BC Taxpayers Lost $100 Million On Film Subsidies In 2011

If the film subsidy program in BC is so successful, why would the BC government have second thoughts on further support for film? The reason is because when you do the math, the result is a net loss for the government which is spiraling into debt. Let’s do the math.

Supporters argue that while subsidies cost the taxpayer millions, it lures productions to spend millions which in turn gets taxed leading to a greater return on investment for the province. Savebcfilm supporters have been posting this chart from a 2005 BC study that tries to show that:

savebcfilm

The report does not only measure money spent by the government and studios, but also measures the tax revenue generated directly and indirectly. Ironically this same report concludes that when you factor in opportunity costs, the government loses money and on top of that, if the tax credits were removed, a substantial amount of production would stay.

Regardless, let’s just assume this chart is 100% factually correct and agree with Save BC film people that in 2005, the incentive program made a net gain of $55.3 million.

2011: BC Increases $$ Spent On Subsidies For Huge Losses

  • In 2005, the BC/Canada government spent $65 million on various film subsidies.
  • In 2005, the report says BC productions spent $1.15 billion which generated $121 million in total taxes.
  • In 2011, BC productions spent about the same amount: $1.18 billion
  • In 2011, the BC government increased the amount spent on film subsidies to $220 million.

When you compare the amount of money spent by BC productions in 2011 and 2005, they are virtually the same: about $1.15-1.18 billion (2011 source here). Tax rates have generally stayed the same so we can assume the film industry generated the same amount in taxes as reported: $121 million.

However, one thing has definitely changed: BC is giving a lot more money for film subsidies. Back in 2005, the PSTC tax credit rate was just 11%, in 2011 it was increased to 33%. In 2005 BC spent $65M in film subsidies. In 2011, the spending ballooned to $220M! (see page 126 of the BC Fiscal Budget)

Rather than a net gain of $55 million back in 2005, they would now have a net tax revenue LOSS of over $100 million in 2011.

BC Tax Credits Are A Subsidy

Despite the protests of the Save BC film people who say—if not scream– film tax credits are not handouts or subsidies, it seems none of them realize the credits are, and always have been, REFUNDABLE.

The PSTC is a refundable corporate income tax credit. When filing tax returns, your corporation may claim a specified percentage of the labour costs incurred in making a production. The credits are applied to reduce tax payable, and any remaining balance is paid to the corporation.

US Productions Pay Very Little Corporate Tax In BC.

And here is one last wrinkle:  the film tax credits in BC can only be applied to corporate income taxes.  And it just so happens that of the $121 million tax revenue from 2005, just $8.7 million was corporate income tax.

So even back in 2005, over $55 million of the $65 million issued tax credits were refunded as cash payout.

No matter what, film subsidy proponents want people to focus on the billions being spent but not the amount it’s costing the taxpayer to lure that business. Ask yourself, if you ran a store selling iphones at a severe discount would you attract alot of spending activity? Yes, but you’d have to caveat it with the fact that money you spent to provide that severe discount is running you into debt and eventually out of business. Do the math.

Soldier On.

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86 Responses to BC Taxpayers Lost $100 Million On Film Subsidies In 2011

  1. Caleb Howard says:

    My salary is taxed, and I pay a 12% sales tax, and property taxes. This sort of report ignores these secondary revenues.

    • VFX Soldier says:

      Not true. Read the 2005 report. It measures direct and indirect taxes stemming from corporate, income, and consumption taxes.

    • Jen says:

      BC does not have direct access to most of those secondary revenues, so it may not be able to use them to sustain its subsidies.

      BC did not collect your federal taxes. The 12% sales tax also did not go directly to British Columbia, since that is collected on a federal level in BC. The only taxes that stayed for sure in BC are the property taxes.

      • VFX Soldier says:

        If that is true then BC is potentially losing even more money. Again, I come back to my original point: If these film subsidies were generating a huge return on costs then they wouldn’t even hesitate to increase the subsidies.

      • Caleb Howard says:

        Fair enough. only a portion of these Taxes go to BC. The report is still disregarding all of the secondary revenues and benefits.

    • Ashes says:

      That won’t make up for the 33% that the BC government pays out on a 100k salary. Even if you spent all 100K you’d only be paying 12k back in taxes while the BC government shelled out 33k to the studios. How is this a good investment for the government?

