Proceedings of the Standing Senate Committee on Social Affairs,
Science and Technology
Issue 22 - Evidence, December 8, 1998
OTTAWA, Tuesday, December 8, 1998
The Standing Senate Committee on Social Affairs, Science and Technology met this
day at 10:00 a.m. to consider Bill S-10, to amend the Excise Tax Act.
Senator Lowell Murray (Chairman) in the Chair.
The Chairman: Good morning, colleagues. We have before us this morning Bill
S-10, Senator Di Nino's bill to remove the GST from reading materials.
Specifically, what we have before us is an amendment moved in the Senate by
Senator Maheu and a subamendment moved by Senator Di Nino. It is in respect of
that amendment and that subamendment that our witnesses, quite a number of
them, are appearing today under some pressures of time, as we all know.
The last time we met, we had a discussion about the impact of the harmonized
sales tax, that is, the GST plus provincial sales tax, in those provinces that
have harmonized their provincial taxes with the GST, namely, New Brunswick,
Nova Scotia and Newfoundland. The question was, is the full harmonized sales
tax applied to reading materials? The answer is that for books, at any rate, it
is not. In other words, the provincial sales tax is not charged in New
Brunswick, Nova Scotia or Newfoundland on books. It may be charged for a
nanosecond but there is a point-of-sale rebate, the effect of which is that
only the 7 per cent GST is charged on books in those provinces. Our friend
Terry Thomas from the Parliamentary Library has written me a letter about that,
which I shall have translated and circulated to all members of the committee.
Without further ado, I am going to call on our first witnesses who are from the
Don't Tax Reading Coalition. They are familiar figures around here, almost old
friends of ours. Please go ahead.
Ms Jacqueline Hushion, Chairperson, Don't Tax Reading Coalition: Good morning,
senators. Two weeks ago, we appeared before the House Finance Committee chaired
by Maurizio Bevilacqua. The committee confirmed its agreement with our position
that reading material should be zero-rated. That same evening, the Governor
General honoured the best of Canadian literature at Rideau Hall. It was a great
We are pleased to be before you again on the subject of Bill S-10 and
specifically to address Senator Maheu's proposed amendment. The senator has
given a lot of thought to this amendment. We applaud her, as we applaud Senator
Di Nino for originating this important bill.
The third reading debate on Bill S-10 made it clear that there is a bipartisan
consensus on the core values of the bill. Now the debate has been distilled to
a smaller question: Should zero-rating extend to magazines and newspapers as
well as to books as originally and repeatedly promised, or are there in fact
good reasons to deny the proposed tax reduction to readers of periodicals?
We submit that there are no good reasons to penalize the readers of magazines
and newspapers and that the bill is a stronger, more principled measure without
the 5 per cent clause. Accordingly, we respectfully request that the committee
approve the bill and the amendment, but also approve Senator Di Nino's
subamendment. We should like to see three yes votes by the committee: yes to
Senator Di Nino's subamendment, yes to Senator Maheu's amendment, and yes to the
Our arguments in favour of this course focus on the following issues. First, the
majority of countries do not tax magazines and newspapers. The proposed
amendment would violate the government's indisputable promise to zero-rate all
reading materials. Zero-rating all reading materials that contain advertising
would be an inexpensive investment in Canada and in Canadians. Canada's tax rate
of 7 per cent on magazines and newspapers and 15 per cent in the harmonized
provinces on that reading material is the highest tax rate on reading in the
In Western Europe, not one country taxes newspapers and magazines at the full
rate. The most common tax rate for those items is zero. Not a single country in
the OECD discriminates against publications based on advertising content. The
government's promise to zero-rate reading material has always explicitly
included magazines and newspapers. The excellent background document prepared
by the Library of Parliament recognizes that there was a political commitment to
zero-rate all reading material but notes that "there was some confusion as
to whether the relevant promise was made by an individual, a party caucus or a
party convention". To clear up that confusion, the answer is "all of
The original commitment was made in 1990 by individual Liberal parliamentarians.
In November 1990, Senators Hébert and Fairbairn led a debate in support
of an amendment to the GST to ensure zero-rating. The wording was identical to
Bill S-10, which is before you today. In 1991, the leader of the opposition,
now the Prime Minister, repeated that promise. Following that, the Liberal
parliamentary caucus, MPs and senators presented a priority resolution that
reaffirmed the historic principles embedded in tax-free status for the printed
word and promised to remove the GST on reading materials. The current Finance
Minister was in that room at the time. The vote was unanimously in favour.
Senator Maheu also wrote to us at that time, immediately before the 1993
election, to say that, "The GST should be removed from books, magazines
and newspapers. It is not simply a matter of affordability,"she said, "it
is the principle that reading should not be taxed."We very much appreciate
the dialogue that Senator Maheu has brought to the deliberations of this
committee. That dialogue has made us all think. We know where this is going.
The political commitment is undeniable.
We also want to look at the annual cost to the federal treasury of keeping this
promise. We calculate that the GST collected on the sales of books, magazines
and newspapers, excluding tax on advertising revenue, which we agree should
remain taxed, is approximately $200 million. Finance has a $300 million
estimate. It is mystifying to us. That figure of $300 million would suggest that
our three publishing sectors sell $4.5 billion annually at the consumer level.
With all due respect to the Department of Finance, if our industry were twice
the size it is, I think we would know it.
If the numbers are as important a consideration in your passage of Bill S-10 as
the consideration and honouring of promises made, then I will ask David Hunt to
share our data with you now.
Mr. David Hunt, National Director, Don't Tax Reading Coalition: Three questions
arose during the deliberations on this bill and particularly during the
evidence stage on November 27 that we have decided to address today. First, how
much GST is raised annually in sales of reading material? Second, is a tax on
reading regressive? That question was raised in the excellent background
document from the Parliamentary Library. Third, what do we mean when we say that
Bill S-10 will benefit small publishers more than larger ones?
The most recent survey of family expenditures in Canada was released by
Statistics Canada on July 28, 1998, after the bill was introduced for third
reading. The most recent figures available are also the highest figures
available because, obviously, sales grow every year. Annual consumer spending by
Canadians on books, magazines and newspapers includes about $900,000 in sales
of trade books and about $600,000 in sales of post-secondary textbooks. The
total is about $3 billion in sales at the consumer level. That includes a
number of sales that under Bill S-10 would not be zero-rated. I have copies of
those handouts to pass around later.
