Media sector, senator back change to ad tax exemption

OTTAWA — A proposal to eliminate a tax exemption for advertising on foreign digital media received support from the production sector and a senator on Tuesday, though any action on the proposal appears unlikely before the conclusion of the newly-launched review of the Telecom Act and Broadcasting Act. Representatives from the media sector backed the idea in front of the Senate standing committee on transport and communications on Tuesday morning, while the vice-chair of that committee brought up the proposal during Heritage Minister Mélanie Joly’s appearance at the Senate question period that afternoon. Sen. Dennis Dawson asked Joly to eliminate the exemption, citing the committee study of a report released in April by Friends of Canadian Broadcasting said if the loophole is closed, about $1.3 billion in corporate tax could be cycled back in Canada. For Canadian media, that could mean an annual incremental advertising revenue gain of between $275 million and $440 million, the report argued. “All we want is for this privilege to be eliminated so that this advertising revenue can be reinvested in Canada,” said Dawson during the question period in French, according to a transcript. In her response, Joly said she understands her “colleague’s concerns regarding the media,” and pointed to the legislative review, as well as the government’s previous and existing efforts to support news outlets, such as increasing funding for CBC/Radio-Canada and plans that will enable news outlets to accept philanthropic donations. Earlier in the day, lawyer Peter Miller, a policy advisor to the Friends of Canadian Broadcasting, and author of a report on the issue, told the Senate transport committee that means “Canadian media ... don’t have a level playing field with these other content providers. Canadian media produce their own content, they employ journalists —Canadians across the country to reflect our communities.” The foreign internet companies do not, Miller continued. Various groups representing the Canadian media sector have called for an end to the exemption which they say favours the internet media giants like Alphabet Inc.’s Google and Facebook Inc. The two companies account for an estimated 72 per cent of Canadian advertising spending, according to a study released last year. Witnesses on Tuesday did admit this change alone would not restore the industry to its pre-internet days. Matt Thompson, director at the Canadian Association of Broadcasters (CAB) said that Canadian media organizations have, and will still need to, “up their game” to compete in the new environment. He added that the local media companies, which are under pressure from declining advertising sales, need to entice the advertisers who want to target the people who live in those smaller communities. The Alliance du producteurs francophone du Canada, represented by its executive director, Carol Ann Pilon, saw promise in the CRTC’s recent recommendations about the future of Canadian content funding in Canada, she said. John Hinds, president and CEO of News Media Canada, told the committee that the group was looking to update the rules for a modern context and to keep the promise of local news reporting — which provides accountability of governments as well as local services like schools and hospitals— alive. Dawson said during the committee meeting that he wanted to ensure a report on the committee is released soon. “This report cannot be delayed,” he said. “We need to be sure that... we start thinking of publishing a report. If we don’t publish in the next few weeks, it’ll be next October or November. It’s certainly something we should consider over the next few days, how we’ll want to act on the loophole.”

Media sector, senator back change to ad tax exemption

Brief | June 6, 2018

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Media sector, senator back change to ad tax exemption

Brief | June 6, 2018

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