OTTAWA -- A major new report is calling for dramatic changes to help shore up Canada's news industry as it faces a massive decline in revenues and a growing "fake news" problem.

The 100-page Public Policy Forum report calls for a sales tax on foreign companies selling digital subscriptions in Canada and a $400-million "Future of Journalism and Democracy Fund" to help finance reliable news and information.

The dozen recommendations also include tax changes, a new "local" mandate for news agency The Canadian Press, providing free access to CBC news content and denying the public broadcaster the ability to sell digital ads.

Edward Greenspon, the report's author, says Canada's news industry is in deep crisis, brought on largely by a shift in advertising to digital media sites.

The veteran journalist says the recommendations are meant to ensure Canada's democracy is well served by a strong, independent and trustworthy news media.

Heritage Minister Melanie Joly ordered the study as part of an overall review of Canada's media landscape, in particular how it has shifted to the Internet. A Commons committee has also carried out its own study and is expected to report to Parliament by spring.

The report comes on the heels of what was just the latest in a series of layoffs by Postmedia, the country's largest chain of daily-circulation newspapers.

The company issued layoff notices Tuesday to employees at the Ottawa Citizen, Montreal Gazette and Windsor Star after the company failed to reach a 20 per cent salary reduction target it set for itself last fall.

Other news giants, including the Toronto Star and the Globe and Mail, have also cut staffing levels as they struggle with declining print advertising revenue.

Nor are television and radio newsrooms immune: Canada's national broadcast regulator warned last year that nearly half of the country's local TV stations could be off the air by 2020 without a revenue boost to pay for local news programming.

The report, entitled "The Shattered Mirror: News, Democracy and Trust in the Digital Age," relied on a half-dozen roundtables, polling and focus group research to reach its findings about how Canadians perceive the relationship between the news industry and the country's democratic institutions.

The Canadian Press participated in the roundtables and research.

In April, Joly launched a public consultation on media and Canadian content in a digital world that included town hall gatherings across the country.

Those forums heard a range of suggestions, including calls for new fees or taxes on foreign-owned digital media players as a means of helping to prop up the domestic news industry.

Others, however, have pre-emptively scolded the government for even considering any kind of taxpayer-funded support for media outlets, arguing that audiences will ultimately turn toward new digital platforms to stay informed.

Internet freedom advocacy group OpenMedia has petitioned against what it calls an Internet tax, but has asked federal Finance Minister Bill Morneau to consider applying sales taxes evenly across foreign online vendors operating in Canada.

In a report on Canada's entertainment and media sector issued last summer, PricewaterhouseCoopers predicted steady growth in Internet advertising revenues, and an acceleration of the recent downturn in newspaper publishing.

Media firms have complained that, while their focus turns increasingly to online publishing, digital advertising revenues have not come anywhere close to replacing those previously generated from print ads.

Joly's office has called the shifts in news revenue streams "significant," and said the government hopes its Canadian content consultations can help it assess how to best support the production of local, credible and reliable news and information.