      • Caleb Howard says:

        it helps the broader economy, and creates stimulus for support industries as well.

      • Ashes says:

        How does the government losing a ton of money help the economy? It’s not stimulating anything. It’s creating a unstable, false sense of a viable economy that’s going to collapse once the government can no longer pay for it.

      • Bev says:

        Isn’t that why government’s favourite thing to do to stimulate the economy is build roads and bridges? They count on the spinoff economy.

    • Caleb, the report DOES measure and include ALL of the secondary revenues. It accounts for the entirety of the “ripple” effect for all of the direct, indirect and even the induced impacts.

  2. Caleb Howard says:

    It’s also worth noting that this report is about Production, not Post-production, except as a tangential discussion. The post-production incentives are only mentioned in passing, and their status isn’t being threatened by any recommendations in this report that I can see. (It’s long, however, and so I may have missed something. I can find only tangential reference to the DAVE post-production incentives in this report, though.

    • VFX Soldier says:

      I understand you want to believe that but this report also include post production. The budgets lump in the DAVE tax credit into the film and television tax credits. Click the link I provide for the 1.18 billion figure. It lists many vfx only projects.

  3. Caleb Howard says:

    Be, well, though. This report may influence production incentives in BC. That may even cascade into an influence on the post-production industry in BC. I hope not, for the sake of the people working here, but my position is not so vocally represented under the VFX soldier. Most of the folks I know in the industry here are Canadian, and most of them like being here.

    Many seem to think that the market in Canada is the cause of the decline in the state of the American worker’s situation. I don’t happen to agree, but y’all do what you have to do.

    Please bear in mind that not everyone feels the way you do about it, however, and that your proposal to fight these incentives – if successful – will potentially impact many good people.

    There are multiple perspectives here. That’s all.

    • Ashes says:

      The whole point on getting rid of tax incentives, subsidies, and the like is so everyone can work where they want to work. All the incentives do is make the overall global VFX industry incredibly unstable.

      Different perspectives are fine, but back it up with actual facts not just how you personally feel. Perhaps the majority of Canadians are fine with the government losing money on this and are will to pay more in taxes or get less services from the government. That’s obviously their choice, but don’t say the government isn’t losing money when it clearly is.

      As for the impact on the American market, yes they are flat out losing work because of the Canadian, as well as other places, tax incentives. Yes, I’ve been in rooms and on the phone with studios who flat out say they are pulling work or awarding to VC because of the incentives. Look at the list of American shows being filmed up there. They are going up there because it’s cheap. End of story. That’s why BC is now losing work because the studios have found an even cheaper place. Thus the never ending spiral to the bottom unless this stops.

    • Andreas Jablonka says:

      you fail to realize that there were “good people” in CA that lost their jobs to this unfair subsidies! Many have moved to BC to follow their own job so to speak (myself included). dont whine about job that might be lost that only got lured here on false pretense (nobody said the Canadians cant do the job, fact just is there were not and are not enough of them to fill the ranks so see about 30% if not more US artist on work permits in BC companys).

      this subsidie is not not enough anymore with montreal, NYC and Ontario uppers theirs. suddenly BC film speaks out and wants to race it to match the others. how is this NOT the pure definition of a race to the bottom?

      • Caleb Howard says:

        *I* left L.A. because of the decline in my income there. That was caused by the increase in the supply of kids willing to work for less, and the general decline in the economy in the U.S. *I* came to Canada, but it was not the health of the market here which drove me out. It was the sickness in the economy there. The causal relationship you posit is in doubt.

        The incentives here definitely improve the lot of a VFX soldier here. It is by *no* means clear that they hurt the lot of a VFX soldier there.

        As money for VFX has increased (by incentive, or investment), the *amount* of VFX has also increased. So too has the number of VFX students and workers increased. Supply and Demand translate that increase into a decrease in the salary that such people command. Doesn’t that basic rule of the free market seem more likely to be causing the downward trend in L.A. salaries to you? It does to me. I was working there in the golden days of the Indigo, and huge day-rates. I never expected it to last, though. I could see the interns willing to work for free, and knew what that meant for me. The subsidies help offset that, but they don’t cause the problem.

      • VFX Soldier says:

        My point is you are using anecdotal evidence which isn’t reliable.

