Magazine Tax

In the dying days of a long parliamentary session, Canada's Liberal government last week suddenly brought forward and enacted its 20% tax on advertising in Canadian editions of U.S. magazines.

Finance Minister Walter Harris, who devised the measure five months ago, remained its main supporter. In a 35-minute speech he hailed the tax as a great boon to Canadian culture, contending that Canadian magazines are in desperate economic shape and that a tax on competing U.S. publications is necessary to save them from "disappearance."

Ontario Conservative W. Earl Rowe, acting leader of his party, scoffed at Harris' reasoning. Said Rowe: "I do not believe it will help any Canadian magazine." Later, in the usually staid Senate, Ontario's Norman Lambert and Manitoba's Thomas Crerar accused their own Liberal party of abandoning its free-trade traditions. But the objections were overrun by the impatient Liberal drive for a vote. In three hours, Harris' carefully timed bill cleared the House; the Senate rubber-stamped it in a single sitting.

Newspaper reaction was a nearly unanimous cry of dismay. The Liberal Winnipeg Free Press called the tax "silly, illiberal and vindictive." The Tory Globe and Mail branded it "one of the worst tax measures ever devised by the government of a free country." The newspapers also expressed doubt that the tax would be of any help to Canadian magazines. They foresaw that the U.S. publications principally affected (Reader's Digest, TIME, Family Circle, Woman's Day, Everywoman's and Parents Magazine) would raise their advertising and subscription rates, and that advertisers who preferred these publications would continue to buy space.

The prediction was not long in coming true. Reader's Digest immediately announced an increase of up to 13% in advertising rates and hinted at a possible 10-c- boost in its 25-c- newsstand price. TIME set no figures but said that an increase in its advertising and circulation rates would be announced for Jan. 1, 1957, when the new tax goes into effect.

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