Statistics Canada considers as books things like industrial directories, street
guides, blank books, colouring books, stamp and coin albums, which Revenue
Canada has already said would not be covered by Bill S-10. It also includes
direct imports by households, many of which, as you know, are not subject to
the GST. It also includes purchases from small suppliers, sales under $30,000 a
year, and purchases from things like charity book sales, second-hand book sales
operated by institutions and so on. We have estimated that to be about 12.5 per
cent of that total market, which we think is conservative, leading to a final
figure of about $203 million. That is the net GST exposure from zero-rating
reading material under Bill S-10.
Finance comes up with the vastly inflated numbers of anywhere from $300 million
to $400 million. That is the annual GST collected on annual advertising sales
in magazines and newspapers, again according to the Statistics Canada and
Industry Canada joint publication called Statistical Review Information
Technology and Content Industries. That GST revenue remitted to the government
from advertising sales in newspapers and magazines is $200 million, approaching
the GST that would be covered by Bill S-10. As you can see, the GST on
advertising sales in fact is greater than the GST on publication sales for
those two categories.
Those industries are coming to you and asking to be zero-rated on actually less
than half of their total revenue because that is the specific commitment made
by both the government and by individual parliamentarians.
We have been asked to explain how we came up with figures of the offsetting tax
increases that would result from removing that tax. As you can see here, we
have set up three tables. For the total GST foregone for books, magazines, and
newspapers, we are back to this $203 million estimate of the total tax cut.
Taking that tax off would mean new sales of reading materials coming into our
industry totalling $96 million worth of books, $41 million worth of magazines,
and almost $55 million worth of newspapers annually.
When revenues to the publishing industry increase, so does employment. Over
1,000 new jobs were created in our sector. That is a direct correlation. It has
been studied many times. We have run that through a model assuming a 40 per
cent personal tax rate, and $15,000 Employment Insurance savings from each job
that can be created, giving us this figure: roughly $29 million $30 million in
payroll tax and EI savings.
We have run that through our industry economic model down here. This is where
our joint industries spend their money: costs of goods sold, royalties,
freelance fees going to individual Canadian writers and freelancers and so on.
This is the tax revenue from the supplier profit in those industries. This
model does not include employment gain within those supplier industries. That is
just the direct jobs gained within the publishing sector. This is the tax
revenue from the new supplier profits. As you can see, it is a fairly small
percentage of this figure but it does add up to $15 million.
The summary of the net impact is that we would be giving up $203 million worth
of GST revenue but we would gain increased income tax and EI reductions due to
employment gains, new corporate tax revenues from suppliers and industry
profits, and reduced collection costs, which are estimated at 10 per cent of
the marginal tax collected for our industry. It is a very expensive industry for
Revenue Canada to tax, as they freely admit. The total net benefit we come up
with, the total net reduction in taxes, is roughly $138 million. We would
submit that that is the real cost to the government of removing the GST from
reading material, which has been repeatedly promised.
Again, for the sake of contrast, I would point out that that is less than 10 per
cent of the total reduction in personal taxes that the Finance Minister has
already committed to make in the February budget. He has committed to make a
reduction of between $1.5 and $2 billion. The most recent figure I saw in this
morning's Globe and Mail was $1.9 billion in tax reductions. We are humbly
submitting that you should start with the one you already promised.
Is a tax on reading regressive? The Library of Parliament paper, which we have
said several times is excellent, seems to have misunderstood our argument about
what portion of household income is spent on reading materials. That is the
definition of regressivity and progressivity.
This is a graph of a family expenditure survey in Canada. Reading materials as a
percentage of household income is highest for the households under $10,000. It
drops very cleanly down to households with income over $90,000. The slope of
that graph is reversed for a number of other consumption categories. Clothing
is one. Transportation is another. In the categories of accommodation and
education, as well as others, higher income households spent a larger
percentage of household income on those categories than did lower income
Reading materials, along with food and basic shelter, are three of the very few
categories where the opposite is true, where the slope is this way and lower
income households spend a larger percentage of income on those materials than
do higher income households.
We have also been asked to explain our contention that small publications will
benefit more from zero-rating than will large publications. Essentially, this
graphs the impact on a publications budget of zero-rating publication sales
against the percentage of that publications income that comes from advertising.
That is why the slope is perfectly straight. Over at this end, you have
publications that sell very little advertising. Over at this end is the example
of publications that are supported 100 per cent by advertising, and therefore,
they do not charge for copies. Obviously, for those there is no benefit at all,
which is why the line intersects. These two bands are just examples.
Over here, we have an example of a smaller publication with between 10 per cent
and 25 per cent of its revenues coming from advertising. That represents a very
large group of publications: artistic, literary, social, ethnic publications,
local interest, ethnology, folklore and so on. They depend on that advertising
revenue. As you can see, their benefit from zero-rating would range from about 5
per cent to 6.5 per cent of their publications budget, whereas a publication
that is larger and derives more of its revenue from advertising, in the 50 per
cent to 70 per cent range, would have a net benefit in the 2 per cent to 3.5
per cent range. That is still a very significant sum. It is a very significant
disincentive for Canadians to subscribe to a publication that gets a
significant percentage of its revenue from advertising, such as L'actualité
or Maclean's, but it is less of a benefit to the publication based on the fact
that that publication has advertising sales to fall back on, which will continue
to be taxed under the GST.
The core of our argument is that a publication that gets more of its revenue
from publication sales will benefit more from the zero-rating of those sales. A
publication that has a larger percentage of advertising but still sells the
publication to its readers will derive a proportionately smaller benefit. We do
not feel that another mechanism has to be written into the legislation. We feel
that the mechanism is already there, that zero-rating publication sales creates
an incentive for publications to generate more of their revenue from direct
sales to Canadians.
The Chairman: Thank you, Mr. Hunt. Colleagues, I will ask you to hold your
questions until we have heard from all of the witnesses. Then I will bring all
the witnesses back to the table for questions.
Good morning, Mr. Saunders. I presume you have a brief opening statement for us.
Mr. Craig Saunders, National Coordinator, Canadian University Press: I do. I
will assume that you read the brief that I sent in. I should like to highlight
the main points within it. First of all, because I do not believe that my
organization has testified before or has made a statement before, I will give a
brief background on it.
Canadian University Press is the world's oldest national organization of student
newspapers. We were founded in Winnipeg in 1938. Currently, our membership
includes just over 50 of the 150 student newspapers in Canada.
