Proceedings of the Standing Senate Committee on
Social Affairs,
Science and Technology
Issue 12 - Evidence - May 26, 1998
OTTAWA, Tuesday, May 26, 1998
The Standing Senate Committee on Social Affairs, Science and Technology, to which was referred Bill S-10, to amend the Excise Tax Act, met this day at 10:00 a.m. to give consideration to the bill.
Senator Lowell Murray (Chairman) in the Chair.
[English]
The Chairman: This is a very simple bill. It consists of one clause, which would have the effect of removing the GST on reading materials.
At our first meeting, we heard from the sponsor of the bill, our colleague Senator Di Nino. We also heard from officials from the Department of Finance, and from the Don't Tax Reading Coalition and the ABC Canada Literacy Foundation.
Our first witness is Peter Gzowski, who needs no introduction to anyone here, nor to any Canadian. For many years, he provided a very valuable forum on CBC radio for Canadians to talk to each other, listen to each other, and learn from each other. Welcome, Mr. Gzowski.
Mr. Peter Gzowski, Media Personality, Founder, Peter Gzowski Invitational Golf Tournaments for Literacy: It is a few days short of a year since I last hosted on CBC Radio. I confess that I still feel some withdrawal, but I will undertake to end my remarks before 12 o'clock in most of the country, or 12:30 in Newfoundland.
I thank you for this opportunity, Mr. Chairman. I am buoyed by the memory of the last time I had the honour of appearing before a Senate committee, nearly 30 years ago. I am also buoyed by the consequences of that committee's deliberations. I was the editor of Maclean's, which was then monthly. The committee was Senator Davey's Special Committee on the Mass Media. Bill C-58 was a result of that investigation and, building on ideas first put forward by the O'Leary Royal Commission on publications, it changed the face of Canadian magazines forever -- or at least until the present, when new technologies and new global forces once again threaten their future.
When I appeared, there were perhaps 50 Canadian magazines on the market. Of those, only a handful could be described as being of general interest -- not about trucks and buses or watching birds. Today, there are hundreds. Maclean's itself has flourished, and is scarcely recognizable as the descendant of the publication I edited. Though their financial situations remain precarious in many ways, these magazines have contributed to, and continue to be a part of, a nation that gloriously survives in the face of all of its tribulations. They have let us tell each other our own stories. They have been a part of who we are.
Senators, is the question that faces your committee of a similar dimension? On the surface, it is probably not. The future of reading is not threatened in 1998 in the way that the future of magazines was threatened in 1969. It would be possible, however, to conjecture that the long-term effects of the kind of changes at which you are now looking might have the same kind of salutary impact on reading of all kinds that the changes of the 1960s and early 1970s had on magazine publishing then.
The similarities seem remarkable. The most obvious, of course, is that you are also examining a question of taxation; of using a change in our tax regime to achieve, not necessarily a fiscal improvement, but a desirable social end. More interesting, I would say, is that the step you are considering calls for exactly the kind of bold and imaginative political stroke that the legislators of a generation ago were willing to embark on: to step ahead of public opinion, if that is necessary -- not contrary to it but ahead of it -- and to amend the law to make a better country.
I wonder if I might presume to buttress your arguments. My own career path, since my last appearance here, has taken me down a number of different avenues -- none of them, I hasten to say, tending towards becoming a media personality -- more involving magazines, books, newspaper columns, and broadcasting. In any one of those capacities, for even my roles on radio and television have deepened my understanding of what the written word means to Canadians, I might have appeared before you to plead the case of ending the tax on reading. Let me leave the laudable and virtually self-evident case of the writing and publishing industries and the thousands of jobs they represent to others, and try, if I may, to speak not only for readers in general, but for a certain kind of reader whose situation I have come to know well.
About a dozen years ago, I was able to turn my avocation and the modicum of fame it brought me into a cause I both believed in and enjoyed serving: literacy. Since then, I have become more deeply involved than I ever dreamed I would. Golf tournaments and other events held in my name around the country have now raised about $5 million to help people to learn to read and write. As well, we have managed to raise awareness of the situation, and also of what should be done about it, and to build a number of networks across the country, often between the private and public sectors. The more I have done, I have often said, the more I have learned. The more I have learned, the more I have wanted to do.
I am rather proud of these efforts, but I raise them here not for self-congratulation, but from a parallel sense of frustration. For all the advances that the literacy movement has made since I fell into its ranks, the need remains Sisyphean. Even with all of our efforts -- and hundreds of thousands of Canadians have been helped -- some 45 per cent of us still have some difficulty reading or writing. Half of those experience difficulty that affects their ability to cope with daily life -- everything from reading the safety instructions on a work site to following the street signs to a job interview, is impaired. In a civilized, caring society at the end of the twentieth century, this is surely not only ethically intolerable, it is economically crippling.
Would the end of a tax on books, magazines and newspapers be the magic solution that the literacy movement has been waiting for? Would it not be a lovely world if the solution to any such situation were as simple? The idea that a single welfare mother who cannot read the back of her kid's medicine bottle is kept from that knowledge by the 7-per-cent surcharge she would have to pay for instruction materials is as absurd as it is sad.
