The film tax fandango: saving pennies, losing the future

Last week’s provincial budget shows how governments can be tough-talking, penny-pinching wise and what-were-they-smoking, real-world foolish, both at the same time.

Exhibit A: the evisceration of Nova Scotia’s film tax credit.

Finance Minister Diana Whalen

Finance Minister Diana Whalen

Finance Minister Diana Whalen argued the credit was too generous, went to filmmakers whose films weren’t shot in Nova Scotia and to companies that didn’t owe provincial taxes. (Earth to Diana: you need new advisors who understand the industry.)

While cutting the tax credit may magically make the books appear closer to balance, it will also help dismantle the yellow brick road to prosperity the government claims it’s building.

The industry not only employs more than 2,000 highly-skilled, well-paid, tax-paying workers, but it also spreads its financial, filmic fairy dust over other sectors: it rents hotel rooms, vehicles, security guards, offices, studios, locations; it spends at supermarkets, building supply outlets, furniture stores, clothing retailers, even second-hand shops…

In 1993 when the credit was introduced, Nova Scotia’s film and TV industry was worth $6 million; last year, $150 million.

The government says the credit costs taxpayers $24 million a year. Under Whalen’s new formula, that outlay will ostensibly shrink to $6 million per year — but probably closer to zero as every footloose producer flees to jurisdictions offering more generous rebates.

It’s already happening. Two producers considering filming in Nova Scotia apparently changed their minds after Thursday’s budget. DHX, the Nova Scotia-born-and-based international entertainment conglomerate, says it will shut down its animation facility — 155 jobs — and may move its head office. 22 Minutes, Mr. D., Haven all appear prepared to wave goodbye too.

If so, Whalen’s prediction of a surplus budget in 2016-17 may turn out to be as real as a Hollywood fantasy.

So too any hope (See: the Ivany Report, the future, etc., etc…) of keeping those smart, well-trained people here in Nova Scotia.

As local film industry veteran Keith Currie lamented to Metro’s Stephanie Taylor: “Once again, we’ve managed to take the best and brightest and force them to go down the road.”

All that to pretend to save $18 million — out of a budget of $10 billion.

Penny wise.

Pound nutty.

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Copyright 2015 Stephen Kimber, Website
  1. Tax credits are almost always beneficial to attracting ~any~ industry to a jurisdiction. And attracting industries brings jobs.

    It’s not clear to me why Nova Scotian NDPers are so up in arms about ending this tax credit while they so staunchly support taxes levied against almost every other industry. To be ideologically consistent, they should support lowered taxes for any industry that buys local products or creates local jobs.

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  2. What were they smoking is the right question alright. Anyone for a new bill to require blood tests and psychological evaluations for government MLA’S ?

    This is the single dumbest move by a provincial government in NS that I can remember. It seems unreal.

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  3. So after dining on our public trough for years, you’re going to pack up the moment subsidies end? Good riddance, parasites.

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    • Are you for real or are you that ignorant? Film is competitive industry and the tax credits are part of the decision to shoot here or another province. The millions pumped into the economy more than offset the tax credit and without it there’s no spinoff and no jobs. If the Irvings were not getting a tax break there would be no contract to build ships in Halifax for the feds; in fact, the shipyard would likely be downgraded. Tax breaks are part of the game played by every other province and NS has choice: play the game or have your abysmal tax base erode even further.

      Do us favour, if you cant analyse an issue with facts, just shut up. Better to be silent and thought a fool than open your mouth and eliminate all doubt.

      Reply

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