Regarding how the GST affects newspapers and magazines, student newspapers work
a little bit differently from other newspapers. Student newspapers have two
funding sources. One of them is advertising, like other newspapers. However,
the other side is not from subscriptions. Student newspapers are often part of
student organizations like a student union or student council. Sometimes they
are independent organizations within a university. As a result, the contribution
that students make to their campus newspaper comes through a student fee, and
that is an exempt fee.
When a magazine or a newspaper does its billings and its revenues come in, a
normal magazine or newspaper would receive GST revenues from advertising,
subscriptions or cover sales. For a student newspaper, the GST revenues from
subscriptions are non-existent -- they are not even a possibility.
Student newspapers are an interesting and important part of Canadian culture and
especially the academic culture. They are the first places that many ideas are
discussed. They are the medium for discussion within the academic community,
and they are often the only voice that students have to discuss among
themselves. They are also community newspapers. They serve an academic
community, a collegial community, as well as a community of citizens at large,
both on and off their campuses.
In my brief, I highlighted The Carillon at the University of Regina which, when
I was the editor there, was the second largest newspaper in the city, with a
whopping circulation of 4,000 a week. It may seem like an insignificant medium
but it is a medium that has had a significant impact on Canada. It is the
largest training ground for new journalists in Canada. There are literally
thousands of students involved in the student press. I can honestly say that
the number of students involved in the student press probably dwarfs the number
of students involved in journalism programs, which I do not mean to demean in
If you look through my brief, you will notice that I mention a number of
prominent Canadians who have been involved in the student press. Among them are
Peter Gzowski, past and present senators, many of the top journalists, some top
politicians and many top authors. You will note that I open with what I think
is a very appropriate quote from Margaret Laurence, which defines for me how the
student press is important to Canada. It gives people the confidence and the
hands-on skills, the ability, and as I said, the confidence really, to go out
there and make a stand with their own writing, to begin to express themselves,
or to discover and develop ideas.
As I said earlier, student newspapers do not receive revenue from subscription
fees. As a result, when the GST came in, it adversely affected student
newspapers more than it did many other publications. Many publications could
recover the cost of the GST by passing it on to the consumer through a
subscription price or through advertising. Student newspapers cannot do that,
and I do not think that they should be able to do that.
As a result, many papers immediately lost a portion of their operating budget.
As a matter of fact, it was the student fees that went straight into the GST
payments because suddenly we were paying more for services like printing.
If you look across the spreadsheet that hopefully you received with this brief,
you will see that there is no typical student newspaper. I have attempted to
clump them into three groups: large, mid-sized and small. This is certainly not
a comprehensive list. I apologize for that. There is no student paper that has
a typical ad content or a typical percentage of their budget delivered to
anything. They are very different papers. They are a diverse lot. I did notice
that the largest student papers are often less heavily affected. The money they
lost to the GST when it was implemented was a much smaller percentage of their
budget than it was for a smaller newspaper.
The other thing I noticed is that the more advertising a newspaper has, the less
impact the GST has on it because it is able to recover a greater percentage of
its GST expenditures through advertising revenues. As a result, the student
papers that are hardest hit are the smallest ones in small communities that are
often the most volunteer-driven and community-based. As a result, the GST has
had a negative impact on the diversity of the student press. Some of those
papers, large and small, are currently having difficulty surviving. It is not a
matter where we can just go back and raise student fees, which, frankly, I do
not think most student newspapers savour the idea of doing, anyway.
The impact of the potential savings from zero-rating might look insignificant,
being between a few dollars and a few thousand dollars, but a few thousand
dollars for a student newspaper is a very significant amount of money. When I
was the managing editor of The Carillon, my salary was $400 a month to run a
community newspaper. My news editor made less than half of that, and my news
editor worked about a 40 or 50 hour week. Really, the positions of student
newspapers are like volunteer positions.
I included the salaries column just to show how it can offset, but those are
spread out among dozens and dozens of students at each paper. The largest paper
there, The Varsity, probably has a group of staff and volunteers that well
exceeds 100 people, maybe even considerably more. It is probably the largest
student paper, or at least one of the largest three.
For some of the smaller papers where nobody is paid, or where employees are paid
only very small honoraria, like The Carillon, a matter of $2,000 or $1,500
means that they could hire a copy editor for a year. It means that they could
hire an arts editor. At The Martlet, the $2,000 that would be saved is even
more than their former poetry editor, W.P. Kinsella, probably made. Therefore,
it is a very significant amount.
The zero-rating of the student press, which is part of an academic community,
would cost a negligible amount. For all of the 150 student newspapers in
Canada, it would probably be under $100,000. In terms of the GST, that $100,000
is insignificant. To the students and to their papers, it is a significant
portion of the budget to which they have given their own money freely. Those
papers provide them with a voice and a forum for discussion. I would argue that
that has played a significant role in the political and cultural development of
The Chairman: Thank you very much, Mr. Saunders. You will permit me a personal
note. The very first time that I came to Ottawa, quite a few years ago, was as
a delegate to a Canadian university press conference that was held in one of
the Senate committee rooms, when I was one of the editors of the weekly
newspaper at Saint Francis Xavier University. Those were the days.
We have here the representatives of the Canadian Magazine Publishers
Association, including Mr. Rick Boychuk, the Editor of Canadian Geographic
Magazine, and Mr. Jean Paré, Publisher of L'actualité.
Mr. Paré, the floor is yours.
Mr. Jean Paré, Publisher, L'actualité: My name is Jean Paré.
I am a member of the Canadian Magazine Publishers Association, Magazines Canada
and almost all of the magazine associations, but I am not speaking on their
behalf since I am neither the president nor the delegate of any of them.
I am president of the French magazine section at McLean Hunter Limited, and I am
speaking on behalf of my McLean Hunter colleagues. You have before you a
written brief that was prepared. I am not going to insult you by repeating it.
I know that your time is precious and I would like to go through the notes
adding some considerations that stem from my 25 years of experience in magazine
I think the concept of this bill is excellent and sound, as it aims to correct a
mistake that was made when the GST was brought in several years ago. Canada had
relatively limited experience with that value-added tax and did not realize how
much of a negative impact it would have on some sectors like information,
reading and culture. I am talking about books, but also periodicals, given the
volume in money and print-runs.