        The supply for work in the US for VFX has fallen because of subsidies that have lured the work elsewhere. No other major vfx location exists without subsidies: uk, austrailia, nz, and Canada: all huge subsidies.

      • Milka says:

        I think 30 percent American is not correct. Yes there are a lot of non Canadian workers but only a portion American as a large makeup is European .

      • Andreas Jablonka says:

        @Milka: sorry i should have been more clear, you are correct, 30% or more non canadian citizens/residents and therefore NOT eligible for tax credits.

      • vfxPeon says:

        @Caleb, Are you seriously referring to Vancouver as being part of the free market? In the hypothetical free market subsidies do not exist because they create an uneven playing field in which jobs go to places where they wouldn’t have normally gone to without government intervention.

        As far as it not being clear that subsidies hurt artists in LA, you must blind to all the facilities here that have opened offices in far off locals solely because of tax incentives. Then the artists in LA either lose those jobs or have to chase them around the globe just because some company thinks they might end up saving some money.

  4. Kung Fu says:

    Whatevs. For all YOUR fire (and is entitled to YOUR views/opinion), YOU don’t really have a lot of credibility…whining like a b*tch is not the same as offering a constructive help. Interconnected global economy is a 21st century reality, as are Tax credits in most industries (not just VFX) that span nations and continents.

    Disagree with YOU on YOUR blog at your own peril though. YOU certainly have memorized rule 4 (“Loudly/Angrily Demonize anyone who disagrees with you, even if you’re outflanked in the logic department”) in the “Anarchist Media Handbook”.

    • VFX Soldier says:

      I understand the anger but let’s look at the facts. Look at this report that was just released a few minutes ago:

      “Community, Sport and Cultural Development Minister Bill Bennett was not available to comment to Metro on Monday, but said on CBC Radio the government has no interest in increasing the tax credits because it can’t afford to. He said for every $10 of film investment the province attracts with its incentives, it must pay $3 out of government coffers.”

      http://metronews.ca/news/vancouver/518473/b-c-film-industry-calls-on-province-to-close-tax-credit-gap/

      It even uses the same source for my film tax expenitures which cost $220M! It’s the costliest subsidy in BC!

    • Caleb Howard says:

      I do feel like my position isn’t being heard, nor respected here. I don’t expect much, however, as I am voicing an opinion which comes from outside the echo-chamber.

      …unless *I’m* the bitch. ;-)

      • VFX Soldier says:

        I’ve welcomed all kinds of discourse even the ones that insult me. While I do appreciate your opinion on this blog, you have to back it up with facts. I don’t read these 100+ page reports to put up my opinion, I read them to write about the facts.

        If you have information that points to the contrary, post your source. Show me the math and we’ll discuss. Simple disagreeing with my posts because you “feel” differently is nice but doesn’t lead to facts.

      • Caleb Howard says:

        This is an ongoing point of local news. Unfortunately, My position is informed by the local CBC radio, which presents a reasonably balanced discussion from the Canadian perspective. This is why you are at the advantage as far as web links is concerned. My “opinion” is more than that, however. My prime point is clear, and more than opinion. My point is that these incentives make lives better here.

        It is unclear from your links that there is a causal relationship between the success of the Canadian market and the decline in the US market. In fact, the bigger picture shows clearly that the US economy has declined seriously, and that that would be a likelier cause. Certainly, it was the massive fraud and collapse of the US housing market that drove me out of there when I left. The incentives and relative stability of the Canadian economy were merely a welcome refuge from the problems in the US. Not their cause.

      • VFX Soldier says:

        That’s anecdotal, I know people at imageworks who had to give up their homes after the company informed them that they must move to vancouver to continue working for the company.

        You argue that the reason for the decline of vfx in the US is because of the bad economy. I argue it’s all about the subsidies and the law firm we are working with will prove that.

      • Andreas Jablonka says:

        how is this UNCLEAR? how many US vfx shops have opened office in vancouver? how many jobs of these companys have been CUT in the US to be transferred/opened in BC? how many are NOT accessible to us artist (non bc residents./canadians) anymore? you are a blind men if you really dont see this.

        your prime point is valid: the incentives make live better in BC. it gves you a job you would not have otherwise. so say thank you US of A ;) and be prepared to lose that privilege as soon other incentives elsewhere kick bc of its throne.

