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Canada's controversial "iPod tax" has once again been struck down in court. The Federal Court of Appeal yesterday rejected a decision by Canada's Copyright Board to collect fees from would-be MP3 player customers to compensate artists for revenue lost to "private copying."

The proposed tax included a CAD5 strike on digital audio players with less than 1GB memory and CAD75 for digital audio players with more than 30GB.

Canada's Copyright Act currently allows the board to place taxes on blank media such as rewritable CDs and cassettes. However, attempts to extend the levy to MP3 players and Flash cards were blocked in 2004.

Canada's Private Copyright Collective (CPCC) which represents music labels and artists lobbied for the tax again in 2007. They claimed MP3 players are audio recording media and should be added to the list of taxable offenders. The Copyright Board accepted the petition and was ready to impose the tax later this year.

"The Copyright Board erred in law when it concluded that it has the legal authority to certify the tariff that CPCC has proposed for 2008 and 2009 on digital audio recorders," the Federal Court of Appeal said in its decision.

Levies on blank media also hit a roadblock in the Netherlands. Earlier this week, a Dutch copyright organization lost a bid to remove a government block on new taxes for digital audio devices.

The Hague upheld a previous decision to freeze additional levies on MP3 players because it found artist rights organizations were not distributing the cash effectively.

"You cannot give such a system the responsibility for a new levy if you know that it is not working properly," Reuters quoted a justice ministry spokesman saying. ®

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