To give you an example of what has happened since the GST was adopted,
print-runs for all magazines in Canada dropped considerably. That occurred in
the middle of a recession, which did not help, but I would not say that that
was the main cause. I have experienced the effects of the GST, year after year,
when planning our subscription sales. For three consecutive years, Canadian
magazines were unable to increase their subscription rates to keep up with
inflation. Not only did their runs decrease, but their capacity for growth and
investment in their editorial content also dropped.
The GST is not the only cause. When we look at the difference between what
happened in the United States and in Canada, we can measure the negative or
perverse impact of this bill, which in other respects was good enough, with the
creation of the value-added tax, for our magazines to support it. The problem
was the application of the tax.
In your bill, there is a proposed amendment, and the amendment does not amend
the bill. That amendment destroys the essence of the bill, because if it were
adopted, we would be making the same mistake that was made when the GST was
adopted several years ago.
I told you that our magazines were affected. At the time, while the number of
Canadian magazines hardly increased at all and print-runs dropped, our foreign
competitors considerably increased their print-runs in Canada because they were
able to avoid the GST. We estimate that 70 per cent of foreign magazines sold
in Canada do not collect the GST nor do they pay it. If they collected it, they
kept it for themselves since they do not have offices in Canada.
The proposed amendment, which limits zero-rating to books and magazines
containing less than 5 per cent advertising or no advertising at all, is based
on the idea that advertising is not a cultural or valid information-based
activity and that it cannot be zero-rated. Advertising in magazines is and will
continue to be subject to the GST. The only thing that would not be subject to
the GST would be the sale of the magazine to the readers as such. As a result,
the argument can be made that the proposed zero-rating applies to the editorial
Other witnesses will tell you that this tax will be as difficult to apply as a
tax that was designed to tax food products at different levels according to how
much sugar or fat they contain. Imagine the problem that this would give rise
to for a retailer who has books, magazines and newspapers with different levels
of advertising! It appears difficult.
I would especially like to point out that large magazines are not less deserving
than university newspapers, small scale cultural magazines, ethnic publications
or general interest publications. I would say that they are essential to the
existence of small magazines. They are essential to the health of the magazine
industry in general.
Magazines are places where publishers and the authors of articles from small
publications earn a living. They are places where people learn to work. Large
magazines, large newspapers and large publications are often the sources or the
place where future magazine editors are born, and it would be hard to get by
without them. The large magazines also support Canadian publication
associations. Lacking advertising revenues, the small, highly specialized
magazines could not survive without these associations.
Magazines are certainly as deserving as books. I read a lot of books, I buy a
lot of books, and I encourage everyone to read books. We also promote books in
our magazines. But a sort of myth exists that books are communications,
cultural and information tools that are superior to magazines.
In reality, periodicals, newspapers, magazines, journals, whatever shape they
take, are the main tools Canadians use to obtain information on understanding
the identity of their country and developing it, for finding all kinds of
intellectual resources, as well as ideas that will enable them to live their
lives, to live with their fellow citizens, and to be active politically,
socially and culturally.
Magazines are mainly what link 30 million people in this country, whether they
be English or French speaking. It is not because large publications contain
advertising and a highly diversified content and that they are not highly
specialized that they are any less essential to communication among Canadians.
I might even say that they are more essential.
I think that large publications reach more people, and because they reach more
people, they instill common knowledge and a common identity. A country cannot
be based solely on small means of specialized communication. These small
publications are essential in that they provide training, education and
information for their target audience, but none of them establishes links
between individuals. Newspapers and large magazines establish these links and
they do so with editorial content that shows they're concerned about serving
society, and not only making money by distributing advertising.
For us, advertising is not the reason we exist, it is the means we use to exist.
Our raison d'être is to reach our readers. Advertising is the means that
enables us to buy from Canadian authors, from Canadian journalists, from
Canadian photographers and Canadian illustrators, and from Canadian designers.
We buy magazine content thanks to advertising revenues.
For most magazines, advertising revenues account for 80 to 100 per cent of their
total revenues and for 60 per cent of revenues for the most successful
magazines. In the case of L'actualité, Châtelaine and some of the
other magazines we publish, 60 per cent of revenues come from advertising.
Without advertising, there are no magazines and this communication among
Canadians no longer exists.
Magazines are not limited to superficial stories that we can do without. Some
target young people and adolescents. Here is a magazine called OWL that targets
school age children. A French version called Hibou is distributed in the
schools for young French-speaking children in Canada.
What do magazines like L'actualité do? They go into the schools. That is
proof of the cultural, informative, political and social value of magazines. We
have a pedagogical program entitled the "In School Program", because
some of our magazines are also used in English-language schools. Several
thousand school age children receive our magazine under the direction of their
teachers. They have special prices and pay 50 cents for each issue. That is
below the cost of production. We provide schools throughout Canada with these
magazines, and I believe that 50,000 children use these magazines to learn a
language. L'actualité is the argument used outside Quebec for learning
French as a second language, often in immersion programs. Education experts,
specialists, and teachers must also get involved to write the workbooks for the
teachers as well as the workbook for the pupils. These are real publications
that are used for teaching purposes in schools.
I could give you the example of Géographica, a small magazine that has
just come into being and that is experiencing serious difficulties. Lack of
advertising is a problem, especially for a magazine that wants to bring
Canada's geographic reality into every home. We can see the extent to which
something as superficial as advertising is just as essential as bread, butter
and milk on the table.
The Chairman: I apologize for having to interrupt you. We have other witnesses
to hear, and after hearing from them, we will invite you back to the table for
a more in-depth discussion.
The Chairman: Mr. Boychuk, do you have something to add at this point?
Mr. Rick Boychuk, Editor, Canadian Geographic Magazine, Canadian Magazine
Publishers Association: I am here today to illustrate some sense of the
importance of magazines to Canada, and to offer you some sense of what we do to
contribute to developing or, rather, maintaining a sense of "Canadianness".
The Canadian Magazine Publishers Association is 25 years old and includes over
270 Canadian publications. They tell Canadian stories, using illustrations,
pictures, maps, and other original works used by Canadians.
We support the legislation in the Senate to zero-rate the GST on reading
materials. We are pleased to note that Bill S-10 is identical to wording
proposed by Senators Jacques Hébert, Royce Frith and Joyce Fairbairn as
an amendment to the legislation that implemented the GST.
