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British Columbia Government Threatens to Eliminate Film and Television Tax Credits

In March 2005, the British Columbia government commissioned a report to determine the impact of the provincial Film and Television Production tax credits on government expenditures and the economy.  It is entitled, Film and Television Industry Review and was completed by InterVISTAS Consulting.  The final result of the report was a recommendation that the government should either reduce the value of the incentive or eliminate it completely. The report finds that BC is paying more to administer the credit than it is recovering in taxable revenue generated by production activity in the province.

Essentially, the government's concern is that taxpayers are on the hook for whatever the government does not recover because the money must come from other spending programs or through increased taxation.  The stakeholders, however, criticize the report and the government for appearing to give minimal weight to the indirect benefit that other industries such as hotels, local convenience stores, catering businesses and other service companies obtain from having films produced locally.  Also, considering the current level of competition for film production business coming from other provinces, various states in the US and internationally, opponents believe it is unwise for the government to take this course of action.  In Playback Magazine, Editor Mark Dillon in his comment entitled, Cutting B.C. tax credits is suicide, says … "To mess with the tax credits now would be devastating for the local industry".  According to Dillon, it does not seem logical that at a time when the Canadian dollar is so low that the government would even consider changing its tax policy in a way that would adversely affect an already struggling industry.

The BC government has committed to factoring the results of this report into its decision about whether or not to continue offering the film tax credits as they currently exist.  It is likely that unless the stakeholders involved can justify the existence of the credits at the current level that the province will make some changes.  Unfortunately, what it is going to come down to is the bottom line.  How much tax revenue is the BC government able to attribute to the presence of these productions within its borders? And how much longer can they sustain tax revenue shortfalls at the expense of the average taxpayer in order to benefit the film industry?  If any changes must be made, any fiscally responsible government would not do a cold turkey amendment.  Instead, a phased in approach would likely give some comfort to producers with productions currently planned to be filmed in BC and will also allow others to find alternative ways of making production seem more attractive in BC.

No one likes change, but sometimes change is necessary.  What the BC government needs to really consider is what type of changes would benefit it’s citizens and it's businesses the most.  This requires canvassing the tax and non-tax advantages and disadvantages of the current film tax credit.

Copyright © 2006


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