As of October 1, 2016, British Columbia (B.C.) will
reduce tax creditsavailable to film and television
productions. Basic production service tax credits will be reduced
from 33 percent to 28 percent, and tax credits offered to digital
productions, animation and visual effects work will be reduced from
17.5 percent to 16 percent. This change to the incentive structure
has caused some concern among B.C. residents, fearful that foreign
filmmakers (and the jobs they have created) may leave B.C. in favor
of cheaper venues.
Following the creation of Canada's federal film incentive
program, some of the provincial governments created additional
tax incentive programs. These additional incentive programs
included labor-based, as well as "spend-based," tax
programs. B.C. was the first province to introduce these
additional tax incentives, but its tax incentives remained
stagnant, while those offered in Ontario and Quebec increased.
B.C critics of film tax credits claim that the incentive program
is costing the province too much money. B.C. has no cap on how the
amount of tax credits generated within a given year, so the boom in
B.C. production also meant a boom in redemption of tax credits.
An Alternative Ending?
Two factors may indicate whether these tax reductions will be
long lasting: (1) the strength of the Canadian dollar and (2) the
success of the film industry in neighboring provinces. Three years
ago, the campaign for increased tax credits was undermined by the
falling value of the Canadian dollar. If the Canadian dollar begins
to recover, one of the effects would be an increased cost of
production for foreign productions in Canada, and, in turn, this
would create an incentive to reverse the tax reductions.
Alternatively, if Ontario and Quebec gain film business at the
expense of B.C., B.C.'s film industry will put pressure on the
government to reverse its stance. Neither of these factors are
within the direct control of the B.C. government, and a potential
reverse would not be immediate.
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