Albina Guarnieri

[Cultural Property Export And Import Act, October 23rd, 1995]

Mr. Speaker, I am pleased to present to the House for third reading a bill on the creation of a mechanism to allow appeals of decisions made by the Cultural Property Export Review Board.

Bill C-93, an act to amend the Cultural Property Export and Import Act, the Income Tax Act, and the Tax Court of Canada Act, passed second reading on October 3. I thank my colleagues for their comments in the House and the progress of the bill. I thank those who gave input at the Standing Committee on Canadian Heritage.

The purpose of this bill is to establish an appeal mechanism against decisions by the Cultural Property Export Review Board concerning fair market value of cultural property offered as a gift to museums, galleries, archives and libraries in the public sector.

The mechanism is twofold: first the donor or the recipient institution may ask the Review Board to reconsider its first evaluation of fair market value. Donors who have obtained a second evaluation from the Board and are still dissatisfied may then go on to the next stage, appeal of the Board's decision to the Tax Court of Canada.

As announced in the February 1990 federal budget, the responsibility for determining fair market value of cultural goods donated to designated Canadian museums, art galleries and libraries is transferred from Revenue Canada-Taxation to the Canadian Cultural Property Export Review Board.

The legislative amendments implementing this change became law in December 1991. In January 1992 the review board assumed this new responsibility.

Inadvertently, no provision for appeal from decisions by the board was included in the amendments, despite the fact that a right to appeal had existed previously.

When Revenue Canada still had this responsibility, the lack of an appeal mechanism had raised considerable concern among donors and custodial institutions. The Minister of Canadian Heritage, in co-operation with the Review Board, undertook a series of consultations with the community concerned on the need for an appeal process.

Subsequently we decided to propose legislative changes that would provide for the right to appeal to the Tax Court of Canada. Why should we adopt this bill?

What we want to do through this legislation is restore a natural right that existed up to 1991. With these amendments we have actually proposed two avenues of appeal over disputes concerning the fair market value of donations of cultural property to museums, art galleries, archives, and libraries.

The two tier process is effective in that it gives donors a chance to obtain satisfaction more quickly without having to go to court. The latter process is always very long and costly for all parties concerned.

This mechanism is not only a boon to present and potential donors of cultural property. It is not only essential for museums, art galleries, archives and libraries, as present and potential beneficiaries of donations of cultural property. It is important for Canada as a whole and for all Canadians, now and in the future. It encourages donations of items that are outstanding examples of our heritage, so that these can be preserved, exhibited and appreciated, for the greater benefit of future generations.

The Minister of Canadian Heritage is responsible for a department where the concept of heritage is given its broadest possible meaning. Heritage means the set of values we share and the signs by which we recognize ourselves as being members of a group and, indeed, a country.

Today, we can no longer restrict the meaning of heritage to what we have inherited from the past. Heritage is far more than just a

collection of historical remains. Canada's heritage is first of all an expression of the ties that bind its citizens and of the unique identity of this country within the international community.

One could say that the concept of heritage cannot be separated from our identity. In the present economic situation, the concerns of heritage and identity are sometimes seen as redundant or of lesser importance.

Heritage and natural identity lie at the heart of economic and fiscal matters, for they animate and inspire the people and activities that drive the economy.

As a result of the various ways in which it interacts with other commercial enterprises, the arts and culture sector generates considerable expenditures which stimulate a direct demand for goods and services produced by other industries.

In 1992-93, the direct and indirect financial impact on GDP totalled more than $24 billion.

More than 600,000 corresponding jobs were created directly and indirectly the same year. The amendments we are proposing to the Cultural Property Export and Import Act, the Income Tax Act and the Tax Court of Canada Act will consolidate the sectors of the arts, culture and heritage by making it easier for those who give valuable cultural property to museums, art galleries or libraries.

Investing in our arts, culture and heritage is investing in our collective future. These amendments are therefore of the highest importance to all Canadians, and particularly to the 60 million visitors to our art galleries and museums annually.