      • Caleb Howard says:

        It’s certainly fair to answer anecdotes with anecdotes. However, neither the presentation on the CBC, nor the decline in the US economy due to massive fraud really anecdotal.

      • Caleb Howard says:

        …and – if anything – the law firm will argue a point of law, not of causality. That the subsidies violate trade treaties, not that those violations cause harm to the US economy beyond that which its banks have perpetrated.

      • Caleb Howard says:

        …anyway – always a pleasure. It’s 5:45 here, and I should have headed out 45 minutes ago. ;-)

      • VFX Soldier says:

        What’s the worry? Not like they pay OT up there!

      • Caleb, I hate to break it to you, but the film tax credits were designed SPECIFICALLY to cause runaway production from the US (primarily California). I even found some transcripts from Parliament with officials on the record saying as much…

        In 2005, the Director General of the Canadian Department of Heritage told Canada’s National Parliament that the tax credit system was a “simple and efficient system” of attracting foreign productions, and if Canada wanted to attract more, they “would just have to give a 50 per cent tax credit on labour, and nothing would be filmed in Hollywood, everything would happen here.”

        Here is the citation to the record if you want to look it up yourself: 24 Feb. 2005, Parl. Deb., H.C. (2008)(Can.).

    • The report was paid for and commissioned back in 2005 the Canadian government and is/was pointed to by film supporters. But that was when the rate was lower….now that the rate is higher this report no loner helps them. ironically, now it hurts their position.

      • John says:

        They pay ot in Canada VFX soldier . So please stick to fact.

      • VFX Soldier says:

        Yes but only after 10, it was a joke anyways.

      • Andreas Jablonka says:

        well that does depend on the company. DD paid OT after 10, so does Image Engine. Sony used to but changed that after spiUnion went live, method studios is paying OT after 8 hours as its correct. unsure about others.

      • P-Fi says:

        The OT laws in Vancouver/BC are not in favor of the employee. They benefit the studio. However due to the fact that there is so much competition between the studios they have started to offer OT just to retain employees. Artists were migrating to the studios with the best rates and OT.

        I’ve worked in many places in several countries and several places within the US including California. California did have the best OT laws.

  5. Ymir says:

    “The problem with Socialism is that eventually you run out of other people’s money.” – Margaret Thatcher

  6. Remi says:

    I don’t really think you should compare a state to a company…

    • Ymir says:

      If BC (the state) is using tax payer money to support an industry, and they are giving out more than they are getting back, then they will run out of other people’s (taxpayers’) money. There’s no comparison to a company involved.

  7. John says:

    You do a great service exposing bc Nd generally only target Canada . Have you done the same with the extensive subsidies provided in place like new York and Nola. As you are so concerned with how tax dollars are spent but never spend the same amount of focus on exposing subsidies in your own country .

  8. Milka says:

    Perhaps we will see a return to import quotas on us films worldwide as a bargaining tool. See how long it is before the us government concedes.

  9. Milka says:

    You dream about killing the us film industry fantastic news

    • VFX Soldier says:

      Well wait you made the proposal, I just said I agreed. lol. Seriously though if there is ANYTHING I can do to help you put this issue into the WTO hands I would help.

      • Andreas Jablonka says:

        speaking of which, how is the feasibility study going? an update would be nice!

      • VFX Soldier says:

        The legal team has been interviewing some key people who are giving information on the nuts and bolts on how the subsidies in the industry work. It’s pretty much the same info from the last post I did on it. When there is big news I’ll put up a post.

  10. Dave Rand says:

    I still dream of the day when it becomes about Talent and Branding only, with directors demanding that the virtual set be at hand where they can work their story out in the midst of a genuine and personable environment, one on one -director to artists. Once you’ve worked this way, as some of us have, you’ll never seek to return to any other format. They will all seem broken and frustrated.

    Our largest contemporary expense is not labor, it’s waste.

    The better mode, once “allowed” to be internationalized, will become the only viable solution to a truly thriving visual story telling culture with world wide growth.

