Is being discussed in Portugal the implementation of a tax on digital devices that allow the storage of files, called “Lei da Cópia Privada”. This fee is intended to compensate the authors for legal copies of their works as musics or books.With this policy, the government will impose a tax of up to 15 euros (except for printers that can reach 20 euros) on each electronic device.
If we assume that the sales forecast of 2.54 million smartphones in 2014 are right, considering a tax rate of €0.12 per gigabyte and an avarage of 4 gigabytes per smartphone (and consider that only smartphones will be taxed), it will lead to a 1,22 M€ on tax revenue that could cover the prejudice of legal copies made by consumers .
On another hand, according to a study by GfK, were sold in Portugal about € 16.5 million last year in music sector. Of these 70% were on physical media such as CD’s or DVD’s, and the rest in digital format such as download, legally.
Using the studies of International Survey on Private Copying Law & Practice, 2013, the World Organization of Intellectual Property, that says that the rates of private copying earned 11 cents per capita in Portugal last year. We can obtain that If these values are considered for after the implementation the tax it was a total tax revenue of 1,1 millions of euros.
There are one problem with this new law that is not contempling the remote storage “in the cloud” because don’t yet exist control mechanisms for those copies.
Theorically, having a increasing in price of digital devices, that stores can do, according the theory of consumer’s choices to maintain a constant utility consumers will have to increase their income or else purchase substitute goods.The implementation of that tax, it is going to lead to a decreasing on purchasing power of consumers so it will cause consumers with the same level of income can opt for mobile phones with fewer features, also hurting the sellers and producers of smartphones and others electronic devices. Furthermore there might be an increase of illegal downloads.
To conclude, if the assumptions above are fulfilled, a comparative static analysis will lead to a decreasing in utility of consumers with the aplication of this tax.
José Maria Vaz Patto