Thisar clediscussesthepossibilityoftheCanadiangovernmentimposinganInternet

ServiceProvidertaxorISPtax.Duetotheincreasingdemandfordigitalmedia;Canadian
mediacollec velyknownasCanadiancontentislosingfunding.Theindirecttaxoninternet
servicewouldgeneratetaxrevenuethatwouldbeusedtohelpfundCanadianmademedia
content.

TheISPtaxincreasesthecostofinternettoCanadians.Theimpactofthisshi isdetermined
byresponsivenessofdemandandsupplytochangesinprice.Thepriceelas cityofdemand
(PED)forinternetisveryinelas cbecausetherearefewdirectsubs tutesinconsump on.
Thepriceelas cityofsupply(PES)isalsoveryinelas casinternetserviceprovidersrequire
specializedtechnologythatisspecictointernetdistribu on.Asaresult,quan ty
demandedandsuppliedisinsensi vetoprice.Thusitcanbeexpectedthattherewillbe
substan altaxrevenue.

TheMarketforinternetservice

Figure1.0g
raphillustratingimpactofISPtaxonInternet

Thetaximposedincreasesthecostthusthesupplycurveshi supwards,fromStoS.This
increasespricefromP1 toP2 , consequentlythequan tydemandedisreducedfromQ1 toQ2 .
Duetotheinelas cPEDandPES,thechangeinquan tydemandedandquan tysupplied