Independent Panel of Experts on Journalism and the Written Press — June 27 2019 meeting
Panel members present
- Bob Cox (chair)
- Esther Enkin
- Brad Honywill
- Pierre-Paul Noreau
- Brenda O’Farrell
- Thomas Saras
- Pierre Sormany
- Pascale St-Onge
The meeting started with a conference call between panel members and CRA and Finance Canada officials to have officials answer clarification questions.
- CRA officials were asked to elaborate on their definition of formal employment, to which officials replied that each case is analyzed on its merits, but this generally requires that someone have an employment that defines the relationship. This does not include independent contractors or freelancers.
- Panel members asked CRA officials about the arm’s length concept. CRA confirmed the panel members’ understanding based on the answers provided at the previous meeting by Finance officials and CRA documentation provided earlier.
- CRA officials were then asked about the expression “regularly employs” used in the legislation. How does CRA interpret this concept? Officials first noted that the expression is not used elsewhere in the Income Tax Act. They also indicated that a definition of it would not be limited to full-time employment but can refer to employment that has some regularity, including part-time. It was noted that many situations meeting the criteria can exist on a broad spectrum. Of course, each would need to be reviewed individually.
- CRA suggested that another avenue could be for the panel to review the criterion as it is stated and recommend changes to it. Panel members suggested various employment scenarios for which CRA officials provided answers, emphasizing that each case would be subject to an analysis of its specific conditions.
- The role of CRA and its relationship to the 2nd panel was briefly discussed. Panel members asked if CRA could be in a position to recommend organizations as QCJOs. CRA officials referred to the agency’s mandate and its capacity to interpret regulations, while also acknowledging the eventual establishment of a 2nd panel charged with recommending or not organizations as QCJOs.
- The conference call concluded with a panel member suggesting that the panel could add some specifications to the concept of “regularly employs”.
- Panel members then discussed the specific situation of small publishers that are run as family businesses. These publications could be excluded due to the arm’s length criterion. Some panel members suggested recommending the establishment of another program since many of these publications would likely not benefit from the labour tax credit in any case. The new program could be funded from partially retrieved social media platforms’ advertisement revenues. A deadline should also be set to ensure funds are made available quickly, not several years from now.
- Other panel members were uncomfortable extending panel recommendations beyond the mandate by recommending the creation of a new program. As a compromise, it was suggested that the report make note of the limitations of the tax measures, that they do not address the problems of small publications or publications for official language minority communities. This observation would not include specific recommendations.
- Panel members agreed to take back to their respective groups a list of the recommendations such as those on criteria applied to obtain QCJO status.
- In further discussing support for small publications, panel members agreed to recommend that government advertising spending include an amount, perhaps as a percentage of the total advertising budget, for ad placements in community publications.
- The panel’s discussion then turned to the criterion requiring that an organization’s original news content “be primarily focused on matters of general interest”. The argument was made that many Internet publications present news but on a particular topic, examined from many angles including public policy. Another member suggested the panel keep in mind digital publications like The Logic as the type of publication the measures should try to support.
- The panel mandate item on the 2nd panel was subsequently the focus of deliberations. The question of the composition of the 2nd panel was looked at, in particular what qualifications its members should have.
- The question was asked of whether a second panel would be required if the current panel’s definitions are sufficiently clear. There was also concern that setting up a second panel would further delay implementation of the tax credit. However, it was argued that clear definitions would accelerate the process since it would be a question of checking boxes rather than relying on judgement calls from a 2nd panel.
- Members expressed concern over the fact that some news organizations pay executives high salaries and bonuses while also cutting jobs in the newsroom. The panel wanted to verify with Finance Canada officials whether there were provisions elsewhere in the Income Tax Act (ITA), for other tax credits, that addressed this issue and imposed conditions on qualification for the credits based on executive compensation. Upon verification with Finance Canada officials, the panel was informed that there are no provisions of this type in other tax credits in the ITA.
- The question was asked of whether to recommend changes to the tax credit to include other expenses such as legal fees and other services. It was pointed out however that the measures were about a labour tax credit and extending the program to include expenses would require a whole different tax credit.
- On the eligible employee criteria and the required hours and weeks of work, it was suggested that equivalencies be considered such as counting together three employees who work 15 hours a week each, rather than limiting it to the hours worked by individual employees. Another member countered that it would perhaps be better to lower the number of hours for a single employee rather than recommend combining times from several employees since this would make it rather complicated to calculate and track. The question then becomes where to set the bar.
- Officials from the Privy Council Office and from the Department of Finance joined a conference call to discuss the panel of experts’ mandate related to a 2nd panel. In opening remarks, officials invited panel members to be guided by government statements and Bill C-97 in their deliberations on the 2nd panel. The government, in its statements, has committed to the creation of a 2nd panel and would like the panel of experts’ best advice on its composition.
