If it were to become reality, a government would have to increase the tax on charges for Internet service for "all" users, regardless of whether they download music at all - legally or illegally. Comparing Internet usage to what you can do with a blank CD, the amount of "other possibilities" for practical uses is overwhelmingly larger for the Internet - so this tax would be even more unfair than the blank media levy that punishes all buyers, not just pirates.
Also, the music industry puts an estimate in the billions of dollars for damage done to the industry from Internet piracy - how could you possibly make up such a huge hole (if its true) without dramatically hiking taxes? This would put pressure on ISPs that already lower prices to attract new customers of broadband services.
Similar ideas have been put forth in countries other than Canada too, but any attempt to make it policy should (and most likely will) be met with a lot of opposition.