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FINAL SUBMISSION: FEDERAL TAX MEASURES IN SUPPORT OF JOURNALISM

Final submission on federal tax measures in support of journalism

Submitted by: The Canadian Association of Journalists

Date: Feb. 19, 2019

Introduction

  1. How should the panel be established?
  2. How should eligibility for the three tax measures be defined?
  3. What should the panel’s terms of reference include?
  4. How should the tax credits be structured? (a) The labour tax credit b) The subscription tax credit)


List of recommendations

Appendix #1: What we heard from members
Appendix #2: Background on journalism definitions

Introduction

The Canadian Association of Journalists is Canada's largest national professional organization for journalists from all media, representing more than 700 members across the country. The CAJ's primary roles are to provide public-interest advocacy and high-quality professional development for its members, as well as annual awards for best-in-class investigative reporting. We have more than 40 years of experience watching our industry evolve, and have developed widely adopted ethics guidelines and also carry out proactive advocacy that responds to the changing landscape.

When Finance Minister Bill Morneau’s Fall Economic Statement announced three federal measures to encourage journalism in Canada, the Canadian Association of Journalists knew the rollout of the five-year, $595-million package would require a deft touch. We deliberated for some time before releasing a statement on Dec. 10 that served two purposes. First, we wanted to express support for the move to allow non-profit news organizations to receive charitable donations and issue official donation receipts, and second, to also applaud the non-refundable tax credit to support subscriptions to Canadian digital news media.

Our statement also urged caution as the government embarked on a process that would eventually, at least to some degree, define professional journalism.

We hope to play a constructive role as the federal government implements these measures, some of which are politically sensitive and divisive among both journalists and the broader public. This final submission offers the CAJ’s substantive input on key questions we were asked to answer by the Prime Minister’s Office. We surveyed members on a prospective role for the CAJ in a transparent, independent process, and more broadly on the impact of new tax measures on journalism in Canada. This report offers substantive recommendations.

1. How should the panel be established?

Recommendation #1: That the panel which defines eligibility for any new tax measures be appointed by a group of independent journalism organizations, led by the Canadian Association of Journalists.

Recommendation #2: That the panel operate independent of government and have the authority to a) define eligibility for tax measures without government approval; and b) approve or disapprove journalism organizations as eligible for the tax measures without government approval, nor any means for any government to overrule the panel’s decision.

Recommendation #3: That the process by which the panel is appointed, and a list of the organizations involved, be published online.

Any panel that defines eligibility for journalism-focused tax measures should not only operate independent of government, but the process by which the panel is established should also be independent. That process should be transparently communicated to Canadians, and the work of the panel should also embrace openness, transparency and a strong conflict-of-interest policy; for example, the membership of the panel, any of its recommended definitions for eligibility, and the names of any organizations that successfully qualify for the tax measures ought to be published for the benefit of all Canadians.

Any panel that is not independent of government will create the damaging perception, regardless of the reality, that media organizations are financially beholden to a government they are committed to hold to account. If outside organizations contribute substantially to the process by which the panel is established, participating organizations should only comprise those which are not directly owned or operated by media companies. Any panel established at the recommendation of media outlets that will subsequently be applying for money will create the damaging perception, regardless of the reality, that the media outlets contributing to the panel’s establishment have been pre-selected by the government as winners.

Among journalism non-profits in Canada, only a handful solicit the vast majority of membership from working journalists. The CAJ is the largest such organization that comprises members (and elected directors) from every region in Canada. The Fédération professionnelle des journalistes du Québec is the largest Quebec-based organization.

The CAJ surveyed members on a prospective proposal that the CAJ play a substantial role in a transparent, independent process that establishes a panel that is independent of government—and subsequently provides administrative support to the panel as it engages with its terms of reference and ultimately makes recommendations. A significant majority of CAJ members support the CAJ playing a role in the process.

2. How should eligibility for the three tax measures be defined?

Recommendation #4: That any eligibility requirements for new tax measures, as well as the list of organizations that successfully apply for the tax measures, be published online.

Recommendation #5: That the scope of eligibility be inclusive of Canadian journalism, and not limited to a single subset of publishers (i.e. newspapers, magazines or broadcast).