However, let me suggest this to you, senators. Literacy is, or ought to be, a civil right in this society, and if millions of people, through no fault of their own, have fallen through the cracks of our system of universal education, is there not a social obligation, a public obligation, to give them a hand to clamber out of the darkness? The public sector has made a larger contribution to the battle for literacy than most people realize. The conservative funding of $55 million announced just 10 years ago has meant the difference between survival and collapse for a number of front-line groups.
I would be remiss if I did not point out the contribution and support that the movement has had Senator Fairbairn. Much of the federal largess -- the seed funding for many of the projects held in my name as the case in point -- has meant more encouragement than facilitation. More and more, over the years, as the initial $55 million has run its course, the burden has fallen on the private sector and the support of volunteers. The profits of globalization may well tell us that this is the way that things should be, but in the world that the globalizers have brought us, the strain on the private sector to carry the burden previously shouldered in this country by the public is immense.
It is possible to wonder if literacy should receive more significant support from the more dependable public resources. An end to the tax on reading would offer exactly that support. It would have the symbolic value of recognizing the importance of reading and writing in our lives, and the practical effect of making the tools of training and re-education more accessible to the people who need them. The single mother with the complex medicine label might not instantly be able to buy the material that she needs, but the institutions that we are trying to build to help her would be more able to offer her a hand. It would make the funding of training more generous, without stepping into provincial domain. The benefits of $118 million -- if that is the figure we agree on -- would find their way to a most deserving segment of Canadian society.
It would be a bold, imaginative, and praise-worthy step. I hope that your committee will find a way to bring it nearer. I thank you again for giving me this opportunity to make that case.
Senator LeBreton: Thank you for appearing here today. Yours is a compelling argument.
How do you define "reading material" and how do you deal with magazines that are pornographic in nature, or publications that are considered to be hate literature? There is a concern that, if the GST is eliminated on all reading materials, we will be assisting those industries.
Mr. Gzowski: The solution for that matter does not lie in the field of taxation. It is easy for people in my business to be total free marketers of ideas. All my instincts say that any censorship is bad censorship. However, I have had a chance to look at some of the stuff that is available in this country -- not only pornography but also hate literature. I would like to burn it, if I could. It makes me sick.
I am convinced that the solution does not lie in taxation. It is a difficult matter to define what is okay and what is not okay. I do not think that it is the business of the government, under the proposed legislation, to address it at all.
It makes me uncomfortable to think about some of the sleazy magazines. They cost $7 or $8, and they are all wrapped in cellophane. I cannot see some creep who wants to buy them saying, "Oh, dear. That will be $7.49 instead of $7." That is not the solution.
Senator LeBreton: I only flag it because that is an argument.
Mr. Gzowski: I understand that, but it represents an insignificant part of what people read.
Senator LeBreton: It is probably something for the Criminal Code to address.
Mr. Gzowski: The Criminal Code does deal with it, but perhaps it does not do so satisfactorily. We can discuss that at another hearing. Surely, that is a matter for the Criminal Code, and not for this laudable goal.
Senator Di Nino: Thank you for appearing before our committee in support of a bill which I sponsored.
We have been trying to ascertain the value of the elimination of Bill S-10 for Canadians, particularly in the area of literacy. If reading material were to cost 7 per cent less, do you think that it would make a difference? Would it encourage more people to read? Would more publications would be sold?
Mr. Gzowski: The symbolic act that I mentioned -- that is, of saying that reading and writing is of social importance to us -- would encourage more people to read.
One of the most difficult aspects of the early days of the literacy movement was the difficulty of getting people to admit their needs. I hope that the movement has largely overcome that. People realize that inability is almost never their own fault, and it is now possible to step forward. In a very real way, that symbolism would encourage more people to seek the kind of help that we are trying to make available for them.
Reading materials are often bought in bulk, and they represent a significant part of any literacy organization's budget. In a practical way, the 7 per cent that would not be real for my hypothetical scum bag in the corner store would be very real to people who are buying those materials, and trying to make them available.
I invite you to come to any of the thousands of literacy work shops in various places around this country. You will note how much of the material there would come under the relief that Bill S-10 would give.
Senator Ferretti Barth: Will taxes still be paid on magazines that are imported into Canada?
Mr. Gzowski: I would assume not. This is what the magazine publishers are telling us. At the moment, many of the American magazines are finding ways around the sales tax. In this case, I am a firm believer that what Canadian magazines seek is not the exclusion of other magazines, but an opportunity to compete with them fairly. I would think that, in this case, what is sauce for the domestic goose would be sauce for the imported gander.
Senator Ferretti Barth: I asked you this because many people like to read foreign books.
Once the tax is added, the tax can be high, especially for students. A literary book may cost $7 to $9, or perhaps even more. Students cannot afford to buy such books. The removal of the GST on reading material would help those people who wish to read foreign literature.
Mr. Gzowski: Absolutely, sales tax should not apply on imported goods or magazines.
Senator Johnstone: Mr. Gzowski, if I understood you properly, you said that about 45 per cent of Canadians have difficulty with reading and writing. How would doing away with the GST on literature help these people? Would the help it would give be significant?