    At first glance this may seem a bit off topic but the first part of the story below demonstrates a new trend, and a new purity by removal of middlemen, although in the end the story ends up with the syndicate, at least there’s a dissection of some of the middle men…there’s so many goddamn middlemen, leaching and bleaching the creative process.

    http://pjmedia.com/lifestyle/2012/05/29/10-reasons-you-should-skip-the-traditional-publishers-and-self-publish-ebooks-instead/

  11. Paul Griffin says:

    So after the lightning rod of subsidies has been toppled, please note the barn underneath. It contains things like wages around the world being substantially less than L.A. Exchange rates that are not necessarily favorable to the USA, and the monstrosity that is studios undercutting each other on their way to the bottom.

    I doubt “a level playing field” is going to bring many jobs rushing back to CA. Remember, California is in this game too:

    http://www.thewrap.com/movies/article/tax-credit-legislation-57956

    • Mike B. says:

      Paul is correct. The arrogance of this blog is the assumptiuon that if tax incentives are removed worldwide, work will flow back to L.A. India and China would become the most attractive to studios in terms of artists and L.A. would be a city of VFX Supervisors and coordinators.

      • Scott Squires says:

        What we’re looking for is a removal of the artificial imbalance and unleveling of the playing field. There will always be more and less expensive places to live and work. Yes, there are places like India and China that have lower costs but that doesn’t provide an excuse for politicians manipulating the system for their and their lobbyists gain. India and China are cheaper right now than any of the subsidized areas yet the studios are reluctant to ship everything there.

        That comes from many factors. The skill, experience, quality, distance and language are all issues. The studios are not looking for the cheapest places to do the work. They’re looking for the cheapest places where they can get reliable work reasonably. As India and China get better more will flow to them but as we’re seeing the wages are starting to move up and by the time they’re producing at the same level of quality the difference in costs may not be as big as planned.

        So yes, if subsidies were removes a fair bit of the work would flow to places that can support that industry. That includes California. Would all of the work come back to California? No. There will still be work through out the world but as been mentioned here it would be up to the companies to compete based on quality and pricing, not solely up to states or countries subsidizing.

      • VFX Soldier says:

        Could you imagine the outrage if a group of California vfx artists asked for a bailout because the work was going to india and china? That’s essentially the argument the opposition is making: “we need to keep these subsidies to protect us from india and china!”

      • VFX Soldier says:

        I think the arrogance is to believe that work going to india and china rather than your location is arrogant.

        I have issues with India and china which I’ve written about extensively. That being said, if a market is vfx professionals can do high quality fast work for pennies on the dollar then kudos to them. That’s not the reality though.

        So far everything I’ve written about is coming true. The reality is subsidies are distorting the market and its looking too costly for bc. The tax to the bottom continues.

      • Dave Rand says:

        Nothing works better than the director living on the virtual set in the same breathing space as the artists. That person should be Canadian, Indian, Chinese, American, Brazilian, hell …Belizian for that matter. You can only get so far on a wire with layers of creative hierarchies. There’s no reason stories can be funded and told from talent across all nations and on their own steam. That will never happen when 6 studios control the market through vehicles like bought politicians and closed distribution channels. Unless of course you’re dying to see Alien vs Avitar vs Transformers with Morgan Freeman hit franchise level hysteria.

  12. random says:

    So once again, socal is moaning, despite zero investment in infrastructure, transport systems, health, education …. it has priced itself out of the market because of a fantasy property bubble boom, but somehow wants to cling onto fantasy land and rental values. Do socal artists like renting crackshacks for half their salary ever month? Or lying on a $1M dollar mortgage application to sign the rest of your life away to buy that crackshack, that was bought for peanuts by someother CG worker twenty years ago … so he can retire to hawaii … while LA property taxes carry on upwards and roads, schools, services, etc., continue to cut, cut, cut. Socal is no place to do business on this basis.

    Quick education about socal last ten years. People lied on mortgage applications everywhere to bid up the price of ordinary houses, condos, office spaces, to eye watering levels, with pretend money from banks. The banks didn’t have any gold or cash in the vaults, they just got caught up in the lending credit booms while everyone was buzzing. Then a few folk started noticing that a crackshack with wafer thin dry-wall in venice beach is not worth $1M, not in any part of the world, let alone a crap-hole with no roads, schools, hospitals, and so on. But everyone was now on the hook for the fantasy loans those banks made. And those banks can’t write down the values to real market levels or they go bust. And all the municipalities base their revenues on the fantasy level loaning during the insane boom-and-bust years.