I would like to point out here that Canada's museums were the first of its cultural institutions to be established. For example, what is now the Canadian Museum of Civilization was founded in 1881. It can be difficult for museums, galleries and libraries to acquire new collection items. They have not escaped the financial challenge of these difficult times.

They have had significant cuts to their funding. Our museums, our art galleries and our libraries must therefore depend on the generosity of Canadians from all walks of life, on people who could have made money selling their artifacts, on people who, instead, have generously given them to us forever.

To offset the drop in funding faced by our museums, art galleries and libraries at the moment, it is our job to come up with ways these cultural and heritage institutions can acquire cultural property that will enrich their collections. Collections are not simply the irreplaceable assets of museums, art galleries and libraries, they are their raison d'être.

Policies and activities involving collections are among the basic mechanisms museums, art galleries, archives and libraries use to define and carry out their mandate. Museums, art galleries, archives and libraries may find it very difficult to complete their collections, for reasons such as rapidly increasing costs.

That is especially true for some art galleries, following the rapid increase in prices on the art market. The speed with which new products appear on the market make it very difficult for museums of science or history to show up to date collections. Donations of cultural assets to the collections are of definite financial value.

For instance, the Cultural Property Export and Import Act concerns a very large range of cultural items, including works of art, historical artifacts, natural science specimens, archives or scientific and technological material of historic significance. Our government has committed to supporting the cultural sector in Canada. Data produced by Statistics Canada show that the Government of Canada remains by far the one that supports the most the cultural sector in Canada. The government wants to go on doing so by continually seeking new ways of promoting the development of the cultural sector.

Innovative structural changes such as Bill C-93 will support the cultural sector without increasing the burden of Canadian taxpayers, so that they can donate their cultural properties instead of selling them to other countries. Canadians must be able to benefit from tax incentives such as those resulting from this legislation. These incentives encourage people to increase their support for our museums, art galleries and libraries.

[Pornography, October 20th, 1995]

Mr. Speaker, surely on the basis of one scene in one film the member would not want us to unleash a new age of censorship or abandon the Canadian film industry. The CBC is protected under the Broadcasting Act which allows it to have journalistic freedom.

The hon. member might consider separating the two issues: on the one, censorship; on the other, our investment in the film sector and the cultural sector which is a thriving industry that results in about 600,000 jobs in this country.

[Pornography, October 20th, 1995]

Mr. Speaker, I thank the hon. member for the question and for providing the notice.

The issue of government funding for independent agencies is a thorny one. Certain artistic expression, while it may appeal to some, is clearly offensive to others. The film in question which aired on the CBC at 11.30 p.m. was produced under the former government. I understand it contained some controversial images.

However, I think even the member can appreciate that the CBC, with the airing of NFB and Telefilm movies, will allow the public to judge the works on their merit.

[Cultural Property Export And Import Act, September 25th, 1995]

I never said that. Do not misrepresent.

[Cultural Property Export And Import Act, September 25th, 1995]

Mr. Speaker, once again the question indicates the ignorance of the third party. If we have objects of art that are worth seeing, I think we will find a place to put them so that Canadians can benefit.

Members of the third party really thrive on misinformation. For instance, the same member mentioned that the annual value of certified cultural property is approximately $60 million. That was the figure he cited. What he did not tell Canadians is that the results in foregone revenue are approximately $25 million to $30 million annually.

Having said that and since we know the Reform Party never tells the whole story, it is the position of this government that we do not like to see a situation where flaws in the tax act cause us to lose precious works of art.

Notwithstanding the fact that members of the third party feel that natural justice should be tossed out the window, I think even with the limitations that the members of the third party have shown themselves to have today, I believe Canadians will agree with me that we do not want headlines such as: "Canada loses art donation due to tax rule hang-up". I think most Canadians would not want to see situations like that occur because of a housekeeping matter, because of a right that was lost as an oversight, even if members of the third party do not believe in natural justice.

[Cultural Property Export And Import Act, September 25th, 1995]

Mr. Speaker, if the hon. member had opened his mind to have a briefing from the department he would have learned that it is not just wealthy Canadians who donate art; it is individuals who for instance have had Canadiana in their family for generations. These may be objects that benefit Canadians in general to know their history. The individuals have chosen to enrich the collection of local or national institutions, rather than selling them.

