Discord in moves to harmonise tape levy: Andrew Marshall in Brussels considers the arguments in a war over 'royalties' on blank recording material

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The Independent Online
WHO could possibly object to spending a few extra pence to help struggling musicians? That is the principal argument being used to support new European Union plans for a harmonised levy on the sale of blank audio cassettes and video tapes. But put another way, the argument sounds very different: who could support a Brussels- imposed tax that would hurt blind people?

The success or failure of the plan stands or falls on how the question is seen. Every country in the EU already has a levy on blank video and audio cassettes, bar Britain, Ireland and Luxembourg, and Britain has stiffly resisted previous efforts to impose such a scheme. This time, the supporters of a levy believe the political climate is right. A new EU directive is in the pipeline, and may be presented to the Commission as early as 7 September, if it passes muster with the cabinets of the different commissioners.

The Music Copyright Reform Group represents composers, songwriters, lyricists and publishers, and is very keen to see the measure go through. Home taping costs its members dearly, it says, since it deprives them of the royalties normally paid when a CD or pre-recorded tape is bought. The music industry is worth pounds 2.5bn pounds a year to the British economy, the MCRG says. It also points out that it is the less well- known artists that suffer most, and not just the Phil Collins/George Michael/Luciano Pavarotti brigade. Since it is impossible to stop home taping, the only answer is to raise the cash through sales of the equipment and tapes.

The organisation says that not only does the lack of a copying royalty hit a profitable British industry very hard, but it also introduces further problems. 'Distortions in the application of European private copying royalty also leads to distortions in the royalties paid to authors in different countries since some schemes are applied on a reciprocal basis,' says an MCRG statement. 'UK copyright owners do not benefit from reciprocal schemes, even though their works are copied throughout Europe.'

MCRG believes that something like 90 per cent of audio cassettes sold are used for taping pre-recorded music. That is big numbers: in 1992, 90 million blank tapes were sold in Britain, against 187 million CDs, LPs, and pre-recorded cassettes, according to figures released by the MCRG. Britain is the second-largest market for blank audio cassettes in Europe, after Germany (148 million in 1992).

The Commission wants a harmonised scheme because the levies that exist at the moment vary very widely, from ecu0.06 an hour in Germany to ecu0.37 an hour in Denmark on audio cassettes. The difference on video cassettes is between ecu1.53 and ecu0.27. Pennywise Danish home tapers need only hop in the car and drive down to Hamburg to make the saving. Like many such oddities in the internal market, it has proved impossible to iron this one out so far.

The Commission proposes a scheme that would remove what it regards as a distortion of trade by proposing a harmonised levy of ecu0.15 per hour on audio cassettes, and ecu0.25 per hour on video cassettes. It has also proposed putting ecu2 on each unit of audio equipment and ecu10 on each unit of video equipment (video cameras and answering machines would be excluded). Countries would be allowed to exceed this by 10 per cent. That is higher than in Germany, Greece, Belgium and Italy, and lower than in Denmark, Spain, France and the Netherlands.

There are plenty of difficult areas left unresolved. The Commission's proposal leaves to national governments how they redistribute the proceeds from a levy: does it go to national royalty-collecting organisations, or is it distributed internationally, for instance?

There are three potential arguments against a harmonised levy. The first is the effect on price. The MCRG claims that there will not necessarily be any impact, saying that when levies were imposed in France and Germany, prices fell. The industry says that after VAT and wholesale margins, retail prices of video tapes may rise by 50 per cent and of audio tapes by 30 per cent.

The European Tape Industry Council opposes the measure, but because of the level at which the levies are set rather than outright opposition. After all, it already faces the levies in nine countries, and the possibility of lowering them in several could outweigh their introduction in three countries.

The second is the argument that has sunk previous attempts by the industry to get a levy, and it is a difficult one. Britain's organisations for the blind, including the Royal National Institute for the Blind, say that audio tapes are vital for sightless people. A levy would be a tax on the blind, they say. Opposition from the blind has sunk previous efforts in Britain and Brussels. The MCRG says that it must be possible to find an arrangement that would either exempt those with special needs, or give them refunds.

The third, however, may be the most difficult. Britain is innately suspicious of anything the Commission gets up to that involves money and costs on industry. And a levy will look suspiciously like a Brussels-imposed tax, something that is even more anathema to Whitehall. The MCRG protests that it is no such thing, since it does not go to governments, but to the music industry.

There is, however, a solid reason for the scheme's opponents to argue that it is a tax. If the measure is passed under the EU's internal market rules, which is the Commission's intention, it is subject to qualified majority voting: and the three states that do not already have a levy have insufficient votes to block it. If it is a tax, then there could be arguments over whether the Commission has the right to do it at all and, even if it has, one state could block progress.

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