tariffs and the fact that tariffs were increasing on goods from dozens of countries. And then there was this Conservative attack ad from 2008.

As for a specific tax on iPods, that was particularly problematic because of previous politicking like this and this and this and this and this—the Conservatives having decided in the lead-up to the 2011 election to accuse the other parties of wanting to impose an iPod tax of $75.

Considering yesterday’s announcement, Moffatt lists three questions that are left outstanding, including the matter of the dispute between importers and the CBSA and whether or not this new clarification will be applied to that.

What happens now in the ongoing iPod tax dispute, where the CBSA retroactively assessed importers for millions of dollars in back tariffs for failing to collect end-user certificates from retail consumers? Although the notice states the move is “effective June 28, 2013″, the memo states the move is a “clarification” of the existing rules. Furthermore, an importer has already obtained a legally binding Advance Ruling from the CBSA that they believe proves that end-use certificates were not required in the first place for televisions with VGA connections.

Pending an answer to that matter, this uniquely ridiculous matter might soon be closed.