Mr. Gzowski: Firstly, I should like to clarify the 45 per cent figure, as well as the other figure I used, which is about one-half of that. This means that 22.5 per cent of us have profound and debilitating difficulty reading and writing. Ever since Broken Words: Why Five Million Canadians are Illiterate was published by Southam in 1987, there have been more and more measurements of the figures about literacy, or of the lack thereof.
After all of my years of experience, all I know is that it is a great pyramid -- at the top are those of us who are lucky enough to pretend to be able to read and write easily. The farther you descend towards the lower echelons of society, the more the difficulty appears. Thus, 45 per cent is the current figure. However, it does change.
How would removing the tax on reading improve the lot of those represented by that figure of 45 per cent? In the short term, it would not help them at all. Someone would not wake up in Restigouche and say, "My God, I can read because it is 7 per cent cheaper."
The symbolic value may not be a useful argument for politicians who deal, not with symbols, but with fiscal realities. The symbolic recognition that reading is a part, not only of cultural life, but also of real working life, would be a tremendous shot in the arm to everyone in the literacy movement. I refer not only to the volunteers, the sponsors, the workers and the front guys like me, but to the most important people of all, the learners.
I trust you are all aware that a similar amendment has been made in the tax laws, again, as I understand it, with some urging from my colleagues at ABC Canada. The Department of Finance has decided that it is no longer a taxable benefit when an employer pays for a course taken by an employee to improve that employee's technological abilities. This is a major stem forward. To me, it just seems to be common sense, but far be it from me to comment on the relationship between common sense and legislation.
Senator Murray: In any jurisdiction.
Mr. Gzowski: I meant nothing specific, Senator Murray.
The tax on reading seems to be a plea to common sense, a plea to beneficent common sense.
That 7 per cent in a literacy group's budget is very real for those of us who are out squeezing every dime we can from unsuspecting golfers, generous corporate sponsors and people around the country. That 7 per cent would sure help me.
The Chairman: In his 1996 budget, Mr. Martin provided a 100-per-cent GST rebate on books for public libraries, educational institutions, municipalities, and qualifying charities and non-profit organizations. Has this not been of assistance to groups such as yours?
Mr. Gzowski: There is no such thing as a group such as mine. I am sort of the floating front guy. I am closely associated in a way with Frontier College, because it was my patron as I got into the movement. I am in the process of serving on a committee that will help celebrate its 100th anniversary, which is quite remarkable. It is a huge achievement. I know that if they were to receive that exemption, it would be of significance. It would be a significant step forward for them.
Senator Maheu: Originally, I was in total agreement with the principle of the legislation. The more I hear, however, the less certain I become.
Mr. Gzowski: I hope that I did not move you farther in that direction.
Senator Maheu: Yes, you did. You said that the future of reading is not threatened, and that defining reading material does not lie in the field of taxation. I find that to be a bit of a cop-out. I should like you to comment further on it.
You were just asked if releasing literacy groups, colleges and libraries, et cetera from the GST, had helped. You said that it had. I have been preoccupied with defining "reading material." For example, people are reading books on the Internet, as well as on CD-ROMs. Would they be part of the group that would no longer pay tax?
Foreign magazines are another issue. How are we helping our literacy groups by removing the tax on certain magazines when the VAT is sort of worldwide? I think that is what we were trying to do.
If we start chopping at it right, left and centre, I am wondering how it would help, if the literacy groups are already protected under the provisions of the 1996 budget. Could you elaborate on that?
Mr. Gzowski: I could, senator. You have asked two or three questions, which makes me think I can get you a job on CBC radio, although I have very little influence there myself. An old trick is to ask two questions and hope that you get a good answer to one.
Let me return to the issue of CD-ROMs and the Internet. At this point, I have no idea how to deal with that. Every aspect of my life tells me how quickly the Internet and the CD-ROM are replacing the written word, and that we will no longer need books.
Every day I read more books about people going belly up on the Internet, and I understand. I know that book sales on the Internet are a concern, and a growing one, in the publishing community. Internet sales now represent 2 per cent of book sales. As technology increasingly replaces what I think of as reading materials, we will probably need new definitions, but I am not qualified to make them. When your committee's report is closer towards becoming legislation, perhaps some definitions will be made. It might be very interesting to sit on a committee whose task was to determine the nature of reading materials. For me, I think that we are talking about what the government campaigned on, which is removing the tax on reading materials as we now know them: books, magazines, newspapers, periodicals.
When I talk about the importance of making reading materials more accessible, a very interesting question arises. It has been quite correctly pointed out that, up to this point, the exemptions have already satisfied much of that need. However, senators, I am coming dangerously close to making a literacy plea that I make too often. You can quantity a child's ability to read or write. You can go into someone's house and count the books in the house. If there are 10 or more, that child will read well. If there are fewer than 10, that child will have difficulty. This is an extraordinary finding that comes from an actual academic study, but it is a reflection of something that is much more profound in the need for literacy.
When I talk about literacy, on of the things that I like to do is to point out that the people who have fallen through the cracks are not a failure of the school system. There is too much teacher bashing in society now. They are often a social failure of the family, of the community, and of the society around them. If we were to make, reading materials more accessible, it could only help in a very worthwhile and real way.