The CAJ does not want to presuppose any conclusions the panel may draw on the definition of eligibility for the new tax measures. Appendix #2 of this submission offers useful background to panellists with respect to ongoing challenges associated with any definition of professional journalism, best practices developed by the CAJ’s own membership verification process, and various definitions that do exist, including in a legislative context.

On the scope of eligibility, CAJ members expressed a strong desire that the tax measures be broadly inclusive of journalism, not limited to a single platform or medium—and that smaller publishers should benefit from federal action substantively. On the labour tax credit, various members who operate small, sustainable journalism enterprises explained their limited ability to hire journalists—which, they worry, may negatively impact their qualification for federal support in the face of much larger, less sustainable organizations that are able to hire in the short term.

The CAJ recognizes that federal funding already exists for journalism in Canada, including via the Periodical Fund and the granting of broadcast licences. We don’t believe these federal tax measures, which aren’t a direct subsidy and aim to support innovative digital journalism in Canada, should be limited to a single subset of publishers (i.e. newspapers, magazines or broadcasters). One member did advocate for increased public awareness about these programs as broader context during the implementation of the new tax measures. That effort could be helpful, particularly given the divisiveness of any federal support for journalism among the broader public.

3. What should the panel’s terms of reference include?

Recommendation #6: That the panel’s terms of reference, meeting agendas and minutes be published online.

Recommendation #7: That an independent panel define eligibility for tax measures; submits a list of pre-approved news organizations to the Canada Revenue Agency; and evaluates applications from organizations that are not pre-approved.

The CAJ believes an independent panel could play a vital role when news organizations claim the tax credits. If the Canada Revenue Agency is left solely to make determinations on eligibility, government may mistakenly—or intentionally—deny applications improperly, based either on a lack of information or poor judgment (or, in a worst-case scenario, political motivation).

The CAJ recommends a single panel establish both eligibility requirements for the new tax measures and evaluate applications for those tax measures. While we don’t in principle disagree with a so-called “double blind” process that sees separate independent panels defining eligibility and judging applications, we recognize the increased administrative burden would be cumbersome.

 

4. How should the tax credits be structured?

a) The labour tax credit

Recommendation #8: That the labour-focused tax credit encourages news organizations to re-invest savings into retaining or expanding staff.

Recommendation #9: That the labour-focused tax credit not incentivize news organizations to use savings to increase executive compensation or reduce debt.

Recommendation #11: That the panel explores the feasibility of the labour-focused tax credit applying to small news organizations that expand capacity to commission freelance journalism.

Minister Morneau’s fall economic statement emphasized the government’s desire to encourage journalism with the labour tax credit. This can be done through a well-designed tax credit that encourages outlets to re-invest the tax credit into retaining existing staff or hiring new staff. If benefits derived from the tax credit are used to pay executive bonuses or pay off company debt, the credit may not encourage journalism—but merely enrich debtholders, some of whom may not be Canadian.

Additionally, in some parts of Canada, student newspapers are the largest news outlets that serve local communities. In the municipality of Guelph Ont., for example, the University of Guelph’s student newspaper, The Ontarian, has been the largest paper in the city by circulation for the past two years since the Guelph Mercury shut its doors. In Sackville, N.B., Mount Allison University’s The Argosy is a significant community news source.

Community radio stations are also important sources of news, often in more rural areas. Ethnic media outlets serve communities that other outlets don’t always reach. Whether the labour tax credit should apply to them is a question for the panel, but each of these subtypes of newsrooms comprise an important part of any conversation about tax credits aimed at supporting journalism in Canada—and they all adopt unique staffing setups.

Further, an increasing number of journalists are freelancers who work for several outlets without employment contracts. Their work supports many outlets, but that work is precarious. Freelancing isn’t sustainable for most journalists who do the work out of passion, and they often have to find a second or third job. The tax credit may be structured to support organizations that increase their capacity to commission stories from freelancers.

The panel will also need to consider how to appropriately measure the growing number of journalists who are on contract, but not employed full-time at media outlets. This is particularly a concern for smaller media outlets, some of which employ their entire staff on contract.

There are lessons to be learned from the successes, as well as the failures, of the Ontario Media Development Corporation Tax Credit, which was intended to encourage journalism but was ultimately scrapped because it was abused by non-journalism entities.

b) The subscription tax credit

Recommendation #12: That the consumer-focused subscription tax credit should exempt harmonized sales tax at the point of purchase.

