Federal Tax Credit Does Little to Spur Local News: Jackman-Atkinson

April 6, 2019 8:16 AM | Columns

By Kate Jackman-Atkinson, Editor, myWestman.ca

Newspaper

Last month, the release of the federal budget meant that details about the government’s support for the news media industry were unveiled. Despite the assertion that it would be something else, it looks like a program designed to benefit the country’s largest corporate newspaper chains.

The biggest part of the five-year, $600 million program is a 25 percent refundable tax credit for salary or wages paid to eligible newsroom employees. To be eligible, the organization must be a Qualified Canadian Journalism Organization (QCJO), and this is where things start to get a bit sticky.

In order to be a QCJO, the organization must meet Canadian ownership or board director requirements. It must also be primarily engaged in the production of original news content, in particular, matters of general interest and current events. Fair requirements if we want to support Canadian journalism. In order to obtain QCJO designation, the news organization must apply to a committee established by the government and argue their case. This is an uncomfortable situation for those concerned about journalistic independence, either in perception or reality.

Looking through the details surrounding this tax credit, we begin to see just how weighted it is towards propping up the status quo at large corporate chains. To start with, in order to qualify for the credit, the organization must be a QCJO and regularly employ two or more journalists. This rules out all of the start-ups staffed by talented journalists who have lost their jobs in waves of corporate cutbacks. It rules out many community papers, which are often their community’s only source of news, but might not be large enough to support two or more full-time staff members who spend more than 75 percent of their time solely dedicated to the production of news content. The organization must be engaged primarily in the production of written content, which maybe wasn’t necessary, as the rules also explicitly state that any organization considered a “broadcaster” under the Broadcasting Act isn’t eligible.

Community papers aren’t just shut out by the staffing requirements, but also because any company that receives funding from the Aid to Publishers component of the Canada Periodical Fund, which is claimed by almost all community newspapers that circulate by subscription, is ineligible.

The sting is that the wage subsidy doesn’t require the hiring of additional staff or expanded coverage, it just pays papers for keeping the staff they already have.

I believe in the value of community newspapers in printed form, but that doesn’t mean I don’t also see the value in the new and innovative ways people are trying to bring the news to their communities. This program does nothing for the hardworking and dedicated Canadian journalists who have chosen to inform their community through the operation of online news sites, TV, radio or podcasts.

Not only has this program put publishers in the position of having to be deemed worthy by a government-appointed board, it has done nothing to combat one of the major problems facing the industry— the unequal treatment between Canadian companies and American tech giants. In 2016, Facebook and Google accounted for 72 percent of Canada’s $5.5 billion internet advertising market. While Facebook collects Canadian sales tax on ads purchased at their physical offices in Canada, ads purchased online and all those purchases on Google aren’t subject to taxation, putting the smaller Canadian media companies at a significant disadvantage.

In announcing the program last fall, the federal government said it wanted to support news coverage in under-served communities, but almost nothing about this program encourages local news organizations, in any format, to start, keep going, or grow. It seems to be just another case of more support for the status quo.



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