We are particularly pleased to support S-10 before this committee, which has
spent considerable time recently on issues of social cohesion in Canada. It is
valuable to recall the wording of the O'Leary Royal Commission. What was said
of the magazine industry then is still true today. "It is largely left to
our periodical press to make a conscious appeal to the nation, to try to
interpret Canada to all Canadians, and to bring a sense of oneness to our
Clearly, magazines play a unique role in promoting Canadian literacy and helping
Canadians to see the world through Canadian eyes.
I have a copy of the latest Canadian Geographic with me today, in addition to
the member's directory. I hope you will take a moment to review it. I do not
like to be too shameless about this. I want to stress the value of Canadian
magazines in explaining Canada to Canadians.
The magazine Canadian Geographic was founded by the Royal Canadian Geographical
Society in 1930. Our paid circulation numbers 240,000. We are the only Canadian
magazine with a full-time cartographer on staff. A few years ago, in
collaboration with Mr. Paré, we launched a French-language magazine, to
address French-language readers.
Advertising revenues are vital to the success of the magazine. The magazine
helps support all sorts of the society's activities, including expedition,
scientific research and, in particular, education programs in schools. With the
assistance of a major advertiser and the collaboration of Governor General Roméo
LeBlanc, we recently delivered to every classroom in 16,000 schools across
Canada a new map of Canada. That is one example of the many ways in which we
contribute, like many other Canadian magazines, to helping Canadians understand
In our next issue, we will publish a detailed map of Nunavut that will include
everything from vegetation zones to communities.
We believe that this is what this legislation is all about: helping us to reach
Canadians with accessible information they want to know about and using the
written word, illustrations, and original cartography to tell the story in a
highly readable way.
We are opposed to the amendment limiting zero-rating of GST for Canadians
interested in reading publications with more than 5 per cent advertising
content. The amendment does not recognize the important role this wide-variety
magazine plays in reaching Canadians and encouraging them to read.
Last week, one of Canada's most premier observers of cultural industries, Rick
Salutin, who is a columnist for the Globe and Mail and who appeared before a
House of Commons committee two weeks ago, said this about magazines -- and I am
endorsing his comments. Let me paraphrase those comments: "I think
magazines are the key way that society discusses itself. Newspapers are too
fast. You have to write too fast, read too fast, and they are gone. Books are
too long, and they take too long to come out. Magazines are the main way that
writers have the time to reflect or write something out, to get it there before
the issue is dead. Magazines sit around the house for a week or a month,"and
in our case I hope longer than that, "and readers have a chance to linger
over them. Canadians understand that, and I think Canadians are real readers of
magazines. You give them a chance and they read it."
The Chairman: You publish an excellent magazine. For those senators who do not
subscribe to Canadian Geographic, you should. It also makes an excellent gift.
I have seen your recent promotional material on that subject. Mr. Paré's
editorial comments are worth reading every week. He says more in fewer words
than most journalists manage to do.
Ms Jane Cooney, Past-President, Canadian Booksellers Association, Proprietor,
Books for Business: I am pleased to have this opportunity to discuss Bill S-10
with you and, specifically, to address Senator Maheu's proposed amendment to
the bill. Our position is clear. We do not support the 5 per cent amendment. We
believe the bill is a stronger, more principled measure without that particular
clause. We believe the cost of zero-rating all reading material, as specifically
promised not only by the government but also by Senator Maheu, would be money
well invested. To do otherwise would be to break faith with the people of
Canada who believe this government's promises regarding this issue.
Our remarks today will focus briefly on four key issues. One, magazines and
newspapers are an important part of the stock of many bookstores; two,
magazines and newspapers are important to the development of literacy skills,
particularly among young people and new Canadians; three, the proposed
amendment would damage Canadian culture and social cohesion; and four, the
proposed amendment would violate the government's clear promise to zero-rate
reading materials, including magazines and newspapers.
The Canadian Booksellers Association represents over 1,300 retail bookstores
from all parts of Canada, from coast to coast to coast, from St. John's to
Victoria to Yellowknife. Bookstores stock a range of reading materials,
including magazines and newspapers from across Canada and around the world. My
own store, Books for Business, which is located in Toronto, carries a wide range
of local, national and international magazines and newspapers. These magazines
and newspapers contain information that assists our customers, who are
individual professionals, secondary school teachers, university professors,
librarians, human resource trainers, et cetera, to carry out their jobs, to
inform their students, and to manage their businesses more productively.
We consider those magazines and newspapers to be an integral and meaningful part
of our business and, more important, a key part of our mission to provide
written information and entertainment to our customers in the most timely,
relevant and cost-effective formats possible.
Furthermore, booksellers witness the importance of magazines and newspapers in
developing literacy skills. Customers who enter our stores to buy magazines and
newspapers often graduate to buying books. This is particularly true of younger
readers, of new Canadians, and of new readers.
Buying a book is an investment, both economically and emotionally, for many of
these individuals. Magazines and newspapers are more accessible and provide an
open door to the world of print. It is not just our observations that tell us
this. All available research confirms the importance of magazines and
newspapers in developing literacy skills and in developing independent readers.
It remains only to point out that some of the strongest opposition to removing
magazines and newspapers from this bill has been from the representatives of
Honourable senators, please listen to them; they are the experts.
You have heard today from the representatives of the Canadian Magazine
Publishers Association and the Canadian University Press about the cultural
importance of periodicals. Again, we echo their sentiments.
Finally, you have heard today the litany of government promises on this issue,
promises that always included magazines and newspapers. Everyone, from the
Liberal parliamentary caucus to the Liberal policy convention to Senator Maheu
to the current Minister of Canadian Heritage and to the Prime Minister himself,
specifically and emphatically promised to zero-rate books, magazines and
newspapers the instant the budget was in balance and tax cuts were a
Canadians do remember. That promise has not expired just because it was delayed.
Literally every day since January 1, 1991, we have fielded complaints about the
GST being applied 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 reading?" Lately, we have taken to answering, "Yes, they did. Let
us see if they intend to keep that promise."
Ms Sheryl McKean, Executive Director, Canadian Booksellers Association: I have
come to answer questions today and to support Ms Cooney's position. She did a
Mr. F.C. Larry Muller, Chair, Educational Resources Group, Canadian Publishers'
Council: When I received Senator Di Nino's invitation, I took the opportunity
to read Hansard, something I had never done previously. It was an illuminating
experience. I was staggered that so much compelling evidence had resulted in so
little activity over seven years.
