Mr. Speaker, Bill C-103 is a cultural policy measure designed to assist in the development of the Canadian magazine industry. It is one of many federal government's efforts to foster conditions under which Canada's artists and creators can continue to express themselves and give Canadians and the world a sense of our identity as a country, an identity which has been enhanced by the events of the past week.
By culture I mean the creators, producers and distributors of films and videos, books and magazines, as well as broadcasting,
the performing and visual arts, design and the vast array of heritage institutions across the country.
While I use the term cultural policy in the singular, Canada does not have a single policy respecting culture. Rather, a series of policy directions has been pursued by federal governments throughout time. In this sense cultural policy has been wrought by governments of the past and present based on a rationale which has remained relevant since the beginning.
The rationale for the state's involvement in the cultural sector in Canada is important to understand because it is more valid today than it was in the 1920s when it was for the very first time expressed. This rationale is made up of essentially two philosophies.
The first is that a cultural product that is work of artistic expression in any form is a good that cannot be treated in the same fashion a hammer, a nail or a widget. Why? Because a cultural product, unlike a widget or a gismo, transmits a set of values rooted in the society in which the artist who created it lives. The product of an artist's expression often acts as a mirror into which society can look for greater understanding of its sense of identity as an organized social group. It allows a society to distinguish itself from others on the planet. It defines and transmits that identity which is unique.
Canada and most other industrialized countries have actively pursued some form of cultural policy which seeks to encourage our own native cultural expression.
The number and range of magazines reflect the concerns and tastes of Canadians. All regions and most large metropolitan areas boast their own magazines. There is a Canadian periodical to serve almost every interest group, economic, professional, artistic, educational, religious or recreational.
Magazines let their readers see behind the scenes of business and politics. They increase national understanding of regional issues and translate national issues into meaningful regional terms. They exalt Canadian accomplishments, profile the great and the small, as well as Canadians who at home and abroad make a difference in our everyday lives.
The second premise on which state involvement in the cultural sector in Canada is based is that in order to produce cultural works, a domestic market of a size that will allow costs to be recouped is a requirement.
The Canadian market, split along language and regionally fragmented, has never been large enough to sustain on its own a healthy cultural industry sector. This has been made more difficult by the overwhelming presence of foreign cultural product, first British and French and then American in our domestic markets. Hence early on Canadian public policy focused on supplementing the domestic market's internal capacity to generate revenues with the financial and institutional tools required to ensure minimum choice of Canadian cultural works alongside the overwhelming presence of foreign ones.
These two premises, the intrinsic merit of a cultural product in transmitting identity and the inability of the Canadian market to generate economically viable cultural enterprises, prompted the Government of Canada to develop policy tools to assist the cultural industries.
The tax measure we have before us today updates a longstanding policy of successive governments which recognizes the unique circumstances faced by Canadian magazines.
The policy implemented in 1965 introduced two measures to assist Canadian magazines in competing for advertising revenues, revenues which are essential to the industry's survival. These measures were section 19 of the Income Tax Act and tariff code 9958. Bill C-103 maintains this policy put in place over 30 years ago.
Tariff code 9958 restricts the importation of magazines containing advertisements directed at Canadians. It authorizes Canada Customs to stop the entry into Canada of the subsequent four issues of a magazine after the publication of an issue that has been deemed split run. Before this measure was introduced virtually all foreign magazines containing advertisements directed at Canadians would have been printed in the country of origin and imported into Canada for distribution.
The publication of Sports Illustrated Canada has sent a signal that it now is possible to contravene the spirit of tariff code 9958 by means of technology which was not in existence when the code was implemented. Sports Illustrated Canada is a split run edition printed in Canada using text that is electronically transmitted from the USA. The editorial content of Sports Illustrated Canada is to a large extent the same as the content in the U.S. editions but it contains advertisements that have been specifically purchased to reach a Canadian audience.
Tariff Code 9958 is not applicable to Sports Illustrated Canada because it is printed in Canada rather than being imported. This case illustrated the limitations of Canada's existing policy instruments designed to support the Canadian magazine industry.
Consequently a task force on the Canadian magazine industry was set up to examine the problem of split run editions and to recommend new ways to promote Canada's policy objectives for the magazine industry.
Concerning amendments to the Excise Tax Act, the task force issued its final report in March 1994. Its main recommendation was that an excise tax be imposed on split run editions of periodicals.
The tax is designed to encourage original editorial content in magazines containing advertisement directed primarily at Canadians. It will impose a tax of 80 per cent of the value of all of the
advertisements contained in split run editions of magazines circulating in Canada.
This measure encourages Canadian advertisers to place advertisements in magazines which have original content. It underscores the government's longstanding policy objectives in a manner which is consistent with our international trade obligations.
Section 19 of the Income Tax Act allows deductions for advertising directed at the Canadian market, only if the advertising is placed in Canadian issues of Canadian owned and Canadian controlled magazines.
The amendment to the Income Tax Act will add an anti-avoidance rule to section 19. The purpose of the anti-avoidance rule is to ensure that newspapers and periodicals which profess to be Canadian are in fact controlled by Canadians.
In conclusion, the government is concerned with creating policies conducive to the growth of the cultural sector. Readers are essential for magazines to prosper. So too are the other major clients of a magazine, the businesses and organizations which advertise their products and services.
Access to Canadian advertising dollars is critical to ensure the economic viability and continued existence of the Canadian magazine industry. Advertising revenues support the cost of the editorial content and make it possible for the publisher to provide the magazine at rates the reader can afford. Therefore, we must not allow split run editions to siphon off Canadian advertising dollars. We must ensure the passage of Bill C-103.
