Lights, camera, goodbye? B.C. government cuts film and visual effects tax credits

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Image: 20th Century Fox

Driven by the film industry’s booming activity in B.C., the provincial government says its high subsidy credits for film productions and animation and visual effects are no longer necessary.

High tax credits combined with a low Canadian loonie attracted record production activity to B.C. over the past year, including dozens of television series and big budget productions such as Pirates of the Caribbean: Dead Men Tell No Tales, Star Trek Beyond, Power Rangers, and Deadpool. 

Visual effects and animation studios have also been expanding their presence in the city to keep up with the load of the contracted work to provide digital effects and animation for both film and television productions.

However, as of October 1, 2016, the credits for principal photography will drop from 33% to 28%. Television series that begin filming before this date will be able to continue using the current rate for all episodes in the production’s forthcoming season.

Digital animation and visual effects productions will see their credits drop modestly from 17.5% to 16%.

The provincial government claims that the current rates are unsustainable if the local industry continues to grow as forecasted. Over the past three years, annual subsidies averaged at $313 million but this is set to increase to $500 million for the 2015-2016 fiscal year. For further contrast, the average annual subsidy in the five-year period before 2012 was $182 million.

In the period between 2012-2013 and 2014-2015, industry spending that qualified for tax credits increased by over 50% to $2 billion.

Image: 20th Century Fox

SEE ALSO: 2015 a record year for Vancouver's film and television industry

“We are proud of the success we’ve seen in this industry, but we also need to safeguard the interests of B.C. taxpayers, who ultimately pay for subsidies, and ensure there is equity with other industries that drive B.C.’s economy,” said B.C. Finance Minister Michael de Jong in a statement.

The provincial government says that the tax credit changes were made in consultation with major American studios and the Motion Picture Association. Foreign productions are responsible for 80% of all B.C. industry activity, but the government does not believe it will significantly alter the level of activity contracted to local film studios – at least in the short-term while the loonie is still favourably low. As well, today’s announcement provides studios with some definitive answers on future rates following months of speculation.

“The Province appreciates the industry’s willingness to work together on this issue, allowing government to provide certainty for production companies,” De Jong continued.

It remains to be seen whether the less competitive credits will cause productions to shift to other jurisdictions such as Ontario, Quebec, Louisiana, and Georgia. In recent years, these jurisdictions have kick started their own film industries by introducing highly competitive tax credits and subsidies, but critics have argued that the ‘race to the bottom’ is not sustainable over the long-term.

It was just three years ago that the B.C. film industry actively campaigned for the province to hike its tax breaks. At the time, the industry was struggling and the industry wanted tax breaks that were similar to Ontario and Quebec.

But Premier Christy Clark’s government denied the industry of more subsidies, and by the end of the year industry activity bounced back.

Activity generated by the film industry currently employs 30,000 people across the province.

 

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Kenneth Chan Deputy Editor & Social Media Manager at Vancity Buzz. He covers stories pertaining to local architecture, urban issues, politics, business, retail, economic development, transportation, infrastructure, and anything else that makes a difference in the lives of Vancouverites. Kenneth is also a Co-Founder of New Year's Eve Vancouver. Connect with him at kenneth[at]vancitybuzz.com
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