If the member wants to reduce this just to a dollar figure, they might make more on the foreign market if they were to sell their objects of art.

I can list a countless number of objects that have been donated to museums. What I might suggest is that the member might benefit from a little trip to the museum to get a fuller education.

[Cultural Property Export And Import Act, September 25th, 1995]

Maybe the members opposite really do not have an appreciation for art in any form, but Canadians do not hold their heads in the sand like ostriches. There is a world there and we would like to have access to that world in any form and in a cultural form as it may occur.

Is the hon. member suggesting that we build a little cocoon around ourselves? I suspect that the hon. members have no appreciation for anything of a cultural nature. If it were up to the members of the Reform Party, the only place they would find culture would be in yogurt.

[Cultural Property Export And Import Act, September 25th, 1995]

Mr. Speaker, there are so many fallacies in the hon. member's statement that I am at a loss where to begin. Let me try to tackle them one by one.

I am not surprised by the limitations of the member's discourse, as his party refused an earlier briefing on Bill C-103. Had they been briefed on that bill and this bill they would be more erudite in their comments.

There are very few programs that are not vulnerable to abuse. We are not going to abandon our cultural institutions because there is one dishonest person or maybe two who might be participating in fraud or tax schemes. However we will make every effort to safeguard programs that have value. We are not going to paralyse all our programs in support of the Canadian cultural industry because of abuse to a program that has on the whole served museums and the Canadian cultural institutions well.

It is important-and this is the limitation of the member's argument-to understand that cultural property is not just paintings and fine works of art; it extends to our natural history.

I know the hon. members of the third party really do not appreciate our heritage and our history and would perhaps prefer to adopt a Fahrenheit 451 policy to literature.

I remind the member that the hotels in Ottawa are packed with people who come to see our works of art and our museums. They are not coming here for the Reform Party. As much as they might have delusions, there is nothing much artistic about their arguments, as abstract as they may be.

On their attack on the wealthy, what they forget is that people who have money do contribute and sponsor the arts. They make a considerable contribution in that regard. The best possible treatment a donor may receive is a refund equivalent up to 50 per cent of the fair market value of the object or collection they are donating.

We understand that the members of the third party would rather see all our collections of art shipped to the United States or elsewhere to foreign markets. However, we feel there is merit in keeping them in this country, because Canadians appreciate them even if members of the third party do not.

[Cultural Property Export And Import Act, September 25th, 1995]

Mr. Speaker, we have seen an example of the shallowness of the debate by the Reform Party. When people look back on the Reform record they will find Spanish eyes on the turbot, green eyes on unity and closed eyes on the cultural industry at large.

The Cultural Property Export and Import Act ensures the preservation in Canada of our heritage in movable cultural property. Through the combined provisions of export controls, grants and tax incentives for donations to designated Canadian custodial institutions, the legislation has been highly successful in enriching the collections of public institutions and thereby providing Canadians access to their heritage.

The legislation also established the Canadian Cultural Property Export Review Board and defined its mandate. From 1977 to 1991, the Board's mandate was to hear appeals in the case of denied export permits and to determine whether the cultural property given or sold to designated institutions met the criteria of "outstanding significance and national importance" contained in the legislation.

In 1991, the Cultural Property Export and Import Act and the Income Tax Act were amended in order to transfer responsibility for determining the fair market value of certificated cultural property from Revenue Canada to the Review Board.

There was no provision, however, for appeal of decisions by the Review Board, and the right to appeal under the Income Tax Act was lost.

The need for an appeal process was identified and acknowledged in 1993 following widespread consultation with custodial institutions, donors of cultural property, dealers in art and antiques and members of the review board. The museum community is convinced that an appeal is necessary to ensure that donors will be confident their donations will receive a fair hearing.