The Chairman: I think we will close on that note, Mr. Gzowski. Thank you very much for attending, and for sharing your views with us. You speak from the perspective of one who has been involved in the literacy movement for a long time, and who has been very effectively bringing the movement to the attention of Canadians.
[Translation]
We are very pleased to welcome before us Mr. Roch Carrier, author, former director of the Canada Council.
[English]
He is an author whose stories have given incomparable pleasure to generations of Canadians, especially young Canadians. Welcome.
[Translation]
Mr. Roch Carrier, author, former director of the Canada Council: It is certainly an honour for me to appear before the committee to reflect upon certain aspects of Bill S-10.
[English]
Many years ago, I was a kid living in a far-away area where it was a big accomplishment to finish grade 7. I was interested in boxing, playing hockey and hunting. The big jobs around were being a trucker or a lumber jack, but my father had some other ambitions for me. He found some books at a bargain price, and he brought some home. They were the first books in our house. I opened the books, and I saw something about the clouds, something about Spain, something about photography, something about Toronto, and something about fishing. If I am here today, it is because I opened those books, books that were bought at a bargain price without any tax.
If you were to ask me if reading should be taxed, my answer would be. I wish that all of the kids in our country could be given the opportunity of having their lives changed through reading.
When I meet kids -- and it happens quite often in all parts of Canada -- I ask them, "Do you read?" Over 80 per cent of them answer, "No, I prefer watching TV." It is a national problem, as well as an international one. Whatever happens with technology, men and women will still have to read and write in their careers. Can a tax help that problem?
I did a bit of research. In 1949, the Government of Canada created a Royal Commission to study the advancement of the arts, literature, and science in Canada. Its report is a wonderful document, and I recommend that everyone read it. It is a document with a vision, and I am sure that at that time, when people read the document, they said, "Those people are dreamers. We cannot do that," but this vision created today's Canada.
I should like to mention two of the recommendations from the report, which was published in 1952. The first recommendation was that the government should abolish the 8-per-cent tax on the importing of books, and the printing of books. The second recommendation was the creation of the Canada Council.
Allow me to give you some figures. In 1957, 55 literary books were published in English Canada -- in a rich country. After the Royal Commission's recommendations were applied, we have a success story to tell. Last year, the Canada Council supported 750 new books, and 768 new French books. This the result of tough work by people in the book business. It is also the result of a vision translated into policy.
Today, we have the responsibility for this vision. Please do not tax reading materials. Do not make reading difficult. Do not create supplementary problems. When one travels in Canada, one discovers all kinds of discrepancies, for example, how the information is provided to the communities, and how knowledge is distributed into different communities.
Even in the regions, there are some discrepancies between institutions. In some places that I saw, some schools could not afford to have a librarian to help the children, or to take care of the books. In some libraries, I saw old materials, which were becoming worn out. I also saw firsthand the impossibility of buying new material. Please, let us make reading available. Do not add to the burden of those who are really struggling to make available information, knowledge and culture.
The results of the policies that were applied from the Royal Commission are a success story. I am talking mainly about books because that is what I know best, but today many Canadian writers have international careers. Books are being read and studied. This is a success story. It is also a success story because it created a whole new field of children's literature.
When my children were growing up 25 years ago, there were almost no books for them to read. Books where a Canadian was the hero of the story, and was doing something interesting, were not being written. That just did not happen in those days. Now, children's literature is a success story, and children should have ready access to those books.
As was mentioned before, reading starts at home. We should make it easy for parents to buy books. As a writer, it is a sad experience to see someone standing in a line of people with a piece of paper in his hand. This child wants to buy your book but he cannot afford it, so he hands you a piece of paper to autograph. Let us make reading available. Imposing a tax is not the right way to do that.
Thank you very much for giving me the opportunity to express my views to you.
The Chairman: Thank you, Mr. Carrier. The commission report to which Mr. Carrier referred was the Royal Commission headed by Vincent Massey, which led to the establishment of the Canada Council.
[Translation]
Senator Maheu: I wish to congratulate you, Mr. Carrier, for your involvement from a very early age. You said that all over the country libraries don't have money to purchase books. You're asking us to ensure that literature is available to every one, including children. Every week, my grandchildren go to the library to bring home books.
To what extent does the value added tax that is in place throughout the world prevent libraries from purchasing books or hiring librarians? The witness before you told us that the future of reading is not in danger.
I am wondering how to define reading and books in the context of the Internet: Are all books or the great majority of books available to students on the Internet? Should we be removing the tax on the Internet, on records and on books? Should we also be removing the tax on computers? In libraries in urban centres, you have access to computers that can provide you with information that cannot be found in certain books in the library.
I fully support this bill and I would like us to adopt it immediately. We must however first define what reading material is. In 1996, Mr. Martin's budget granted exemption from the federal tax to certain groups, namely volunteer workers, libraries and schools. What more can we do? What more will that give us?
Mr. Carrier: You have in fact asked several questions. There are also several reasons that can be given in support of a tax. If you want, we could find very good reasons to impose a tax on bread or milk. Justification can always be found. With regard to the Internet, despite all that we know about the world of computers, it is still a non identified object. Some people will tell you that the Internet will mean the end of books. Others will tell you that since the arrival of the Internet, children have never read as much. They read more thanks to the Internet than people want to admit. We don't yet know what the situation is. I believe we will have to wait a little while before being in a position to form a precise opinion on that.
