A personal expenditure tax alternative

Replacing the GST

The GST is a form of general tax and in the search for alternatives we sought to replace it with another form of general tax with economic characteristics that are equivalent or superior. The GST is a flat tax on consumption. The flatness means that the marginal rate of tax does not increase as income or expenditure increases or as the type of expenditure moves from the class of items that are regarded as necessities to those which are considered luxuries (except of course that food is exempt.) Such a tax burdens consumption rather than income, exempts savings from taxation and therefore taxes income only once and avoids the distortion which income taxation induces in savings behaviour. A deficiency of the GST as it has been applied in Canada is that certain items have been exempted from it, with a corresponding distortion of consumer choice. The fact that the provincial governments have not integrated their sales taxes with the GST means that there are unnecessary duplications of effort in collecting the tax and unnecessary costs in documenting an alternative tax base.

So, from the point of view of replacing the GST as a general tax measure, the task is to find a consumption-based tax which is proportional in its impact, cheap to administer, and integrated with the taxes at other levels of government. In other words, one which has as good as or better than the GST.

The expenditure tax

In concept, a general value added tax like the GST is an attempt to tax all spending by final consumers while exempting productive inputs and exports. Since all income is, by definition, either spent or saved, a tax on that portion of income which is not saved would be formally equivalent to the GST. It seems obvious, therefore, to suggest that the very first place to look for a replacement for the GST would be such an expenditure tax.

An expenditure tax would be applied through the existing income tax collection apparatus. It would be collected at source like the income tax. It would apply uniformly to all income not saved; the onus would be on the taxpayer to demonstrate that the income had in fact been saved. Borrowing, being a source of consumption finance (or dissaving), would also have to be reported by the taxpayer and included as part of the expenditure tax base. (Since financial institutions are already required to issue forms reporting the amount of income earned from investments, and have the administrative and computer infrastructure to do this, such an additional requirement would not be onerous.) Repayments of loans would be treated the same way as saving. Interest cost would be treated as expenditure. Mortgage loans would be treated the same way as they are in the national accounts with interest being regarded as a consumption payment and the remainder being saving.

In its simplest form, the expenditure tax would simply be an add-on to the existing income tax system. Very few additional calculations would be required and, by comparison with the GST, there would be a minimal amount of additional reporting, accounting and base identification. The base for the expenditure tax would be broader than that for the GST, and the tax rate would be correspondingly lower. There is even a precedent for this approach to the collection of a general sales tax in the form of the flat income taxes collected by Alberta, Saskat-chewan and Manitoba. Of course, the flat taxes are calculated on the basis of the existing tax return and do not require additional information.

Table 1 presents the data for an expenditure tax as it would have applied in 1991--the last year for which Revenue Canada has released taxation statistics.

Click here to view Table 1: An Expenditure Tax as it Would Have Applied in 1991 ($ millions)

To make them more or less identical to the current GST, any expenditure tax adopted would have to make a separate adjustment for the fact that a portion of expenditure is made for food. Since food is exempt from the GST, an exemption could be made as a fraction of income. The fraction of income spent on food by families of different incomes is calculated regularly by Statistics Canada in the Consumer Expenditure Survey and could be incorporated into the standard tax return as an adjustment to the tax base. We have provided such an adjustment in table 1.

As table 1 shows, an expenditure tax rate of only 4.2 percent would be required to replace the gross revenue from the GST, because the tax base is broader. Overall, the expenditure tax is therefore preferable to the GST since it would be less costly to police, less distortive of behaviour and much cheaper to comply with.

A simple expenditure tax option

One possible form of the expenditure tax could be calculated on the basis of the existing tax return information and would exempt only that portion of income which is saved in the form either of RRSPs or of employee contributions to an RPP. Such forms of savings constitute most of the savings done by a large portion of the population and income minus retirement savings is a reasonable approximation of expenditure. Since this would leave borrowing to finance consumption as a loophole of potentially significant proportions it could only be a transitional form of the expenditure tax. The particulars of such a tax are presented in table 2.