The subscription tax credit should exempt HST at point of purchase, similar to the structure that already exists for zero-rated supplies like basic groceries or raw wool. This will reduce the administrative burden for the CRA and media outlets. It will also be more appealing for news readers who will see the benefit of the credit right away, instead of waiting for their annual tax returns.  

List of recommendations

Recommendation #1: That the panel which defines eligibility for any new tax measures be appointed by a group of independent journalism organizations, led by the Canadian Association of Journalists.

Recommendation #2:That the panel operate independent from government and have the authority to a) define eligibility for tax measures without government approval; and b) approve or disapprove journalism organizations as eligible for the tax measures without government approval, nor any means for any government to overrule the panel’s decision.

Recommendation #3: That the process by which the panel is appointed, and a list of the organizations involved, be published online.

Recommendation #4: That any eligibility requirements for new tax measures, as well as the list of organizations that successfully apply for the tax measures, be published online.

Recommendation #5: That the scope of eligibility be inclusive of Canadian journalism, and not limited to a single subset of publishers (i.e. newspapers, magazines or broadcast).

Recommendation #6: That the panel’s terms of reference, meeting agendas and minutes be published online.

Recommendation #7: That an independent panel defines eligibility for tax measures, submits a list of pre-approved news organizations to the Canada Revenue Agency, and evaluates applications from organizations that are not pre-approved.

Recommendation #8: That the labour-focused tax credit encourages news organizations to re-invest savings into retaining or expanding staff.

Recommendation #9: That the labour-focused tax credit not incentivize news organizations to use savings to increase executive compensation or reduce debt.

Recommendation #10: That the panel explores the feasibility of the labour-focused tax credit applying to small news organizations that expand capacity to commission freelance journalism.

Recommendation #11: That the consumer-focused subscription tax credit should exempt harmonized sales tax at the point of purchase.

Appendix #1: What we heard from members

In our survey of CAJ members, 74 per cent of respondents expressed concern about government influence on any definition of journalism (including eligibility requirements for new tax measures). Respondents consistently emphasized the importance of independence from government; specifically, they stated journalists are best placed to confront this challenge.

One respondent replied that a definition of journalism is “not as problematic as a definition of journalist that extends beyond ‘someone who practises/creates journalism.’ ” They suggested that, absent any regulatory body with enforcement powers, contested definitions of what is and isn’t journalism are now largely left to the courts:

By not having a central definition of journalism already, we have let the courts (more often than not) define what journalism is and isn’t within the scope of criminal and civil law; tests that are defined and enforced based on something or someone being challenged as legitimate.

Respondents generally advocated for full transparency in the panel’s work: “All panel meetings be open to the public. Agendas, minutes and transcripts be proactively released,” wrote one member. Another stated the new tax measures should support directly support journalism, not the bottom lines of media owners—and be free of government involvement.

The public needs to feel confident [federal money for journalism] is about maintaining the journalists’ ability to provide thorough coverage at the highest standard, not about keeping mainstream media out of debt. Journalists must remain beholden only to the public, their codes of ethics and truth. Any participation by the government undermines all of that.

Several respondents insisted that small news organizations, including those which are financially sustainable but don’t have resources to employ more journalists in a given year, should still qualify for the new tax measures. Another respondent raised pre-existing federal support for journalism, including the Periodical Fund and the granting of broadcast licences. They advocated for increased public awareness about these programs as broader context during the implementation of new tax measures.

One respondent identified the inherent challenge facing journalists who accept any government funding, whether via direct subsidy or indirect tax measures. “No matter how this gets handled, the claims of bias and #trudeaubucks and “paid off” media will never abate,” they wrote. “I recognize that something has to be done with the government’s plan—but am not at all comfortable with the overall idea.”

Appendix #2: Background on journalism definitions

 

Broadly speaking, the CAJ opposes any government creating a definition of journalism that could exclude journalists who intend to hold that government to account (Alberta’s provincial government offers a recent example of overreach). We understand the intent of the process underway is to define eligibility strictly for tax measures, not more broadly speaking. We believe it would be difficult to do one without the other, no matter which journalists and newsrooms ultimately qualify; if broadcast outlets and magazines are excluded, defining eligibility for print and digital newsrooms still forces a conversation about what constitutes a newsroom and the journalism it publishes.