    So here you are now, socal. Teetering on bankruptcy but unable to write down the debt and interest levels and become competitive again. The boom years of the early to mid-ninetees coincided with the LA eartquake and economic slump from military-aerospace budget slashing. L.A. became a cheap place to do business for a while and so boomed. But this time around, everyone is on the hook for massive land and property debts from fraudulent lending. You can’t become competitive again with addressing this. But no one will accept that they over borrowed and overpayed for garabge wafer-thin dry-wall houses, condos and office spaces.

    So … the solution … is to moan about subsidies … while most of the people around can never root in the town they live, and watch the services and infrastructure slowly die, year after year.

    Good luck vfx-soldiers in propping up those fools who bought into the property mortgage bubbles between 1998-2008. While they moan about cities that spend money on the taxpayers that support them, you are propping up their bad mortgage loan decisions, the insane lending policies of bankrupt banks and unrealistic municipality revenue schemes. Good luck!

    • VFX_Boom says:

      Totally. Everyone should relocate to the affordable VFX towns like London, Vancouver, Sydney, and Wellington, and the all the issues will be laid to rest.

      I’m guessing some reading might be in order for Mr. Random.

      • random says:

        Do you mean like the world class public services, trains, roads, healtcare, hospitals, schools, free pension and healthcare assistance when you fall on your luck, and so that, you pay similar level of taxes in socal but receive nearly nothing? But still then have to buy your $1M crackshak? Or spend half your wages on each month? Because in London, sydney, toronto, vancouver, wellington, so on, you pay those same taxes but the government offices actually use the money and give it back to you for things that you would pay much more for in socal – not give it all to banks in interest loans then ask the local people and business to pay all over again. Yeah, that makes the people’s republic of socal twice as expensive than other places. Deal with your corrupt politicians first, then worry about the subsidies. Still, blaming foreigners or other states is always easy, you don’t have to look into the mirror at yourself or fellow citizens or policiticians, because that may be a bit too uncomfortable and close to home.

        Oh yeah, LA is sunny, that why your venice crackshak with wafer thin dry-wall is $1M and all your taxes are high with nothing given back to you in return (all passed straight to banks in interest loans on deals made on the golf course). But … it isn’t even very warm most of the year … and half the world is sunnier and warmer …. so that can’t be the reason why everything is so expensive there … must be those pesky non-LA people again.

      • shaner says:

        random, when you say those city governments actually use those tax dollars and then give it back to you in the form of “world-class” public services, you make it sound like for every dollar the taxpayers put in, they get an equal value of service. Doesn’t work that way much.

      • parada says:

        its not an opinion. Socal is bankrupt. Look at municipal bond rates. Every city is crippled by bank interest and close to failure. There is massive service cutting even though you pay more tax than those other movie cities like London, sydney, toronto, vancouver, wellington. Where you can get health care, pensions, services, proper transport systems. Socal has some of the highest land and property values in the world combined with the highest foreclosure rates nearly anywhere. How can you have any business environment in that backdrop? I grew up in East L.A. but I left years ago because it’s collapsing, more tax every year, nothing given back. I go back 5 generations in California but I can probably never return as things stand. I agree that some banks and governers need go to jail before things can change.

      • Scott Squires says:

        So if SoCal is so expensive and a bad business environment, why should other areas worry about having subsidies? It seems to me that if that were the case other areas could simply charge less for their own work. (less overhead supposedly, etc) on a level playing field.

        Vancouver is expensive. Soho is expensive. But those expenses are countered by the subsidies. In the US most of the vfx companies reside in industrial park buildings, not always in the best area. ILM used to be in an industrial park near the water treatment plant. (i.e. low rent district). In London you have companies in the heart of Soho who’s rent must be incredibly high. Would that still be the case without subsidies or would they have a less expensive area outside of London for the majority of the work and reduce their Soho footprint? Companies tend to make much different decisions for now and the future if they have subsidies or they don’t have subsidies to help support them.

    • VFX Soldier says:

      Bubble? What property bubble?

      “Vancouver is the second least affordable city in the world when it comes to housing”

      http://www.huffingtonpost.ca/mobileweb/2013/01/22/vancouver-housing-affordability-demographia_n_2526812.html?utm_hp_ref=canada-british-columbia

  13. DMC says:

    The tax credit is a draw but the bureaucratic cost of retaining staff in Vancouver is a lot lower.