Click here to view Table 2: A Transitional Expenditure Tax as it Would Have Applied in 1991 ($ millions)

Since the expenditure tax would be collected at source and subject to the same sort of calculation of withholding as the income tax, there would no longer be any need to send out GST rebate cheques. Low income taxpayers would simply not have to remit the expenditure tax in the first place. The corresponding savings would add to the compliance and policing savings from the elimination of the GST. The compliance and policing apparatus already in place for the income tax would suffice to enforce the expenditure tax. Those who receive GST rebates at the moment but who do not file income tax returns would not have to receive the rebate since consumer prices would fall by the amount of the abandoned GST.

The real advantage of the expenditure tax is the potential it has for eventually replacing the income tax as well. There is some expenditure tax rate which would suffice to replace the revenue both from the GST and from the current income tax. It would be a flat rate tax and would replace the current array of rates. Table 3 contains a calculation of the flat tax rate which would be required to replace all federal and provincial income tax revenue as well as the GST revenue. It turns out that a rate of 25.7 percent would be sufficient.

Click here to view Table 3: An Expenditure-Based Comprehensive Flat Tax as it Would Have Applied in 1991 ($ millions)

Why just the GST?

While the main brief of the Standing Committee on Finance of the Parliament of Canada is to study the replacement of the GST, it has been evident for some time that the GST is not the only tax which is causing difficulty. The tobacco and alcohol taxes have now been identified as such significant distortions of pricing that basic consumer behaviour and attitudes toward illegal activity have been changed. Recent adjustments of tobacco taxes in Quebec and Ontario are an indication of the extent of the problem. However, there are other commodity taxes which are causing behaviour change that is of even greater significance to the economy. The gasoline and diesel taxes are other examples of taxes that distort consumer and producer choices. The gasoline tax causes the price of gasoline to be much higher in Canada than it is at accessible points in the United States, with the consequence that billions of dollars are spent on gasoline and other products every year in the U.S. by cross-border shoppers. Truckers and the national rail system are put at a distinct competitive disadvantage by these taxes and Canadian importers and exporters are often cross-border shoppers for transportation as a result. The effect on the tourist trade is obvious.

What all of these commodity taxes have in common is the attempt to influence the behaviour of the users of the products. High tobacco and alcohol taxes are supposed to deter consumption. Gasoline taxes are meant to encourage the use of alternative modes of transport because of the supposed environmental impact of private auto use, or are meant to be a sort of user fee for the highway system. However, as we have all seen dramatically in the case of tobacco taxes, and border communities have seen in the case of the gasoline taxes, behaviour can change in more than one way and often the actual consequences of a policy are different than those intended. Moreover, since the ability of Canadians to avoid these taxes depends on where they live or their preferences, there is a profound inequity associated with these taxes. Border dwellers do not have to pay the gasoline tax while others do. Those who smoke or drink alcohol pay higher taxes than those who prefer other recreations or stimulants.

Maybe it is time to reconsider the whole range of specific commodity taxes with a view to replacing them with revenues collected from a generally defined expenditure tax base. Such a tax could be collected in the same manner as the GST-replacement expenditure tax, with less distortion to behaviour and less inducement to illegal activity than the current system of taxes.

Table 4 presents the calculation of a comprehensive expenditure-based tax designed to replace the GST, the PST, all federal excises and indirect taxes, and, finally, all provincial indirect taxes as well.

Click here to view Table 4: Expenditure-Based Sales and Excise Replacement Tax as it Would Have Applied in 1991 ($ million)

Considering the objections

While the idea of a personal expenditure tax is easily presented, we have found from our conversations with the Parliamentary Committee and others that there are many seeming objections to the tax. As far as I have been able to determine, none of these objections stand up to careful scrutiny. Those which seem to have the most substance would have to be dealt with differently if the Expenditure Tax were to replace the entire income tax system. Then the tax rate would be in the vicinity of 25 percent and would provide incentives to taxpayers to evade and avoid which simply are not present with a tax rate of about 4 percent. In the remainder of this paper we consider some of the apparently crucial objections.