The reality for the world of the written word is very intense competition with the world of computers. Any person working in any one of those fields will tell you the same thing.
In an adventure where we don't know exactly where it leads, is this the right time to make one of the fighters -- to get back to my boxing metaphor -- shoulder a bag containing a heavy tax? It is not the right time. Let the events unfold.
As for a definition of reading material, even though reading has been my main occupation for more than 50 years, I am unable to provide a totally satisfactory definition. Reading is a consumption that happens at all sorts of levels and in all sorts of places. This is why I would advocate a very open definition of this activity which consists in gaining information, knowledge and even intellectual pleasure.
[English]
Senator Di Nino: Mr. Carrier, we heard from Mr. Gzowski that nearly one-half of Canadians have some difficulty reading, and that approximately one-half of those are severely disabled. To make the point, Mr. Gzowski talked about the welfare mother who cannot properly prepare cereal for her children, because she cannot read the instructions on the box.
Does the GST on reading material not create a wider gulf between those who can afford to have computers, and who have access to the Internet and to CD-ROMs, and those who find it very difficult even to buy books on a very limited budget? In your opinion, is the GST on books widening the gulf between those who have and those who have not?
Mr. Carrier: For me, the GST is no problem; I buy the books that I want to buy. Not many writers are able to do the same thing. The average income of a writer in Canada is about $4,000 a year.
Although the GST poses no problem for me personally, that is not the case for everyone. It is especially not the case for institutions such as small town libraries and schools. Yes, it is true that a very high percentage of people have reading problems. I do not think that cutting the tax is the answer to all those problems. However, let us be practical. Let us deal with the problems one by one. If we can make books more readily available, then we will gain something.
Again, I repeat, reading starts at home. I should like to take two minutes to tell you an anecdote. I was going to Toronto to attend an event organized by Mr. Gzowski. The person who picked me up at the airport was a nice fellow. He said, "Mr. Carrier, do you see that bench?" I said, "Yes." He said, "That was my bench." I asked, "Why is that?" He told me that he used to live on the street, because he had been in jail for having committed small crimes. I asked him why that was the case. He said it was because he was not very good at school, that he had hated school, and wanted out of it. He wanted to have the same things that his friends who attended school enjoyed, so he committed little crimes. The reason all of that happened is because he had some problems reading. However, as a result of one of these marvellous programs, he learned how to read. Now, he is in charge of a social program, and is taking care of the problems that many adults in Toronto have because they cannot read.
This problem is far bigger than a tax. As a society, we must make some decisions about what the future should be. In the future, our kids should enjoy the privilege of being able to read, and to read in their families. It is the best start to a good life.
Senator Di Nino: A few moments ago, Mr. Gzowski alluded to the symbolic value that the elimination of this particular tax would have. Could you comment on that, please?
Mr. Carrier: That would be a beautiful victory for all of us, because the government would be telling people that reading is important to the future of our children and of the country. It would be a wonderful victory, and a wonderful gift to give to the country.
Certainly, less money would go into the budget of the Department of Finance. However, more money would be going to Canadians and, consequently, to the government, because it would create so much more activity.
Senator Chalifoux: Mr. Carrier, I thank you very much for a very insightful presentation. I am very fortunate in that I come from a province that does not have provincial tax. Do you know if provincial taxes are imposed on books and reading material?
Mr. Carrier: Yes. However, I do not want to go too far in that direction because I am not a specialist.
I come from the province of Quebec, where there is some protection from the tax. However, in the world of business I know that many book stores will still be charging the tax.
Senator Chalifoux: In your knowledge of this area, what effect would this bill have on the provincial sales tax on reading material?
Mr. Carrier: That is difficult to answer. My gut feeling is that if the federal tax were cancelled, the provincial governments would not be able to keep their taxes.
The Chairman: Prior to the imposition of the harmonized sales tax in the Atlantic provinces, I believe that there was no provincial sales tax on reading materials.
With the harmonized sales tax, taxpayers in those three Atlantic provinces are now hit by the combined provincial and federal sales tax. I am not sure what the situation is in the rest of the country. I do not think that there is a provincial sales tax on reading materials in Ontario, is there?
Senator Maheu: I am not sure. I know that it applies in the Atlantic provinces.
Senator LeBreton: Mr. Carrier, you said that people can justify taxes. We certainly live in a society that tries to justify all kinds of taxes, but your statement that no one would dare tax milk and bread was an interesting one. I remember the GST debate -- and we have the scars to show for it. Food, including milk and bread, of course, was exempted. You could make the same argument in terms of low-income families trying to buy reading materials.
Mr. Gzowski spoke about lower-income families that do not have as much money to buy books for their children, and are probably not as organized to get children going off to public libraries and places like that. For those families, the price of a book does come into account.
I was struck by your statement that 80 per cent of young people tell you that they prefer watching television to reading. Perhaps it is easier, especially in low-income families, to switch on the television than it is to read books, simply because these families cannot afford them. It is a convenience.
You said we would not dare tax food for the sustenance of the children. Why should we tax food for the sustenance of the mind?
