B.C. cuts film tax credits—and filmmakers say that’s OK

Tax breaks to industry to fall by five per cent 

Three years ago, Save B.C. Film spokesperson Wayne Bennett said that only a hike in tax credits could save Hollywood North. Yet on Monday, the provincial government announced that it will do the opposite: in October, the basic tax credit rate will decrease from 33 per cent to 28 per cent, and the digital animation or visual effects (DAVE) tax credit rate will drop from 17.5 per cent to 16 per cent.

And that’s OK with the B.C. film industry, which is grateful the province established an industry-government working group to get the industry’s perspective. “We never thought there was a risk of the tax credits disappearing,” says Peter Leitch, chair of the Motion Picture Production Industry Association of B.C. “It was just making sure that we could work together to come up with a solution that worked for both sides.”

If rates had remained unchanged, the province estimates the subsidy would have cost nearly $500 million in forgone revenue this fiscal year, an increase of an average $313 million over the past three years and $182 million over the five years before 2012-13—presumably because revenue rose proportionately.

“When the tax credits are increasing, in some ways that’s pretty good news in that that means they’re succeeding and the industry’s doing well and we’re employing a lot more people,” says Leitch. “So that certainly does help offset the cost of the credits, and we’re proud of the size of the industry that we’ve built and that we’re one of the leaders around the world in terms of content production.”

Between 2012-13 and 2014-15, industry spending on foreign and domestic productions that qualifies for the production services tax credit increased more than 50 per cent to $2 billion, according to a government release. Foreign film and television productions make up about 80 per cent of all production spending in B.C., and the government attributes the strong U.S. dollar to helping attract foreign filmmakers to the province.

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Businesses in B.C. pay some of the highest provincial taxes while residents’ taxes are among the lowest. (Conference Board of Canada)