Q: How would Canadians pay their expenditure tax and when would they pay it?

A: The expenditure tax would be collected by employers just like they collect the income tax. At the beginning of the tax year, when taxpayers are filling out their Personal Exemption form in which they indicate the exemption bracket into which they fall, they would also indicate the amount of saving and borrowing they intend to undertake during the year. This would determine the extent of the deduction of expenditure tax at source.

Those taxpayers who pay directly by instalment would simply add the amount of their tax to their income tax instalment.

Q: Is the personal expenditure tax adopted in any other country, and if not why not?

A: No, the personal expenditure tax is not now in place in any country. However, it is being strongly considered in the United States where Senators Sam Nunn and Peter Dominici are advancing it in the U.S. Senate. Prominent fiscal analysts like Rudolph Penner, former Director of the U.S. Office of the Management of the Budget, and Murray Weidenbaum, former Chairman of the President's Council of Economic Advisors, are supporting the move to a personal expenditure tax as an alternative to the personal income tax. The fact that the U.S. might well adopt such a system is, in an era when the Canadian and U.S. economies are becoming more tightly integrated by the day, yet another reason to give such a tax careful consideration.

Q: Why do you think that the personal expenditure tax was not adopted historically? Why have all the countries who have consumption taxes opted for value-added taxes like the GST?

A: When I last spoke to the Finance Committee, I noted that value added taxes were a technological anachronism because economists since John Stuart Mill (born in 1806) have been admonishing governments to tax consumption. The only way in which they could do this historically was to enlist shop keepers as tax collectors and get the consumption tax directly from consumers when they spent their income. While it has long been known that it would be easier and cheaper in principle to collect the consumption tax together with the income tax using the income tax apparatus, such proposals always foundered on the information about taxpayers that such an approach requires. In 1994, all of the information required is either already being collected or can be collected with very little additional effort.

For example, nearly half of personal saving is done in the form of retirement savings plans or pension plans. Most of the rest consists of deposits in banks, trust companies and credit unions and equity in private dwellings. Savings in the form of deposits at institutions, or purchases of stocks and bonds or mutual funds, are already the subject of disclosure and reporting to the Department of National Revenue. Some small changes to the information reported would be required but no new reporting apparatus would have to be established. Even paying down the principal on home mortgages, the other dominant form of savings for most Canadians, is already computerized and reported to the consumer by financial institutions. Such reports could be used to complete the information required for the consumption tax.

While there might be some minor inconvenience in completing the extra few lines on the income tax return, it pales into insignificance when considered in relation to the hassle and inconvenience associated with the GST.

Q: What about compliance? One of the advantages of the GST is that it has a sort of self-policing function. How would the expenditure tax deal with that aspect?

A: Revenue Canada already mounts considerable effort to ensure that people comply with the income tax act. This compliance effort would also suffice for the expenditure tax. In fact, there is also a considerable problem with GST compliance as has been seen in the explosion of underground economic activity and Revenue Canada now mounts a separate effort to enforce the GST. If the expenditure tax were adopted, the enforcement effort with respect to the GST could be redirected toward the income tax with corresponding improvement in the compliance with and hence the equity of the income tax system.

In any event, the personal expenditure tax is likely to be much more comprehensive in its impact than the GST is at the moment. The current tax base for the GST is roughly $270 billion in fact when in theory it should be much larger. The tax base for the expenditure tax would be around $400 billion, thus spreading the burden of the tax across a broader base and enabling a lowering of the tax rate which of course is available to everybody and reduces the extent of distortion of the impact of the tax system for all taxpayers, whether of low or high income and at the same time reduces the incentive for tax avoidance.

Q: Since savings would be exempted in this expenditure tax, wouldn't the poor, who don't save, pay more tax? Isn't your proposal a regressive tax?