Mr. Carrier: You mentioned the low-income family. There are a lot of low-income families with one parent, generally a mother, and very often it is a well-educated mother. For her, this tax makes a difference. Many people in that situation would be able to tell you, "I cannot buy the books."
The Chairman: Thank you very much, Mr. Carrier, for taking the trouble to attend our committee, and also for lending your quite prestigious support to Senator Di Nino's bill.
Honourable senators, we will now hear witnesses from the Canadian Booksellers' Association, and from Indigo Books and Music. Welcome and please proceed.
Ms Sheryl McKean, Executive Director, Canadian Booksellers' Association: We are delighted to be here. This is a very special opportunity to present information that we hope will help you. It is important that you understand exactly whom I represent. CBA, the Canadian Booksellers' Association, represents more than 1300 bookstores in Canada. Those bookstores are trade bookstores, campus bookstores, independents, and independent chains. Some are big box formats. The bookstores can be very small or very large, up to 20,000 or 25,000 square feet. Our booksellers employ thousands of Canadians, and they serve many more thousands of Canadians.
For a number of reasons, our members are vehemently opposed to the GST on books. The first is that they believe it to be discriminatory against low-income families. The lower the disposable income, the more significant the tax becomes. Those may be the people who most need to have books, if they are to get out of the low-income trap in which they are caught.
Another reason is that a promise was made to booksellers, and that promise has not been kept. They feel that they have been cheated. Canadians with whom our members deal every day feel cheated by the people who represent them.
They are also opposed because they believe that the book is unique. A book provides education, it provides entertainment, and it is a reference. For many people, it is a companion. A book, because of its unique character, cannot really be compared to other products. A book is not disposable like diapers. A book is used year after year for its original purpose. It does not have to be recycled to be useful. An example would be The Stone Angel, a book that is more than 20 years old, and is used in a number of ways. It is used as material for educational courses, so, in a sense, it is a textbook. It is also, of course, a novel, so it is used for entertainment. It is a book, like many other books, that teaches about Canadian culture, and that allows Canadians to express ourselves. It helps us to understand the point of view of other Canadians.
We believe that books are Canada's most successful cultural product. If the GST on books remains, fewer Canadians will be able to buy books. If fewer Canadians are able to buy books, booksellers will clearly sell fewer books. If they sell fewer books, then they will go out of business. If they go out of business, that will affect publishing. If it affects publishes, that will affect writing. The whole industry will be hurt. It is currently being hurt by this tax.
It is important to Canadians, to our cultural product, and to our economy that the GST be eliminated from books.
Today, we have with us Gailmarie Anderson. She is the incoming president of the Canadian Booksellers' Association, but she is also the owner of a bookstore in a rural community. We also have Dan Mosersky with us, who represents the large box format in urban centres. Tomorrow, you will hear from a campus bookseller, who will offer yet another perspective. I should like to ask Ms Anderson to make her remarks now.
Ms Gailmarie Anderson, Incoming President, Canadian Booksellers' Association: I should like to present a personal viewpoint on removing the GST from books and reading materials. As Ms McKean indicated, I own a small, independent bookstore in rural Saskatchewan, and like hundreds of my colleagues across the country, the GST on books and reading material has seriously affected my business. I am also a professional educator with a keen interest in early childhood reading and literacy, and having the GST on books and reading material has negative consequences for these key issues.
Owning a bookstore is more than a job. As you can well imagine, it is a lifestyle, because a bookstore becomes an integral part of a community and its cultural identity. As booksellers, we are ultimately responsible for putting books in the hands of the public.
We ensure that Canadians have access to books, and we work closely with schools and libraries to facilitate people reading and learning and to bring books into the home. I applauded Mr. Carrier's remarks about having books in the home, because if children have books at home, they are able to learn to read.
Bookstores must survive in today's economy. The elimination of the GST would empower the individual consumer and the low income person, as well as the senior and the student, to buy books. It would stimulate the market-place, and it would increase Canadians' accessibility. As a bookseller I deal with customers every day who ask, "Is the GST on books and magazines?" Nine years later, they are still asking about the GST being on books. Every day, I must tell children that they have to add the GST to the money that they have for books. I see parents who buy one book rather than two books for their children because of the added expense. In a small book store, the GST makes it more of a struggle to survive, and makes it more difficult for Canadians, as individual consumers, to have books.
Ms McKean indicated that Canadians were affronted when the government placed the GST on books. We felt that it was a social privilege. Reading is a cultural identity, and we were proud of the fact that Canada sponsors writers and publishers and helps the book industry.
In the industry, we all recognize and appreciate the fact that the GST was removed from libraries and educational institutions, as Senator Maheu indicated. That has had a direct impact. In my small community, the school boards began to buy more books because the tax was eliminated.
In light of the government's confidence in the economy, it is a good time to remove the GST. There are as many reasons for removing the GST as there are Canadians. We applaud your efforts to this end, and I thank you very much for them.
In an episode of Star Trek: The Next Generation, Captain Picard's main form of relaxation was to go to the vault aboard the Starship Enterprise, take out an actual book, and read it. It is a timeless diversion. As Canadians, we should value it, and we should remove the tax and the GST from our books.