I could not imagine what I could possibly bring to this discussion that had not
already been said. I did, however, think about it, and one critical item, it
occurred to me, has been overlooked in all the discussions: We are failing to
recognize reading for what it really is, and we are treating it as something
In Oscar Wilde's play, Lady Windermere's Fan -- which, by the way, finished a
wonderful run on Niagara-on-the-Lake this year -- Lord Darlington defines a
cynic as "a man who knows the price of everything and the value of nothing".
That play was written in 1891. A hundred years later, in a book titled The
Hungry Spirit, the great British commentator, analyst, and prophet of business
practice, Charles Handy, laments the tragedy of applying business paradigms to
everything in society, including hospitals, prisons, social welfare and
Inputs and outputs, costs and revenues are now the measure of all things. I
believe these writers are decrying the commodatization of society. Put a price
on everything -- animal, vegetable, mineral, spiritual -- and then we do not
have to worry about what it is and what it means in people's lives. Once a
price is established, we can tax it.
In between Oscar Wilde's play and Charles Handy's book, the world has seen
cataclysms of unimaginable horror. Canadians have poured out their blood, not
only in war, but also in peacekeeping activities, not for dollars and cents,
but for humane values, decency, dignity, tolerance, political freedom, respect
for others, freedom of expression. What is the price you would put on such
things? If we could put a price on them, we could, of course, tax them.
I respectfully submit that print-based reading materials are not a commodity;
they are not a taxable item. They are part of the nourishment of the human
spirit that makes the values we live and die for possible. The materials are so
potent that dictators burn them in public squares, exile their authors in
prison or destroy those who produce them.
Print-based reading materials, newspapers, magazines, books, are the very stuff
of John Stuart Mill's "marketplace of ideas", the public forum and
debate that makes civilized democratic life possible.
You have heard really heart-wrenching accounts of the 45 per cent of Canadians
who are functionally illiterate. If we are to save another generation from
being similarly deprived, we must break the cycle. We must do everything in our
power to give books and magazines a real presence in homes. Millions of
Canadian children are living below the poverty line. Almost certainly, if these
children are not introduced to the world of reading, we will have another 45 per
cent of adults who cannot play their proper role in society and cannot fulfil
their human potential.
Let us also recognize that real reading comes in many forms: puzzling over the
funnies on a Saturday morning; reading comic books and even better such lively
magazines as Owl; pouring over Christmas catalogues and reading the blurbs,
wondering what Santa will bring; following the instructions to assemble toys;
devouring series books such as the Hardy Boys or Nancy Drew from the old days,
or the Animorphs from today; studying magazines about cars and rock stars; and
finally, stumbling on that one special story or piece of literature that will
electrify and illuminate a child's life. We need wide-ranging, indiscriminate,
devouring reading to launch kids on a lifelong journey.
Better readers are better students. Every teacher knows that, but better readers
are almost always the product of the home environment, not the school
environment. Richly endowed homes have many books, magazines and other types of
reading matter, and a parent or parents who read to their children. Poorly
endowed homes have hardly any reading materials, and a parent or parents who are
unable to share the experience of reading with their children.
I have a book here called Everybody's Favourites: Canadians talk about books
that changed their lives. I want to share with you just one quote from one
The story was C.S. Lewis' The Lion, the Witch and the Wardrobe. I began reading
it at 4:00 on a Monday, after school, and finished it the following morning. I
did not sleep that night. But the magnificent paradox of the book, and all of
the Narnia stories is that by not sleeping for a few hours, I was awakened for
the rest of my life.
That is the legacy that I want, and I am sure we all want, for every Canadian
child. This legacy, to a huge extent, depends on the government's finally
keeping an oft-repeated promise, to remove the tax from reading. Can we not
once and for all close the book on a very sad chapter in our national and
cultural life? Can we not at last zero-rate the GST on reading materials?
Senator Gill: I would like to thank everyone for their work and overviews of the
situation. Mr. Paré, you stated that magazines could promote Canadian
identity. I have seen L'actualité and I have noted that these magazines
contain articles of all leanings.
These magazines promote Canadian identity, but I assume that from time to time
they may promote other things. Can that also promote Canadian unity? There is a
price to pay for all of that, and the government is penalizing publications
instead of promoting them. I would like to hear your point of view.
Mr. Paré: The integrity of Canada does not mean that everyone must share
the same opinions. Some people are left wing, some are right wing, and some are
more traditional. A country is also a broad discussion. If we have no
magazines, no newspapers, if we do not have the books to lead these
discussions, I wonder if we have a country. I just returned from a business trip
to San Diego and to other cities on the American west coast. I realize that I
was in Canada when I got on the plane and saw people reading Report on
Business, Canadian Business, Maclean's, Châtelaine, all of these Canadian
magazines, whereas on the American planes they did not have any Canadian
magazines. I realized that I was in Canada when I went into the airport and I
saw newsstands where more than half of the visible titles were Canadian and
talked about issues concerning my country, my province, my city, and my
Some of these magazines talk about politics, and culture. I bought one on
agriculture. The magazine is 90 years old this year and when I bought it, ten
years ago, it was on the verge of going bankrupt. I bought it for two reasons:
because I learned to read by reading articles on Jersey cows and on potato
beetles. That is proof that a good publication can serve all kinds of purposes.
I also wanted to buy it because I believe that farmers in a country need to
talk to each other and to learn the same things. They need to communicate.
That magazine did not turn a profit for five years, and we succeeded in saving
it because a large publishing house was able to cross the desert, and with its
"know how", reorganize it. Today it is an expensive magazine, because
it targets a small audience, because it is highly specialized and costly to
Because a subscription is expensive, the tax on this magazine for farmers is
much higher than the tax on a less expensive general-interest magazine. We have
noted that GST on magazines does not affect all citizens in the same way. It
has a greater impact on people who must buy more expensive magazines.
Yes, all magazines contribute to the identity of this country, because not all
Canadians agree with Canadian policies. There are even some who advocate
policies to destroy Canada, but at least, they talk about Canada, and not other
countries and the United States.
Senator Poy: I want to congratulate everyone here today on their presentations.
I personally do believe in the free expression of ideas. It does not matter
what anybody says, we are exchanging ideas, and therefore I believe very
strongly that there should not be any tax on reading materials. This is the
statement I want to make today.