A: It is true that low-income Canadians save less than those with higher incomes. This can be seen in chart 1 which shows the savings rate by level of income. If savings were the only deduction made in calculating the expenditure tax, then those having a low income in any given year would tend to pay a higher fraction of their total income in expenditure tax. However, like the current GST, the proposed expenditure tax would also exempt food. Chart 2, which is based on the Consumer Expenditure Survey conducted by Statistics Canada, shows that low income families spend a larger fraction of their incomes on food than do high income families. The deduction for food would therefore be graduated with lower income taxpayers getting a larger food exemption as a percentage of their income. In consequence, the combination of the higher exemption for food and the lower exemption for savings leaves low income Canadians with about the same overall expenditure tax rate as high income Canadians.

Click here to view Chart 1: Savings Rate by Income Class

Click here to view Chart 2: Savings and Food Consumption Rate by Income Class as a Fraction of Total Assessed Income

On the other hand, as illustrated in chart 3, middle income taxpayers would actually pay a slightly lower tax rate than either those with the lowest or those with the highest incomes. This is because they spend a higher fraction of their incomes on food than high income families, and save a higher fraction of their income than low income families. In other words, the personal expenditure tax would be one of the few taxes that actually benefits the "middle class" which so often bears the main burden of taxation.

Click here to view Chart 3: Expenditure Tax as a Percent of Total Assessed Income by Income Group

Q: But surely it is unacceptable to get more expenditure tax from low income taxpayers than from middle income taxpayers. That's regressive also.

A: While that may potentially be true, the proposal we are making would replace the gross amount of the GST revenues taken by government. So, there would therefore be an opportunity for the use of tax credits to offset this pattern of tax incidence if that were to be desirable. In our proposal, $2.4 billion would be available for the provision of tax credits.

Q: What would prevent a shrewd taxpayer from borrowing money in the United States and then use that to buy a savings deposit in Canada? The increase in savings would be tax deductible and would be an escape from the expenditure tax.

A: While there may be an opportunity to make such transactions, the taxpayer doing so would of course have to assume the currency risk of the transaction, have to pay the difference between the loan cost and the interest that could be earned on the deposit and do it all for a expected gain equal to less than five percent of the total amount of the loan. The reason for the latter is that the expenditure tax rate would be 4.2 percent. For this reason, many of the shrewd transactions which one might invent would simply not occur because the return in terms of tax savings would not warrant it.

It is also important to note that for most taxpayers, even those with relatively high incomes, the level of their assets not contained in their Registered Retirement Savings Plans, Registered Pension Plan or private residence is quite small. To give a current example, the difference between the effective rate of tax on investment income held by a holding company in the Northwest Territories versus British Columbia is greater than the proposed expenditure tax and there has not been a great flood of taxpayers to the Northwest territories to take advantage of the fact. Or, if there has been, it has been judged by the government of British Columbia not to have been significant enough to remove its income tax surtax.

Q: Young people spend more of their income on large ticket items like refrigerators, televisions etc. Therefore, the expenditure tax is a tax on the young, is it not?

A: All consumption taxes have the effect of taxing expenditures, and it is true that people in their early years tend to be purchasing significant consumer durables--housing and the like-- whereas in late life they are consuming less. However, these people are already being affected by the GST and so there would be no difference in this treatment of them under the personal expenditure tax. It is interesting to note, however, that because the expenditure tax would have a lower tax rate, all of the expenditures of younger people would be taxed more lightly under an expenditure tax than under the goods and services tax. For example, the special GST tax rate on housing of 5 percent is higher than the effective personal expenditure tax rate proposed. Also, since the accumulation of equity in a home is a form of saving, equity accumulation would provide younger people, for whom that is often the only form of saving, with an offset. The expenditure tax would in fact encourage equity accumulation as a form of saving.

Q: How would this tax treat capital gains?

