The coalition wants the feds to help the industry by closing what it describes as a loophole in the Income Tax Act
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OTTAWA – After U.S. President Donald J. Trump’s repeated threats of tariffs on Canada sparked a surge in Canadian patriotism, local media leaders are calling on the federal government to “preserve Canadian unity and culture through the protection of its media.”
The Canadian Local Media Coalition wants the federal government to help the industry by closing what it describes as a loophole in the Income Tax Act that helps foreign companies like Google and Meta, the parent company of Facebook.
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More than 20 media companies, associations and unions are openly calling on the federal government to change the law and mandate that advertising spending by Canadian advertisers on foreign digital media be subject to Section 19 of the Income Tax Act.
Postmedia President and CEO Andrew MacLeod signed the letter to the ministers of finance and heritage.
Since the 1960s, the law has stipulated that Canadian advertising expenses on foreign media are not deductible for income tax purposes. The law has never been amended and doesn’t apply to tech giants.
In an interview with National Post, Cogeco Inc. chairman Louis Audet said Ottawa does not seem interested in taking action.
“It’s a mystery to me,” said Audet.
“What we’re talking about is preserving Canadian unity and culture through the protection of its media that allow people to speak to each other from one end of the country to the other, that allow elected officials to speak to their constituents and vice versa,” he added.
He said the initiative is not a response to Trump’s comments about making Canada the 51st state or the frequent threat of a new round of tariffs on Canadian goods, but the context seemed fitting.
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“When all of this was building up, he was not even elected. But yes, I agree that it sort of blends in nicely,” he said.
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For years, Audet has been trying to convince other industry leaders to join forces and demand changes to the legislation. He has personally contacted finance department officials and tried to meet with former finance minister Chrystia Freeland, to no avail.
He says the department was very focused on how much more revenue such a change would bring in, to his annoyance.
According to a study by Friends of Canadian Media, “billions of dollars of advertising expenditures could be rendered non-tax deductible, representing significant potential gains in corporate tax payable”.
Industry executives say 70 per cent of Canadian advertising dollars from local media have been shifted to foreign digital giants like Google and Meta, for example. In 2022, that’s $13.5 billion in lost revenue for Canadian media.
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The industry has been in a whirlwind over the last decade. In fact, 40 daily newspapers, 400 community newspapers, 42 radio stations and 11 television stations have disappeared in Canada since 2008.
The office of Finance Minister Dominic LeBlanc did not immediately respond to a request for comments.
A government source said Ottawa is reluctant to comment on such initiatives with Prime Minister Justin Trudeau stepping down on March 9. The new Liberal leader, who will become prime minister, is also expected to call an election in the spring.
National Post
atrepanier@postmedia.com
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