The telephone fee collected in Latvia will increase the welfare of foreigners

The state expects to charge 1.7 million euros or 0.89 euros per capita per year for new telephones and other devices that can theoretically store authors' works, which is three times as much as in 2019. Minister of Culture Nauris Puntulis regrets that he was not present during the discussions when the amount of the fee was discussed. He would have liked an even higher tariff for smartphones.

Despite objections from the information technology industry and the general public, a change in the calculation of the data carrier fee came into force on Thursday, which provides for this fee to be charged for telephones and computers even if they are not used to copy any copyrighted materials and even if it would be technologically impossible. Saeima deputies have every opportunity to review the fairness of this fee by reviewing the Copyright Law.

“Regulations Regarding the Amount of the Blank Tape Levy and the Levy of Equipment Used for Reproduction and the Procedures for the Collection, Repayment, Distribution and Payment Thereof” stipulate that the data carrier fee (referred to in the Cabinet Regulation as remuneration) must be paid for smartphones, all types of computers, including laptops computers and tablets, USB flash drives, hard drives of all types of computers, including HDDs, SSDs and external hard drives. Previously, this fee was not charged for phones and computer hard drives. According to the estimates of the Ministry of Culture (MoC), the amount of media remuneration collected in Latvia in 2019 was slightly higher than 550,000 euros, i.e., an average of 29 cents per capita. Now that, following the regulations of the Cabinet of Ministers, this fee is charged for smartphones and computer hard drives (CDs and DVDs have been removed from this list)

the Ministry of Culture estimates that 1,695,000 euros could be collected per year, which is an average of 89 cents per capita.

At the government meeting, the proposal developed by the MoC was opposed by a number of industry representatives, including the Latvian Internet Association, the Latvian Association of Journalists, the Employers' Confederation of Latvia, the Latvian Chamber of Commerce and Industry, the Latvian Information and Communication Technology Association and several others. The industry mainly criticized the process of drafting amendments to the rules, as well as the unfairness, inadequacy, and disproportionate nature of the proposed option. The industry called for the offer to be revised.

At the same time, support for the amendments was expressed by several creative and cultural organizations, which believe that changes to the rules will lead to fairer regulation.

Still not enough?

The media fee does not seem to be too high - 1.50 euros for a smartphone (excluding VAT) and 2.85 euros for a hard drive (excluding VAT). However, if the cheapest hard drives cost from 25 to 35 euros, then it turns out that the fee is about 10% of the value of the product. "In addition, we have already paid a fee of 2.85 euros for the computer itself. When combined with IT profit indicators, such a fee practically excludes some players from the market. This significantly distorts the IT and electronics market. It will not remain empty - considering that the market is uniform throughout Europe, the system will be reorganized, and the losers will be Latvian entrepreneurs, but the winners will be those who work abroad. Latvia's losses from unpaid taxes of IT companies will be much higher than AKKA/LAA's revenues from this fee,” Normunds Bergs, Chairman of the Board of SAF Tehnika, previously told Neatkarīgā.

At the government meeting at which changes to these rules were discussed, the idea was raised to further increase this fee.

"If I had been present in this years-long discussion, I would probably have fought for a higher amount of remuneration from smartphones," said N. Puntulis. According to the estimates of the composer Zigmārs Liepiņš, the remuneration tariff should have been even two or three times higher.

Almost half of the money goes abroad

This remuneration is managed by AKKA/LAA. Its website states that remuneration is paid to both domestic and foreign authors represented by the association on the basis of inter-agency agreements. About 30% of all fees collected go to foreign authors' associations, because the use of works by foreign authors, especially in the field of music, where it varies at around 60-70%, is quite significant in Latvia, AKKA/LAA information states. In its turn, the 2020 AKKA/LAA report shows that in 2020, 7.2 million euros were received in all types of remuneration (not only in data carrier remuneration), while 5.7 million euros were paid to authors, including 2.8 million euros (49%) for foreign performers.

AKKA/LAA expenses per year fluctuate around 1.4 million euros. Of which, in 2020, 667,139 euros were paid in salaries. AKKA/LAA ended 2020 with a revenue surplus of EUR 17,993 over expenditure.

Collecting signatures to stop the fee

The Mana balss portal has an initiative on the abolition of the data carrier fee.

Its submitter Māris Antons points out that the data carrier fee has always been absurd. "It is not fair to tax all data carriers, which means that the data carrier is used to make copies of music files. If once people really used mp3 files and created their playlists to play music in cars or on other sound systems, and this consideration was at least partially true, then nowadays, when people use streaming services (Spotify, etc.), it simply does not correspond to reality. The procedure for applying this fee is also not fair, as data carriers are mostly purchased for professional purposes, where for security, archiving, and other reasons it mainly stores self-created files. People who change equipment more often also pay more for this tax than others. But it is not the case that more frequent telephone changes mean that a person will make more copies of music tracks. This is not true, therefore this fee is also rapidly losing its partial validity and should be abolished,” emphasizes the initiator.

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