Senator Di Nino: This is quite an interesting day. I was thinking as all of you
were speaking about what kind of questions I wanted to ask that would made any
sense after the tremendous presentations that you all made.
I will share with you that I spent last week in Taiwan observing the democratic
process, which is in its infancy in that country. It hit home today when Mr.
Muller was speaking about the value of being able to be informed in a free
society, which probably happens more through magazines and newspapers than it
would through books, particularly in a country where up until 1987 martial law
existed. You really hit home a point that perhaps we have not addressed during
the extensive discussions we have had on Bill S-10. I want to thank you for
For the record, so that when we reread this, when others read this in the
future, I wonder if you could expand further the notion of what reading means
for society, particularly for a free society in a democratic world.
Mr. Muller: One of the most striking things that all of us remember is the role
of samizdat in the Soviet Union, the underground basement mechanical printing
presses that shared ideas and made them available. The Gulag Archipelago was
written, among others, but basically the kind of periodical that can send a key
idea out to a lot of people is a fundamental instrument in achieving freedom,
awareness and informed discussions.
This is why, as a book publisher, I am extraordinaryly uneasy when we make
distinctions between newspapers, magazines and books. To me, they are a
continuum. I went through all of them. I learned to read through all of them. I
learned to think through all of them. I could not bear to see them divided.
Senator Di Nino: What is the difference between a magazine and a book, other
than the way it is bound?
Mr. Boychuk: A book takes a long time to gestate. It involves two years of
research and writing, followed by a publication schedule for a spring or fall
launch. Magazines can address themselves to popular discourse much more
quickly, and they can do it in a much more visual fashion. In our case, and in
the case of lots of magazines, you integrate imagery, cartography and text. We
offer readers many more ways in which to enter stories and learn about the
context of issues or, in our case, places in the country.
Books are much more a text medium; magazines reach out to people in a way that
is much more visual. There are coffee table books, but there is a greater
division within book publishing than there is within magazine publishing. If
you have a coffee table book, it does not necessarily address you in a text
fashion, and works of fiction or even non-fiction do not necessarily use books.
One of my great complaints about books is that they do not use enough maps.
Ms Cooney: The user-friendliness of magazines and newspapers is very valuable in
terms of obtaining new readers and of encouraging new Canadians to feel
comfortable with the printed word in this country. Quite apart from the
currency of a magazine or a newspaper, they are easier to handle, there are
more of them, and they are also less expensive, so they reduce some of the
barriers to reading that books may create.
Mr. Paré: I agree that there is no wall between books and magazines.
Magazines and periodicals -- media, in general -- would be much poorer without
A book is a very personal expression. All my journalists have written books.
They do it during the weekend, during the holidays, at night. It is a personal
expression. They do it because they believe in what they are writing and they
want to express themselves. When they write for the magazine, it is different,
it is a communication. They write with the reader in mind. They already
understand the questions before they are asked, and they answer the questions.
However, they use their books and other people's books.
If you are a reader, you are aware that someone who writes a book will be
invited to appear on TV and to speak on the radio, and will appear in the
Books are often the source of material, but the media are the echo chamber, they
are the tribune for all of these people. I have translated Marshall McLuhan, a
great Canadian scholar, and I know exactly how many of his books have been
sold. Very few.
Everyone knows Marshall McLuhan. His ideas have been widely diffused, used and
have enriched the entire intellectual class and all members of the media, and
this was achieved thanks to the media, magazines, newspapers and TV.
I find that the media and books work together. It was Marshall McLuhan who
pointed out that democracy is the general diffusion of knowledge and that it
came about with the advent of the printed word. It was invented with Gutenberg
and might well disappear when printing disappears.
Senator Cohen: I have been very impressed. You have given me so much food for
thought. You were almost poetic in some of your presentations.
Canada has just been thoroughly chastised in Geneva about the whole area of
poverty in Canada. I note that Mr. Muller, in his article, said, "This
year, in physically and financially devastated East Africa, Botswana, Zambia
and Zimbabwe are all removing duties and value added taxes on books so that
there will be no governmental obstacles placed between children and the
opportunity to read."
As you say, Canadians should live their values. We should not leave ourselves
wide open for the world to say, "This is what you have done to the poor.
Now look what you are doing for literacy in Canada." I was compelled to
make that statement.
Mr. Muller: The same is true of Latin America, where they have desperate
poverty. None of those countries tax reading materials.
Mr. Hunt: Just this year, both Indonesia and Russia have removed their
value-added taxes from reading materials. Those countries do not have the
luxury of a fiscal dividend.
Senator Cohen: To use a tired expression, we must put our money where our mouth
Ms Hushion: Argentina made a decision to not tax reading. They fought a big
battle down there, and that is over.
Senator Ferretti Barth: I am happy to be here and to listen to your comments. I
agree with the bill introduced by Senator Di Nino. The bill contains three
amendments, and I will stand by the third amendment proposed by Senator Maheu.
It deals with eliminating the tax on all reading material and leaving it intact
for magazines that have more than 5 per cent advertising.
It is a counterbalance for the government so that it does not lose this revenue
entirely. You talk about books, magazines and children's books, and by adopting
the third amendment, I do not think there would be anymore problems. To adopt a
gradual approach, the third amendment could also be amended over time.
You also said a lot about problems with reading. Since I arrived in Canada, and
especially in Quebec, I have spent a lot of time working with underprivileged
families, and we have had problems buying children's books, magazines and other
Do you think that the 7 per cent tax on magazines and newspapers would
significantly deprive children of the opportunity to be exposed to reading? I
want to make sure one thing is absolutely clear. The Conservatives are the ones
who adopted this legislation on reading material. At the time, criticism was
not levelled at the government, but now, we have this bill. I congratulate you
on your initiative, but as a member of Parliament, I think that we must proceed
gradually. We cannot eliminate everything all at once.
I do not think that books should be subject to the GST. There would be a tax on
magazines and periodicals with more than 5 per cent advertising. Magazines
contain a lot of advertising, and you cannot eliminate the GST.
The Chairman: What was your question?
Senator Ferretti Barth: I was very concerned with the nature of books,
especially children's books. I said that I had not yet seen a drop in reading.
My question is for Mr. Muller.
Mr. Muller: I will answer in English because my French is quite limited. I do
not want to massacre your beautiful language.
