A tax credit Ottawa promises to encourage more Canadians to pay for online news will roughly cover two months of a digital subscription fee.
Tax credits are one of three tranches of a $ 595 million five-year increase for the scary media industry, funded by finance minister Bill Morneau last week's fiscal update – along with tax credits for the work costs incurred by news agencies to produce original content and offer charitable status to nonprofit media organizations.
The tax credit will be worth 15 percent of the cost of a subscription, although economically based spokesman Jack Aubry says that the actual dollar amount that someone saves depends on the cost of a subscription.
Aubry says, for example, that someone who pays 200 kronor per year to access an online news site would be entitled to a tax credit worth $ 30.
He says the government believes that the tax authorities are necessary to encourage more Canadians to subscribe to online news and help organizations transition to a more sustainable business model.
John Hinds, CEO of News Media Canada, representing the newspaper industry, says there is "no silver bullet" that will save Canada's news industry when it's struggling with the transition to digital, which has shown that advertising revenues fall and subscribers abandon the ship.
But before the government announced, Hinds said several newspapers asked their readers about the idea of a subscription tax and found that it was well received.
"It's about encouraging people to pay for news and giving them a fiscal incentive to do it," he said. "Part of the challenge we have had as an industry is that people do not want to pay."
Tax credits to encourage behavior are common, ranging from home ownership to volunteer work, promoted by offering different credits. But they do not always work.
By 2017, the Liberals eliminated a public transport tax credit introduced by the former Conservative Government in 2006 to encourage people to use commuter trains and trains more often. Two separate studies on that credit, one from the University of Ottawa and another Saint Mary University in Halifax, determined that there was little or no impact on transit as a result of the credit.
The subscription tax is intended to be temporary but no further details have yet been decided. Hinds says there are still many details to be prepared, such as those subscriptions that are eligible, if you can claim more than one subscription and if there is a maximum benefit per household.
The cost of digital subscriptions varies greatly depending on the site, with some offering a payment per story, other daily, weekly, monthly or annual assets, and others that provide online access to those who purchase the print version.
The government intends to appoint a panel of journalists to a committee to recommend permissions and parameters for the media package, but it seems no further details about what will be available until the next federal budget.
The Conservatives are lively at the government's media package and argue that the Liberals try to buy journalists before the next fall's federal elections. Hinds said there are some indicators the critics of the package are less worried about the subscription credit because it targets consumers of the media rather than journalists directly.
But a spokesman for Conservative leader Andrew Scheer said that the party's biggest concern is the makeup of the panel that determines which organizations are entitled to parts of the package.