By establishing the right of appeal, potential donors will be assured that if they are dissatisfied with a review board determination they will have recourse to the Tax Court of Canada. With the concurrence of the Tax Court of Canada the appeal to the tax court has been made retroactive to January 1992, thereby providing all donors who have made a gift since the right to appeal was lost and who wish to pursue an appeal with both the opportunity and the legal right to do so.

The bill also covers situations in which donors may ask the Review Board to reconsider its initial decision. The increase in the number of situations in which the Review Board may redetermine the value of a gift will provide donors not wanting to spend the money involved in an appeal to the Tax Court of Canada with an opportunity for a new hearing on the circumstances surrounding the gift and the determination of its value by the Board. This approach will mean that most of the applications for appeal will be handled directly by the Review Board, eliminating the need for court proceedings and thus making the process accessible to all.

It will also ensure that any disagreement on fair market value is discussed by experts in this highly specialized field. Applications for redetermination made to the Review Board will be studied in depth by members of the Board and other experts as necessary.

The provision for two appeal processes is also cost efficient because it is anticipated that the majority of appeals will be resolved directly between the donor and the review board and will not necessitate a formal appeal to the Tax Court of Canada. In a time when we are all concerned with reducing government spending, the ability to resolve differences of opinion about fair market value with an existing organization, the review board, whose members serve on a part time basis, will result in savings of both time and money.

The review board is an agency operating at arm's length from the Department of Canadian Heritage and it is resolutely in favour of establishing a procedure whereby one could appeal its determinations regarding fair market value. The review board is made up of specialists in museology, collectors or traders, who are well aware of the difficulties custodial institutions and donors of cultural property have encountered because there was no appeal procedure. The determination of the fair market value is currently done and will continue to be done by individuals who are skilled in various areas relating to cultural property and very active on the markets where this property is sold.

The determination of the fair market value of any object and particularly cultural property involves an element of subjectivity that can lead to disagreement. These disagreements occurred when the responsibility for determining fair market value resided with Revenue Canada. There have been disagreements among the experts in the time since the review board has assumed this responsibility. This debate is both healthy and inevitable when dealing with often unique material. An open and transparent process at the time the review board determines and if necessary redetermines the fair market value of cultural property is essential.

The right to pursue the matter in the courts if no resolution can be found is consistent with both the Canadian legal system and the concept of natural justice.

The staff of designated institutions argued that the absence of any appeal procedure caused the number of donations made by collectors to drop. All designated institutions would therefore welcome the implementation of such a procedure, since it would foster an increase in donations while at the same time eliminating the potential for tension in dealings between donors, custodial institutions and the review board.

Donors of cultural property have also reacted positively to the introduction of the bill, as they believe that it removes a major deterrent to donating. Any perceived denials of natural justice have been resolved, as donors will now be able to appeal to the tax court if they disagree with the review board's determination of fair market value.

There is also strong professional support for these amendments in the communities that are most affected by the availability of tax credits for donations of cultural property. The Canadian Museum Association and the Canadian Art Museum Directors Association have expressed strong support for the bill and the establishment of an appeal process. Both associations, whose members include museums and art gallery personnel from across Canada, have issued policy statements in support of the establishment of an appeal process.

These amendments to the Cultural Property Export and Import Act to create an appeal process to the Tax Court of Canada of decisions of the review board should not be viewed as a shift in government policy, nor should they be interpreted to be a reflection on the work or credibility of the Canadian Cultural Property Export Review Board. Instead the bill must be recognized for what it is: the reinstatement of a right to appeal that was lost in 1991 when responsibility for determining the fair market value of certified cultural property was transferred from Revenue Canada to the Canadian Cultural Property Export Review Board.

The amendments to the Cultural Property Export and Import Act, the Income Tax Act and the Tax Court of Canada Act contained in the bill will ensure the continued preservation of our heritage in movable cultural property. The appeal process will ensure continued confidence in the donation system and will in turn lead to an increase in donations to museums, art galleries, archives and libraries.

This bill also ensures that there will be public confidence in the fairness of the procedures of the review board and that there is no denial of natural justice. Furthermore, a right of appeal that was lost in 1991 when responsibility for determining fair market value was transferred to the review board will be restored.