You asked several questions. Shall I try to address them one by one? You talked
about gradually phasing in the tax change by leaving the magazines with 5 per
cent in place. I would find that morally offensive. The government, the Prime
Minister, the Minister of Finance, everybody has agreed that reading material
should be free. I can find no reason in my mind or heart to support the
suggestion that reading materials that have 5 per cent advertising are second
class and should be penalized. Advertising makes it possible for a lot of very
worthwhile magazines to exist. They could not be born or survive without some
degree of advertising.
As a child, I enjoyed reading advertising. I found it helped my reading
abilities to see these wonderful things. One becomes wiser, but certainly the
advertising is part of the reading experience.
A promise was made. If I can quote Robert Service's Sam McGee, "A promise
made is a debt unpaid." The government promised to take the tax off. I
find it unacceptable to suggest that we will take most of it, or a little bit,
off or leave some on. That is my personal opinion.
Second, would it deprive poor people? What we have in Canada is an amazing and
wonderful array of terrific reading materials of all sorts. I know from 31
years experience in the publishing industry, for every per cent or two that
prices increase, sales decrease a per cent or two, which means that fewer
people are being reached by magazines they could otherwise afford. I cannot
think of anything more important to this country than increasing as much as
possible the number of wonderful reading experiences in homes, and therefore,
if I could reduce the price by five cents, I would. We should forget about the
advertising side and really consider the desperate need to start children
reading. That is my personal belief.
The Chairman: You have before you an amendment moved by Senator Maheu and a
subamendment moved by Senator Di Nino. Senator Di Nino, do you want to take a
minute to explain the purport of your subamendment?
Senator Di Nino: First of all, I want to thank my colleagues, many of whom have
privately and publicly expressed support for the bill. I think that the
amendments were designed to delay this bill and to find a way to kill it, when
it makes it to the other place, if we are to proceed with it and pass it in the
Senate. For the bill would create intricacies, some of which are suggested by
the paper prepared by the library.
The third-party amendment really does penalize an important and crucial part of
the literacy program in this country. When I asked about the difference between
a book and a magazine, I said that the principle between a book and a magazine
is really no different. All of them are to educate, inform and entertain in
different ways, but certainly they are all there for that purpose.
To suggest that one segment of this important component of the democratic
system, one segment of this important component of educating, informing and
entertaining our populace from childhood to those who reach my age -- if they
are lucky enough -- is an insult. It is an insult to many Canadians.
It is telling the 1,500 magazines, the 270 that belong to the Canadian Magazine
Publishers Association, that they are second-class citizens.
It is an insult to the individuals who produce hundreds and hundreds of
third-language publications in this country. They do not import publications
from other countries, but publish from the Atlantic to the North to the
Pacific. Some of the individuals are known to many of us, or many of them are
known to some of us, and they often work eight days a week, 26 hours a day
trying to put forth a message, trying to educate or inform in their own way
their own communities. There are hundreds of them across this country, if not
thousands, and any consideration of their publications as second class is an
insult to all of these people.
I want to respond if I may for a moment to Senator Ferretti Barth.
The Chairman: We do not have much time. You must not filibuster your own
subamendment. I would like you to explain the purpose of your subamendment.
Senator Di Nino: We believe that a tax on all reading material is inappropriate.
It is certainly a commitment made by many in government prior to this one, and
this particular one, that zero-rating of reading material is what we are
talking about, not zero-rating of only a component of that particular industry.
The Chairman: Senator Maheu had moved an amendment to the effect that any
reading material that contained more than 5 per cent advertising should still
be subject to the GST. You want to remove that from her amendment.
Senator Di Nino: Absolutely.
The Chairman: Colleagues, you have before you the amendment moved by Senator
Maheu, and you have the subamendment moved by Senator Di Nino. Do I need to
read the subamendment, or may I dispense? Everybody has a copy of Senator Di
Senator Gill: Is this the Order of Reference that we just received from Paul Bélisle?
The Chairman: Yes. It is an excerpt of the Order of Reference from the Senate.
You know what is behind all this, Senator Gill?
Senator Gill: Yes, Mr. Chairman. I am starting to understand not only the
current issue but the games played at committees. The political game. I have to
learn, I am a new senator. I have to learn how Senate committees work as soon
as possible. I also need to understand the amendments that are introduced, the
side issues and the hidden side of politics.
The Chairman: Senator, several months ago, this committee returned the Bill S-10
to the Senate without amendment. In the Chamber, Senator Maheu moved an
amendment and Senator Di Nino moved a subamendment. In its wisdom, the Senate
referred the amendment and the subamendment to us. Today, we are here to vote
first of all on the subamendment, and then on Senator Maheu's amendment.
You have given me permission to dispense, so the vote will be on Senator Di
Nino's subamendment. I will ask the clerk whether all the senators seated at
the table are members of the committee. Yes. I will read your names in
alphabetical order and you will vote please, yea, nay or abstention on the
subamendment of Senator Di Nino. Senator Butts?
Senator Butts: Nay.
The Chairman: Senator Cohen?
Senator Cohen: Yea.
The Chairman: Senator Cools is absent. Senator Ferretti Barth?
Senator Ferretti Barth: No.
The Chairman: Senator Gill?
Senator Gill: No.
The Chairman: Senator Johnstone?
Senator Johnstone: Yea.
The Chairman: Senator LeBreton?
Senator LeBreton: Yea.
The Chairman: Senator Di Nino?
Senator Di Nino: Yea.
The Chairman: Senator Poy?
Senator Poy: Yea.
The Chairman: Five yeas, three nays. I declare the subamendment carried. We will
now proceed to the amendment as amended; Senator Maheu's amendment as amended
by Senator Di Nino. Senator Butts?
Senator Butts: Nay.
The Chairman: Senator Cohen?
Senator Cohen: Yea.
The Chairman: Senator Ferretti Barth?
Senator Ferretti Barth: No.
The Chairman: Senator Gill?
Senator Gill: No.
The Chairman: Senator Johnstone?
Senator Johnstone: Yea.
The Chairman: Senator LeBreton?
Senator LeBreton: Yea.
The Chairman: Senator Di Nino?
Senator Di Nino: Yea.
The Chairman: Senator Poy?
Senator Poy: Yea.
The Chairman: The amendment as amended is carried by a recorded vote of five to
three. I will report to the Senate that the Senate has accepted the amendment
of Senator Maheu and the subamendment of Senator Di Nino. Thank you,
colleagues. We meet tomorrow when the Senate rises, but not before 3:30, on our
study on social cohesion.