Tuesday, December 12, 2017

A letter to the Toronto Star (unpublished)

Re: Closing tax loophole needed to save local media, Dec. 4

Ian Morrison’s review of the tax measures designed to stem the flow of advertising dollars to U.S. media was conveniently incomplete. Section 19 of the Income Tax Act disallowed as a deductible business expense the cost of advertising in foreign-owned publications to protect magazines in the 1960s because U.S. titles like Time were publishing Canadian editions. Bill C-58 similarly shielded television in 1976 because American stations close to the border were selling ads in Canada. That set off a trade dispute in which the U.S. disallowed as a business expense the cost of attending conventions in Canada. More than 100 were cancelled the following year as a result. A ceasefire in this cross-border business war was only negotiated with the 1988 Free Trade Agreement. This might prove a cautionary tale about the perils of scheming to redistribute cross-border commerce, especially in the current era of “America First.”

Marc Edge
University of Malta