A: It would treat capital gains precisely as the current tax system does--as a component of income. The expenditure tax would apply to realized capital gains, but only to the extent that they were not reinvested. Any income or capital gains which is saved would not be taxed.

Q: Would a change in the book value of assets cause a person to pay more tax?

A: No, the treatment of assets would be the same as under the current tax system. Changes in book value would be included in the expenditure tax calculation only to the extent that they had been reflected in income. So, for example, a change in a mutual fund value is not reported by the taxpayer until such time as the accrued capital gain is actually realized and then it is taken into income. By the same token, under the expenditure tax, changes in book value would be taken as part of savings only to the extent that they had been first recognized in income. In this way capital gains would be treated as any other form of income and capital losses would be treated precisely as they are at the moment under the tax system, whereas changes in book value which are accrued but not realized would have no effect.

Q: Wouldn't people be able to manipulate book value to show phoney gains that they would deduct as savings?

A: Changes in book value which increase value are a capital gain. Changes in book value which reduce it are a capital loss, and these are already provided for in the Income Tax Act and on the standard income tax return. Any manipulation would boost both income and savings, having no effect on tax payable, provided only that there was an adjustment for the fact that at the moment only 75 percent of a gain is taken into income.

Q: What would be eligible as savings under this tax?

A: Eventually all savings would be included. A good starting point would be retirement savings, the RRSP and RPP contributions made by individuals. This accounts for roughly 50 percent of total personal savings. The next class of savings instruments to be added are the class of assets which already have to be reported to Revenue Canada. This would include savings accounts, mutual funds, insurance policies of some kinds and stock and bond purchases. An important source of savings is the equity accumulation in private dwellings. The reduction in the principal outstanding on mortgages would be one measurement of this equity accumulation.

Q: How would business inputs be affected, and what about single proprietors?

A: There would be a complete exemption for business inputs. Similarly, the costs for sole proprietors would be exempt. At the moment sole proprietors are required to provide a separate accounting for gross and net income earned from business and it is only the net amount of business income that is included in the taxpayer's income tax return for personal income tax purposes. So once again the expenditure tax produces no new requirements for information or for reporting nor even for additional calculation since every sole proprietor is required at the moment to make these gross and net business income calculations.

Q: It sounds like this tax would require a lot more reporting to government and would invade people's privacy much more than the current tax system.

A: At the moment we are all required to report our social insurance number when acquiring conventional savings instruments. Accordingly, there would be no further breach of the privacy of individuals by what is proposed in the expenditure tax. The only additional information that would have to be provided is information on borrowing, and while there would be some small additional cost imposed on financial institutions to provide this information in addition to that which they already provide on interest earned on deposits, generally speaking the apparatus is already in place for this reporting, and the information is already readily available to credit agencies and other authorized users. Whatever one may think about this situation, it would not be changed by the introduction of the personal expenditure tax.

Media Archive invited to assist in monitoring South African election

Lydia Miljan

Lydia Miljan is Director of the National Media Archive, a division of The Fraser Institute. -Note.

ON DECEMBER 10, 1993 I received a phone call from the Commonwealth Observer Mission in South Africa, inquiring whether the National Media Archive would be in a position to help establish a methodology for monitoring the South African media's coverage of the election campaign.

I was delighted to accept the opportunity. The following is a personal account of what I did for the South Africans.

Organizations in place

The Independent Media Commission (IMC), established as part of the legislation governing the first all-race elections in South Africa, is headquartered at the World Trade Centre in Kempton Park. It is a remarkably hideous building, considering that this was where the negotiations for the constitution were held. My first meeting was with Lebogang Matsobane, who is responsible for monitoring state publications. We discussed the organization of the National Media Archive, our methods, and how we could potentially serve the Commission.

The government had enacted legislation to ensure "during the period of the first national election for the National Assembly and other legislatures . . . the equitable treatment of political parties by broadcasting licensees, and that State-financed publications and State information services do not advance the interests of any political party."

