Thank you.
Good afternoon. My name is Chris Tabor, and I'm here as a representative of the Canadian Booksellers Association, the CBA. I'm also the director of the Queen's University campus bookstore and an active member and spokesperson for Campus Stores Canada, representing over 100 campus stores in the country.
Thank you, members of the finance committee, for giving me a chance to speak today.
CBA is a national trade association representing close to 1,000 booksellers from coast to coast. CBA active members include trade, campus, chain, specialty, used, and antiquarian booksellers. CBA booksellers are located in all provinces and territories and all communities, large and small, from Victoria to St. John's and from Iqaluit to Halifax.
The CBA, along with a long list of like-minded organizations in Canada, strongly believes that the goods and services tax should be removed from books. With the elimination of the GST on books, Canadians, including students, will be able to purchase books more often, thus contributing to an improved literacy rate, which can only result in a more informed, innovative, and productive workforce. In the wake of the strong Canadian dollar, Canadian booksellers have been hit especially hard as consumers are able to compare the U.S. sticker price to the Canadian sticker price on books.
Over the past few months, booksellers have been working hard to pressure publishers to lower their prices. Consumers must understand that prices are set by publishers, not retailers, and at least six months before the titles arrive in a store. Therefore, due to the rapid movement in exchange rates, current prices rarely reflect current rates. The CBA has also been working with the government to find a way to solve the issue.
I'd like to now shift gears and hit the subject of book prices in Canada, with the rising Canadian dollar, from a campus store perspective. In taking off my CBA hat for a moment, I'll move to the Campus Stores' position on some regulatory changes we see as required. As I mentioned earlier, our industry has been assailed in the media for the inexplicable difference in price between a book in America and that same book in Canada, and I'm sure many of you have had similar questions raised in your ridings. What most people don't know is that 10% to 15% of book prices is a regulated royalty, paid to multinational distributors. A typical textbook, which can cost $100, could cost $10 to $15 less if the government were to eliminate a regulatory protection that does nothing for authors or customers. We could see book prices drop by 10% or 15% overnight, and I'll explain how.
The Copyright Act is, as you know, a broad statute that governs the protection and distribution of intellectual property. In the cases of printed material, the act allows for publishers to establish import monopolies on the works of artists from around the world. Minister Flaherty recently used the example of Harry Potter books authored by J. K. Rowling, noting that these books have different costs in America. Let me explain a very significant element in that cost differential and how booksellers, campus stores, students, and customers are beholden to foreign-owned publishers, also known in the act as “exclusive distributors”.
Section 27.1 of the act makes it an offence to import new books from any source other than the exclusive distributor of those books, provided that those distributors adhere to the regulations promulgated under the act. These regulations stipulate that an importer can charge a bookseller the price of the book in a country of origin—the U.S. or the U.K.—the difference in the exchange rates between the two countries, and either a 10% or a 15% levy, depending on the country of origin. That means that non-Canadian publishers can tack on an additional 10% or 15% of pure profit to their products before they risk losing a sale to parallel importation. Mr. Chair, that pure profit comes directly out of the pockets of Canadian students, with no appreciable benefit going to them or accruing to the artist or authors who created the work in question.
The regulation was promulgated in 1999. As you can imagine, the world of cross-border shipping and shopping has changed significantly since then. Ironically, since the advent of the Internet, Canadian customers can get some books cheaper abroad than a Canadian reseller can.
Section 27.1 protections are outdated in a universe with a parity dollar. The tariff protections actually exacerbate the direct pocketbook impact the levy has on individual booksellers and purchasers. Eliminating the levy will not affect the primary function of the Copyright Act: to provide creators with the ability to protect their art and earn a royalty from producing it. Further, nothing in our proposal would impinge on a publisher's exclusive right to distribute in Canada, provided they do not charge more for the work in question than they would at home.
We ask why should Canadian students pay more than their peers in the U.K. and the United States for the identical book?
We thank you for your time and attention.