The CAJ’s membership eligibility

The CAJ confronts the question of “who is a journalist?” on a regular basis. While we do not certify or accredit professional journalists, we do limit our membership to those applicants who satisfy certain eligibility requirements. We also follow a verification procedure with an appeal mechanism for those applicants who are unsatisfied with any decision on their membership.

Class A members of the corporation shall be individuals who, as determined by the board of directors of the corporation, are Canadian, or work in Canada, or work for Canadian-owned media, and:

  • whose salary comes primarily from, or time goes principally into, journalism or;
  • are managers of media enterprises or;
  • are teachers of journalism at a recognised post-secondary program or;
  • are students enrolled in a recognised post-secondary journalism program or who work in the student media on a regular basis during the academic year.

 

The CAJ also offers Class B membership (i.e. non-voting) to Canadians who don’t qualify for Class A membership. The only stipulation is they must work in Canada.

When our review of an application doesn’t produce clear examples of journalism, we generally assess the merits of the application not by thinking about what journalism is, but rather what it isn’t. Press releases are not journalism. Blogs that publish opinions that are solely those of the author, based on no disinterested reporting, are not journalism.

Of course, the CAJ confronts instances in which our consideration of writing or broadcast samples requires more complexity than the pre-internet age when lines were clearer. We are as inclusive as possible, given the myriad platforms on which journalism is published and the methods employed by journalists. But sometimes it’s just not easy. That’s where a 2012 discussion paper, published by our ethics advisory committee, can offer some guidance.

The CAJ ethics committee’s definition of journalism

In the midst of the ever-evolving journalism landscape, the CAJ’s ethics advisory committee—a panel of journalism educators and practitioners—set out to define journalism. The committee published a discussion paper in 2012 that offered a novel approach: define journalism not by a set of values, but rather a set of actions. The committee concluded journalists are “distinguished from other types of activity and actors” according to three tests: a disinterested purpose, the act of creation, and a particular set of methods. They elaborated on each of those headings.

A disinterested purpose: “An act of journalism sets out to combine evidence-based research and verification with the creative act of storytelling. Its central purpose is to inform communities about topics or issues that they value.”

An act of creation: “All journalistic work—whether words, photography or graphics—contains an element of original production.”

A particular set of methods: “Journalistic work provides clear evidence of a self-conscious discipline calculated to provide an accurate and fair description of facts, opinion and debate at play within a situation.”

The committee concluded:

Non-journalists will fulfill some of these functional criteria, some of the time. The work of those who do not see themselves as journalists may well be consistent with some of these descriptors. Examples may include some historians, some ethnographers, and independent commentators of various kinds. Works that come close to meeting the criteria could include a book review, a carefully crafted and considered letter to the editor, or a thorough, thoughtful comment on a piece of news by someone without any interest in the matter beyond intellectual.

But we propose that for most purposes, the above three criteria create a three-way definitional "veto." That is, all three criteria must be met in order for an act to qualify as journalism. Failure to pass any one of these tests means that the act in question is not journalism, and only journalists will meet—or, at least, attempt to meet—all these criteria consistently, fully and deliberately.

In 2012, the CAJ did not adopt the committee’s conclusion as organizational policy but promotes it on an ongoing basis for discussion in the wider journalism community. We don’t apply this definition, strictly speaking, to applications for CAJ membership. But it is helpful as we navigate the evolving nature of journalism.

Other relevant material

The CAJ's widely cited Ethics Guidelines are intended to help both seasoned professionals and new journalists to hold themselves accountable for professional work. The guidelines do not apply definitions of journalism, but provide examples of the application of our general ethical principles—and help journalists apply those principles and their best judgment when faced with scenarios not covered here.

The Journalistic Source Protection Act, passed into law in 2017 as Canada’s first press-shield law, offered this definition of a journalist:

“a person whose main occupation is to contribute directly, either regularly or occasionally, for consideration, to the collection, writing or production of information for dissemination by the media, or anyone who assists such a person.”

The CAJ’s concern with that definition is the “main occupation” test, given the large number of journalists who publish work on a freelance basis and are forced to earn substantial income by other means.

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