These amendments will also remove any obstacles, real or perceived, to making donations to Canadian custodial institutions. Through these donations all Canadians will benefit, as we will be ensured of the continued preservation and access to Canada's heritage in movable cultural property.

[Excise Tax Act, September 25th, 1995]

Mr. Speaker, the United States has an advantage. It does not need paid lobbyists. It has 52 members of the Reform Party lobbying on its behalf.

Bill C-103 is an act to defend the Canadian magazine industry and to support the government's longstanding policy on periodical publishing.

The threat is split runs, a tariff dodge aimed directly at the lifeblood of the Canadian magazine industry: its Canadian advertising base. Reports commissioned by the task force inform us that this tactic, if left unchecked, could consume as much as 40 per cent of total Canadian magazine advertising revenues, devastating the Canadian industry.

Successive Canadian governments have had a longstanding history of implementing structural measures which provide support to the Canadian magazine industry. These measures have helped the Canadian periodical industry to survive in a challenging and difficult environment.

The importance of Canadian periodicals has long been recognized. Thirty years ago the O'Leary Royal Commission on Publications observed that Canadian magazines provide the critical analysis, informed discourse and dialogue which are an indispensable part of Canadian society.

The O'Leary report on the role of publications had a mandate of finding ways of furthering the development of the Canadian identity through a genuinely Canadian periodical press. The recommendations of this report have formed the basis of federal periodical publishing policy.

As this commission pointed out in its 1961 report, the larger a periodical's circulation, the more advertising it can attract and the greater its advertising revenue. The more it can afford to spend on editorial content, the better are its chances of obtaining more circulation. In other words, advertising dollars are the key element which determines the business success of a periodical.

The O'Leary Report recommended that the Canadian periodical industry be supported by measures which would channel Canadian advertising revenues to Canadian magazines.

Two policy measures were introduced in 1965 which were designed to channel Canadian advertising revenues to Canadian magazines: section 19 of the Income Tax Act and customs tariff 9958. Section 19 of the Income Tax Act limits tax deductions of advertising expenditures to advertisements placed in Canadian magazines for advertisements directed at the Canadian market. Customs tariff 9958 prohibits the fiscal importation into Canada of split runs or special editions of periodicals with editorial content substantially the same as the original edition except for the advertising which has been purchased especially to reach a Canadian audience. These two measures created a positive environment for Canadian magazines.

Customs tariff 9958 proved to be an effective way to prevent the distribution of split run editions. However, technological progress has forced the government to review the effectiveness of code 9958 which had well served the industry for more than 30 years.

In particular, technology now permits to evade the spirit of custom tariff 9958 and the objective of the federal policy regarding periodicals.

In January 1993 Sports Illustrated announced plans for a Canadian edition to be printed in Canada which would contain advertisements directed at Canadians. Sports Illustrated Canada is printed in Canada from texts electronically transmitted from the United States. Canadian ads are then substituted for American ads and some Canadian editorial content is added, thereby bypassing the border controls provided for with the customs tariff code.

As a result it became apparent the policy measures the government currently has in place could no longer fulfil their role.

On March 26 1993, the government announced the creation of the task force on the Canadian periodicals industry. The act to amend the Excise Tax Act and the Income Tax Act implements the main recommendation contained in the report of the task force. The excise tax on split run editions of periodicals distributed in Canada will eliminate the loophole used by Sports Illustrated Canada .

Amendments proposed to the Excise Tax Act would impose a tax equal to 80 per cent of the value of all the advertisements contained in the Canadian split run edition.

Bill C-103 gives the following definition of a split run edition: An edition distributed in Canada in which 20 per cent or more of the editorial material does not originate in Canada and that contains one or more advertisement destined to Canadians.

This tax will maintain the long standing governmental policy regarding periodicals. It shows the will of the government to support the preservation in Canada of an industry that is original, viable and dynamic.

Each member of the House can choose to support the bill, supporting the livelihoods of over 6,000 Canadians employed in the domestic magazine industry while at the same time keeping news stands well stocked with a broad choice of periodicals for the Canadian reader.