Mr. Dan Mosersky, Vice-President, Indigo Books and Music: CBA members and booksellers are on the front line of the GST. Every day since January 1, 1991, we have fielded complaints about the application of the GST to the books, magazines, and newspapers that we sell. Every day customers say to us, "Did the government not promise to take the GST off books?" Our answer is "Yes."
Canadians have not accepted paying the GST on books. It has been argued that Canadians have grown used to the GST. That may be true for other products, but it is definitely not true when it comes to books and other reading materials. Canadians everywhere object to paying GST -- both for the limit it puts on their budget for books, and for the moral principle that reading should not be taxed. Petitions and letters asking Parliament to remove the GST from reading continue to pour into the House of Commons and the Senate. At last count, over 600,000 Canadians have signed petitions, many of them in our retail stores.
This is the first tax on reading since Confederation, and we could offer many statistics to support the claim that it has had negative effects on our ability to get books into the hands and homes of Canadians. During the past eight years, and during the hearings on Bill S-11, the predecessor to Bill S-10, you have heard the statistics, and you have been told that the GST seriously jeopardizes the reading, lending and selling of books, magazines and newspapers in Canada.
From personal day-to-day experience, the GST makes a difference in customers' purchasing decisions. First, they notice that the GST is added to the bill. They then choose not to buy a book, or to buy fewer books than originally planned.
Students have been left out. Campus booksellers regularly hear from students who cannot afford to buy all of their textbooks, because the 7 per cent GST often equals the price of at least one of their books. They cannot afford all of the books that they need, and they are disadvantaged. The GST has reduced text book purchases by students. As you know, students buy their textbooks in September and in January. The GST low-income rebate is of little help to them in this, because they receive their tax refund in the spring months, after they have to purchase texts. A semester's worth of textbooks can represent an outlay of several hundred dollars. The GST makes a real difference to students' purchasing patterns.
In 1996, the government removed the tax from books purchased by schools and libraries, but did nothing for the individual students who must buy their own textbooks. Campus book store personnel serve concerned students daily. They share their concerns, and tomorrow they will be here to impress upon you the seriousness of the issue for students, for education, and for Canada's future.
The tax on reading is a regressive one. It has been argued that the removal of the tax on reading would benefit higher income earners. In fact, according to Statistics Canada, lower income earners, particularly students, spend a larger percentage of disposable income on reading material.
It has been argued that removing the tax from books would disproportionately benefit imported books. In fact, Heritage Canada has always argued the opposite. By reducing sales in the Canadian market, taxing reading disproportionately harms Canadian-authored books published for Canadian readers, and causes the most damage to the publishers who publish the most Canadian-authored books.
Canadian booksellers need healthy sales of all books today in business, in order to keep publishers, authors, editors, illustrators and a host of other Canadians employed, thereby helping to maintain a vital cultural economy.
We support the view that direct assistance to the publication of Canadian books is appropriate, but those books must not collect dust in publishers' warehouses. Without retailers to sell the books to the public, it will make no difference whether Canadian books are published or not. The GST is a threat to the continued existence of booksellers, and to the entire publishing industry in Canada.
As for the cost, we understand that the GST collected on reading material is approximately $182 million per year. That figure represents $66 million from books, $47 million from magazines, $66 million from daily newspapers, and $3 million from community newspapers. This is the tax revenue that would be given up if reading is zero rated under the GST.
The reading tax has always been extraordinary revenue for the government. Prior to the GST, reading material was specifically exempted from the manufacturers sales tax at every level of production.
Removing the GST from reading material now would result in significant increases in federal income and corporate tax revenues that would offset the reduction in GST revenue. Studies in the United Kingdom suggest that every tax dollar collected on reading material results in reduced revenues from personal and corporate tax, equivalent to 60 per cent of the tax collected.
We estimate that the removal of the GST from printed reading materials could lead to $54 million in offsetting tax income and cost savings, plus nearly 1,000 new jobs in a labour intensive, highly skilled industry.
Now that the budget is balanced, the Minister of Finance is seeking to make small, tightly targeted tax reductions that will encourage increased productivity and economic growth. Canadians have earned some tax relief as part of the deficit dividend. Canadians have always felt that there should not be a tax on books and readings materials. Government has repeatedly concurred with this. It is time to keep your promise to restore reading to a tax rate of zero. It is time to listen to Canadians. It is time to respond to them on this issue. Do not tax reading.
Senator Maheu: Thank you very much for your presentation, Mr. Mosersky. I have a question and some comments to which any one of you may respond.
You suggested certain figures on tax costs. Could you repeat your figure on the GST? I have tremendously different figures from the taxation department.
Mr. Mosersky: We estimated it at $182 million per year.
Senator Maheu: I understand it is $100 million on books, and about $150 million on magazines and newspapers. When we talk about the GST, we cannot overlook the PST, which applies in most of our provinces, as well as the harmonized sales tax in the Maritimes, which we have already discussed.
Mr. Mosersky: There is no PST on books in any province.
Senator Maheu: I believe GST is charged on magazines and newspapers.
Mr. Mosersky: That is correct.
Senator Maheu: Could you come back to my first question, please? How do you define "reading material" as far as the electronic highway is concerned? Further, it is my understanding that libraries and literacy groups are not taxed.