- When asked if, in a scenario where a 2nd panel is not put in place before an election, the measures would still be in place, officials answered that yes, the measures would still be in place even under such circumstances. A process would still be in place involving CRA to administer the measures.
- Officials explained to the panel that government recognized the risk of a perceived risk of government influence over media with the application of financial support to the industry, which is why a body to make recommendations to the Minister of National Revenue on QCJO applications was thought out. Officials also pointed out that CRA staff have the technical expertise to administer the majority of objective criteria but would turn to the advisory body on criteria of a more subjective nature, that require some industry knowledge, criteria such as whether an applicant primarily produces original news content.
- On the panel’s suggestion that a third party, such as an accounting firm, could take on that role, officials pointed out that such a group would perhaps have tax expertise but not journalism expertise.
- When asked about the possibility of putting limitations on amounts that could be received by a QCJO that gives executives large bonuses in a given year, officials indicated that this would be very unusual in the context of a tax credit.
- Since the panel of experts is being asked to make recommendations on the composition of the 2nd panel, officials were asked if they had an indication of the size of this panel. Officials replied that the legislation was discreet in this respect and that the government would make a decision on this at a later date.
- When asked if the 2nd panel could act as an appeal body, officials answered that there is nothing in the legislation that gives the body this role and that there is already an appeal process in place for taxation decisions.
- On questions related to the application process, officials reiterated the 2nd panel’s function as advisory and indicated that it still needed to be determined whether the body would review all or only some of the applications.
- The conference call was then concluded.
- Panel members continued deliberations on the 2nd panel. Referring to Bill C-97, a panel member noted that its purpose seemed to be that of advising the Minister specifically on journalism questions. It was then suggested that the 2nd panel be composed of the heads of large journalism schools from each of the regions of Canada. There was agreement that there should be no more than five members.
- In proceeding this way, a member noted that the question of diversity of composition would still need to be addressed. Perhaps the way to proceed would be to ask the heads of the schools for names of individuals for the 2nd panel.
- It was suggested that there should still be a recommendation to not have a 2nd panel at all as it makes the process cumbersome and creates delays.
- As a compromise, a member proposed that there be a series of recommendations on the composition of the 2nd panel, where: 1) there should not be a 2nd panel; and 2) if this is not accepted, then the government should better define the role of the panel, i.e. only refer to the panel for applications for which CRA is not in a position to make a determination.
- On the question of naming individuals instead, one member suggested that employees from journalist associations would be well placed to carry out the duties of the panel because of their current tasks. It was however pointed out that there would be strong pressure on them and it would create a conflict of interest.
- One member expressed concern on making recommendations on the composition of the 2nd panel when some of its characteristics remain unclear, such as the question of its workload, duration, compensation for panel members, etc.
- One panel member countered by suggesting that if the administration of the measures is left only to CRA, the panel of experts is dooming the measures to failure, since the government could ultimately say that it is not working properly and then proceed to reversing the measures.
- Panel members agreed then to proceed with the earlier suggestion of having a series of recommendations and that a list of the journalism schools to consult be prepared as a mechanism for identifying individuals for the 2nd panel. Journalism schools from the following universities were identified: UBC, Carleton, Ryerson, Laval, UQAM, Dalhousie - King’s College and a First Nations college from the prairies.
- Criteria should be listed to inform the nominations, including:
- Knowledge of the industry and of written journalism
- Understanding of the goals of the program
- Knowledge of emerging platforms
- Overall composition should reflect the diversity of Canada
- As a second option, it was suggested that names come from professional journalists associations (FPJQ, CAJ, etc.) to which would be added an Indigenous representative.
- Returning to the tax measures criteria, the panel then examined the digital subscription tax credit and agreed to recommend it be changed to 20% instead of 15% if it is to have any impact.
- On the qualified donee measure, the panel noted that the measure, as they understood it, would not allow foundations to fund newspapers or other news organizations. A note was made to ask Finance officials if there is a way to allow foundations, who would have charitable status, to support journalism.
- A member suggested that the report should note that it is difficult if not impossible for a newspaper to change its status to not-for-profit status with the goal of eventually becoming a qualified donee. Panel members generally did not believe that this measure would result in many news organizations becoming qualified donees.
- Panel members discussed the creation of a form that would be the basis to test out if the criteria are operational. With the goal of ensuring the panel definitions and criteria are operational, panel members asked that Finance Canada officials attend part of the next panel meeting to provide technical assistance in reviewing the text of the panel’s definitions and answer questions panel members may have.
- Discussion then turned to the topic of the communication of the recommendations. Members expressed their interest in having the report be made publicly available on the Internet. The objective is to ensure transparency in the process. Panel members asked if the report could be housed on the Canadian Heritage site. An inquiry would be made to see if this is a possibility. The panel further discussed the idea of having one person designated as a spokesperson and of emitting a press release. This would not prevent individual panel members from answering press questions on an individual basis.
End of Meeting
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