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Heritage Committee Report: Key Recommendations

As previously reported, on June 15, the federal Standing Committee on Canadian Heritage (CHPC) released its long-awaited report on the media and local communities entitled Disruption: Change and Churning in Canada’s Media Landscape. The committee began this study in February 2016. Over the course of this work, 131 witnesses appeared before the committee, including Magazines Canada’s CEO Matthew Holmes and Board Chair Doug Knight, who appeared in May 2016.

The CHPC report was released against the backdrop of Heritage Minister Mélanie Joly’s ongoing review of federal cultural policy, which is examining programs, policies and funding mechanisms related to how the federal government supports and invests in culture and the arts. Policy announcements related to this review are expected this fall. Modernizations to the Canada Periodical Fund are anticipated as part of this.

Also against the backdrop of Minister Joly’s review, News Media Canada, which represents daily newspapers and free community newspapers, is lobbying the federal government to provide financial support to daily and free community newspapers.

It is important to contextualize Parliamentary committee reports such as this one by the Heritage Committee. While these reports can and often do shine a light on policy issues of note, it is ultimately the Minister of Canadian Heritage, in this case, on the advice of the civil service, who makes policy and program decisions related to this file.

Following is an overview of key recommendations made in the CHPC report on the media and local communities based on relevance to Canadian magazine media:

Recommendations related to the Canada Periodical Fund: The report does recommend expanding the CPF’s eligibility to include daily newspapers and free community newspapers, along with a concomitant increase to the program’s budget.

In the context of this recommendation, it is important to note that Magazines Canada’s CEO Matthew Holmes, Board Chair Doug Knight and incoming Board member Gilles Gagnier held a number of high-level meetings in Ottawa in June with senior staff in Minister Joly’s office, as well as with the Deputy Minister of Canadian Heritage and other senior Heritage staff to reaffirm the importance of the Canada Periodical Fund to the Canadian magazine media sector and to seize the opportunity afforded by the Minister’s review, as well as the CHPC report, to modernize and adapt the program.

Other recommendations related to the CPF include adapting the program and increasing the program’s support levels for digital distribution, and increasing the program’s support levels for Indigenous, ethnic and official language minority publications.

Recommendations related to Section 19 of the Income Tax Act: This section of the Act supports Canadian ownership in the magazine, newspaper and broadcasting sectors by allowing Canadian advertisers to claim tax deductions for buying advertising space in Canadian magazines (Section 19.01) and newspapers (Section 19).

One recommendation is to amend Section 19 to exclude tax deductibility for foreign-owned or foreign-controlled Internet advertising platforms. A second recommendation is to amend Section 19 to allow Canadian advertisers to claim a tax deduction against the costs of advertising on Canadian-owned digital platforms. (Currently Section 19 is silent on any measures relating to the digital arena.)

Recommendations related to tax measures for foreign-owned companies: One recommendation is directed at foreign-owned news aggregators that publish Canadian news and sell advertising directed at Canadians and recommends they pay tax as do Canadian media companies.

A related recommendation targets foreign-owned over-the-top television services such as Netflix and calls for these companies to collect the same taxes as Canadian companies do and to contribute to Canadian content production funds. (Prime Minister Trudeau came out against this latter recommendation, also known as a “Netflix tax,” the same day the CHPC report was released.)

Recommendations related to the Canadian Broadcasting Corporation: That the CBC eliminate advertising from its digital news platforms so as not to compete directly with other digital media companies who do not enjoy the benefits of being a Crown Corporation, as the CBC does.

The CHPC report concludes that media concentration in Canada has resulted in loss of jobs, less local news coverage and fewer diverse voices. The report recommends that a new section be added to the Competition Act to deal with news media mergers, which would require a panel of experts in media to conduct a “diversity of voices” test to ensure there is no dominance in any media market.

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