Mr. Mosersky: I am not prepared to answer the question as it concerns the electronic highway. Clearly, as far as we are concerned, we want the amendment to read "printed material, books, magazines, periodicals and newspapers." We do not make a distinction between types of reading material.
Senator Maheu: Do you mean whether or not they are generating money from advertising?
Mr. Mosersky: No. We feel that you can continue to generate money from advertising, and that should be taxable. It is the sale of reading material itself that we should not be taxed.
However, I believe that you could very easily include CD-ROM and Internet products as reading and printed material. That is my personal answer; it is not necessarily representative of the industry. This is ultimately about freedom of expression, and taxation is about inhibiting the freedom of expression. Therefore, a very strong argument could be made for including those types of communication, expression and writing with those areas not subject to tax.
Senator Maheu: I take it that the $250 million in lost tax revenue does not worry you.
Mr. Mosersky: In 1990 and 1991, I attended many sessions where we fought the initial implementation of the tax. Many people in the Department of Finance said that this would be revenue neutral. As an ordinary citizen, that was a term with which I was not entirely familiar. If it were revenue neutral and there was never any revenue from this industry, then, in a sense, you have reaped a windfall of $250 million.
In the last eight to ten years, there has been a decline in government funding to the industry. Another argument presented to us was that the increased revenue would sort of spill back into the industry, something which has not occurred.
Ms McKean: There are different opinions as to how "reading material" ought to be defined. There is a definition in the Excise Tax Act. It does not include, nor is it my view that it should include, CD-ROMs. There is a very significant difference in use. When you pick up a book, a magazine or a newspaper, you do not need anything else to be able to read, unless you are as old as I am and you need reading glasses. You cannot read a CD-ROM; you have to have a computer to do so. Therefore, there is a significant difference.
[Translation]
Senator Ferretti Barth: It has been said that young people read less and less. Is it really because of the tax or is it because television has invaded our homes and drawn the attention of the family, especially children? There are many shows geared to children, and mothers are sometimes very happy to settle the kids in front of the TV set rather than going to the store to buy books. Did book sales decrease following implementation of the tax or was it because of the advent of television?
Is all material destined to the visually or hearing impaired treated as reading material? Are books printed in Braille taxed or not? Are tapes for deaf-mute people considered to be reading material?
[English]
Ms Anderson: I should like to respond to your first question, senator, and I am sorry that I do not speak French.
I have had my book store for 20 years. When I first opened it, I did so because I moved to a community where there was no book store, and I did not think I could survive without one.
The Chairman: Where is that?
Ms Anderson: I live in Melfort, Saskatchewan, which is two hours north of Saskatoon.
At that time, 20 years ago, more people bought books for their children. That was just as Sesame Street was starting up. Certainly, television has had an impact. However, I think that society has not treasured books as much as it should have. If, as a literary culture, we still treasure books, more parents will have to try to have books in their homes for their children. Over the years, we have always been cognizant of the fact that we have to encourage parents to buy books for their children, which I think makes a difference to their education.
With regard to books in Braille and tapes for the visually impaired, I am not sure whether they are taxed. I understand that, in Saskatchewan, they would not be taxed, because they would fall under a certain category as far as our provincial tax is concerned. I do not know what would happen in the case of the GST.
Mr. Mosersky: Large print books and audiotapes sold through retail outlets are taxed.
[Translation]
Senator Ferretti Barth: So they are considered to be reading material, even books in Braille?
[English]
Mr. Mosersky: Large print books are considered reading material.
[Translation]
Senator Ferretti Barth: So the bill will also help the disabled in our society?
Mr. Mosersky: That's right.
[English]
Senator LeBreton: I find the argument very compelling. I am concerned for low-income families and seniors on fixed incomes, because this is where the problem is. Are you finding that this group expresses the most concern? A $20 book costs $21.40 at the cash register.
People may be getting used to the GST, but they are not getting used to it on books. Is it they younger people and the people on fixed incomes who still hold the government acountable for this? This government has twice promised to get rid of the GST on books, although a few foolishly suggested getting rid of the GST on everything. We all know the story behind that.
Ms Anderson: We see this with people on fixed incomes, with senior citizens, students, and children, all of whom I see as different book buying constituencies. On a regular, even a daily, basis, they ask about the GST on books.
Senator LeBreton: They are well aware of the promise.
Ms Anderson: Very much so.
Senator LeBreton: You have a small business. We had witnesses from the Department of Finance here, who had compelling arguments in terms of the GST being a tax on consumption and not on income, which I think is generally supported. They worried about adding further exemptions, and making things more difficult for businesses because they would have to reset their cash registers and so on. I am sure that this is a problem that you would like to have.
Ms Anderson: I would love to have that problem.
Senator LeBreton: Do you deal almost exclusively with books, or do you sell other things?
Mr. Mosersky: We have other products. Almost all retailers today have computerized inventory-control systems or sophisticated point-of-sale systems that could easily handle a variety of products.
Senator LeBreton: Just like a grocery store.
Mr. Mosersky: Yes. Some items are taxable, and some are not. It would be an insignificant issue, as far as we are concerned.
The Chairman: Thank you, witnesses, for taking the trouble to give us your testimony today in support of Senator Di Nino's bill.
The committee adjourned.