Lebogang's responsibility is to "ensure that State-financed publications and State information services are not, directly or indirectly, used to advance the interest of any political party, whether directly or indirectly." He requested that I prepare a discussion paper on our methodology, premise, and applications for an upcoming workshop to be held at the end of the week.

I was then introduced to David Niddrie, head of the IMC's public broadcasting wing. His mandate is to "ensure equitable treatment of all political parties by broadcasting services." The IMC is to act as the agency to hear and assess complaints. Under the legislation, only political parties may go to the IMC to complain about public broadcasting inequities. The IMC, however, also has the right to monitor broadcasts, and to intervene on its own behalf if it considers public broadcasts unfair. It does not have to wait for a registered party to launch a complaint. The key component of the power of the IMC is that it adjudicates complaints, and if it decides that a broadcast is indeed unfair, it can levy heavy fines.

Despite the power of the IMC, neither the public broadcasting nor the state-publication departments had decided on a methodology, or in fact determined definitions for operation. However, the public broadcasters had the advantage over the state publications people in that they had defined areas to observe and existing monitoring agencies.

David Niddrie explained that two organizations are aiding the IMC in assessing public broadcasting coverage of the campaign. One is the South African Communications Service (SACS), in effect a government department, that works out of offices in Pretoria. The other agency, the Media Monitoring Project, is non-governmental, is funded by the Canadian International Development Agency (CIDA), and is housed in Johannesburg. Because these two agencies are already in operation, it was felt that the IMC should avail themselves of their services. The task at hand was to help the IMC assess the information these latter two groups gathered, and establish a way to coordinate the information both would be providing.

With that information, David Niddrie sent me on my way with broad responsibilities. In effect, I could do as little or as much as I thought appropriate.

My first task was to meet with each of the organizations, determine what they considered flaws in their procedures, and go from there. After meeting with officials at the IMC, I went to the SACS office in Pretoria to examine their operations. In stark contrast to the IMC's quarters in the Trade Centre, SACS is housed in a very modern building. They have state-of-the-art technology which records and digitizes all radio and television broadcasts in the country. Those digitized signals are categorized by subject, and speeches are timed and catalogued. SACS has come under attack in recent years for being the propaganda agent for the government, but despite this reputation, the IMC is to receive some raw data on the election from this source. When I asked SACS if they wanted to expand their analysis, SACS officials responded with a definite "No." They explained that by offering no assessments of what was being said, they could not be charged with bias. Given their reluctance to provide any content analysis of the news reports, there was very little I could offer in terms of improvement to their system.

The next afternoon I met with the people at the Media Monitoring Project. This office in a busy downtown Johannesburg building is substantially less posh than the government offices enjoyed by SACS. The staff is remarkably young; the two coordinators, Lara Kantor and Bronwyn Keenan-Young are in their early twenties and have been working on the project for a little over a year. They told me that they are from the "critical school" of communications. In other words, they had only provided qualitative assessments of the content, and had made no attempts to quantify any of the data. They admitted that in fact they had had no training in any quantitative method, and indeed were very sceptical of information that SACS would be providing. They derided the SACS information as merely "stop-watch" analysis and found little value in it.

In the course of our discussion, Kantor and Keenan-Young admitted that while they did not think much of "stop-watch" analysis, they too had their critics. Specifically, the IMC was somewhat concerned that the Media Monitoring Project's qualitative analysis would not hold up in the adjudication process, and subsequently be of little use to the Commission. When they discovered that the National Media Archive's technique could quantify some of the content without diminishing their qualitative work, they wanted to hear more. I gave them this example: their finding on February 22 that "a statement by the watch group Lawyers for Human Rights (LHR) was covered widely on evening television newscasts" could be dismissed as an opinion unless they could provide some measurement of the frequency of the term "widely." They were very impressed that we have a method that enables us to say that "a statement by the watch group, Lawyers for Human Rights (LHR), was featured in three quarters of evening television newscasts." The gist is the same, but using the Media Archive method the statement was transformed from being merely the judgement of the analysts to being something that could be quantified, and more importantly, something that could be replicated by any other group of analysts.

As I explained, providing this level of analysis would only serve to enhance the work they were already doing. In addition, it was paramount that they continue with their analysis to provide a context for the content analysis. The MMP was convinced that the Media Archive method would provide the much-needed rigorous standards that they had been lacking to date. Their only concern was whether we could implement the system before the commencement of the election campaign nine days away.

Considering that I had just finished monitoring our own election campaign a few months earlier with a staff that was trained only days before the writ was dropped, I was confident that the same could be achieved with this group.

Getting things done

In the next few days, I worked closely with the MMP in establishing a coding scheme for the election. In addition, I attended the "Workshop on Methodology" at the IMC. At the workshop, held on the Friday, I was asked to make a submission to the State-financed publications division in the morning, and to provide a submission to the public broadcasting division in the afternoon. The morning session went very well. I provided a Canadian example illustrating how media monitoring worked for us. Others in the group gave more academic overviews of the various methods for analyzing text. It was an interesting workshop, but I couldn't help but think that it was much too late given that they had a week to decide on a framework.

Over lunch I met up with the people from SACS and the MMP. We had decided to get together to establish some consistency in the way issues would be categorized. The SACS project had begun a system of identifying the topic of discussion, and their distinctions would be useful for the MMP's project. In addition, by making the two groups think about the issues in the same manner, the IMC could make better use of their separate submissions. We set up a meeting for the next Monday to discuss the definitions. With my assistance, MMP and SACS worked closely together to establish the criteria for identifying themes in coverage. For example, was an issue about security services, townships, or participation in the campaign? This provided a way to harmonize both projects and make them work within the IMC framework.

By Tuesday, we had hammered out a good first draft of a coding document that would allow us to examine every statement that would be made in the election campaign. We identified all the parties, news organizations, and relevant issues. It was agreed that we would begin training the researchers on the coding scheme.

IMC chooses NMA methods

After much debate about the role of the IMC, the adjudication process, and the time involved in conducting the analysis, the IMC and MMP decided that we should proceed with training the MMP researchers in the National Media Archive's method of content analysis. The National Media Archive's method provided enough detail to be of use to the IMC, and I was confident that the staff could be trained in time to make the deadline for the start of the campaign.

The people who would do the content analysis were the staff currently transcribing and translating the news bulletins. When I began training them, they were already providing the transcripts and making comments on what they felt was fair coverage. I sensed that when I suggested changes to the procedure, these people felt that these might make their work to date irrelevant. However, I did persuade them to adopt the new method once I explained that it would give them more guidance in determining what was important and what wasn't, and that their work would prove more important than ever. Reassurances were one thing, but only when we went through the coding procedure examining stories statement by statement did the staff see the value of this method.

When we started on the first story, we all agreed that it seemed to be a neutral story on the ANC. However, when we examined each statement, we soon discovered that it contained more statements in favour of the ANC than critical of it. The exercise helped to illustrate to the monitors that often our own perceptions and biases affect the way we interpret a news story, and only when we are forced to examine precisely what is being said can we assess the content fairly.

By the time I completed the training process, the monitors were busily coding individual statements. A typist had been trained to enter the numbers, and analysts had been shown how to run the computer program which would churn out the daily results. As well, I trained the analysts to read the tables and charts so that they could provide quantitative data on their qualitative assessments of the campaign.

As I was engaging in the training system, I was continually asked by those at the IMC about time constraints. They were quite concerned that I could not train staff and implement the system in the time I had remaining. One senior official kept on insisting that I must stay longer because he simply could not believe that the project could be put in place in such a short time. In fact, I was able to successfully train the workers at the MMP in the time I was there.

When I returned home just two and a half weeks after leaving Canada, I received word that the MMP was up and running and issuing daily results of the election to the Independent Media Commission.

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Last Modified: Wednesday, October 20, 1999.