    The vfx industry has relied upon great swathes of talented foreigners. With more and more films requiring more vfx, more talented folks from overseas were required. Post 9/11 this became a lot lot harder for firms in the US.

    However Canada’s streamlining of the process of hiring vfx professionals under the original ‘IT Worker’ program meant it became easier for companies in Canada to retain workers who would otherwise be inadmissible for work in Canada. In most cases these artists would find it extremely difficult or almost impossible to be hired in the US under its current visa regime.

    The ‘IT worker’ program was eventually phased out in 2010/2011 to be replaced by the standard TWP & LMO process. Economic conditions had changed, particularly in Quebec. However from 2007 onwards Citizenship & Immigration Canada introduced the Canadian Experience Class for gaining permanent resident status in Canada, similar to US green card.

    Under this new program applicants need only have two years of work experience in Canada. (Other options existed for foreign students with only one year of work experience!). Most work visas are for 6 or 12 months, meaning it was now relatively easy for vfx workers to attain permanent resident status in Canada after two years of working here. Many have decided to become permanent residents, myself included.

    So the picture in Vancouver has changed quite considerably in the almost seven years I have been here. Back then the vfx business was small with a handful of local companies, now it is dominated by foreign companies. However the talent pool, because of immigration policy and tax credit regulations (X% of staff must be Canadian resident), is decidedly Canadian in make-up.

    There is a talent pool here, there always was, even before DAVE came into existence in 2003, it is just a lot bigger now. Whether or not this can be an asset in Vancouver’s favour remains to be seen.

    The bottom line though is that it is lot easier for a company in Vancouver to hire and retain staff from a global talent pool because of more business friendly immigration policy.

    As a sidebar I’d be interested to know how many US citizens were ‘forced’ to move to Vancouver by their firms? My impression, from colleagues, is that for the most part those that were ‘forced’ to move were non-US citizens because of the reasons I’ve mentioned above. The bureaucratic cost of retaining foreign workers in the US is higher than in Canada. Thoughts?

  14. Island Time says:

    I remember at the 90′s, beginning of 2000′s that our dollar was half the American dollar, trading at almost exactly 50 cents to theirs. Subsidies did entice, but don’t kid yourself, the dollar was why Americans came to film.

    Now that the veil has come off, and everyone can see what has been happening for the last 10 plus years by the banks and the consequences, the dollar has dropped in the States. It is not as fiscally feasible for them to come up here, our dollar is too strong against theirs, and we can’t devalue ours anymore to try to compete. America is going bankrupt.

    I have no issue with my tax dollars going to subsidies to help the film industry. Please with all the bail out’s and “to big to fail” nonsense, perspective is everything. Vancouver cannot afford to lose the film industry, the trickle-down of monies from the industry I have heard (but not found) puts it 4th in industry income in Vancouver. Correct me please, if I am misinformed.

    In the meantime, our government paying 12 million of BC taxpayers dollars to host an awards show to promote film in another country was beyond a kick in the box. But, Christy is looking for votes and obviously thinks she will get them from communities she caters too.

    Don’t forget to vote in the next election.

  15. One can find numbers that support both gains and losses for the governments that offer these programs. I’ve seen both, so it’s very difficult to say “I have the FACTS”. Hell you can find legitimate economists that flat out disagree on just about anything. I don’t think you can fault an LA shop for moving to Vancouver if the studios are not willing to spend money in LA. The shop owners choice is to move or go under. This is a big picture global economy debate that will work itself out as governments keep or end these programs based on their eventual success or failure. If these programs truly are a loss, those governments WILL bail eventually.

    • Scott Squires says:

      The sad part is politicians rarely consider what’s logical, what financially makes sense and what’s best for their people as a whole. As long as lobbyists have their attention the problems will continue.

    • Totally valid points. That said, the overwhelming majority of the studies on film credits (and there are now dozens) all show a negative ROI to the coffers that fund the programs. Only about four or five show a positive ROI…and ALL of those were paid for by the industry–usually the MPAA–and have been roundly discredited. The report for NM about film tourism was a knee slapper! Even one report paid for by the Michigan film industry, an Ernst & Young report, showed a loss on taxpayer investment. My point? In this instance there really isn’t any disagreement on ROI for the taxpayers in terms of money paid out of coffers and money paid in as new tax revenue.

  16. bob says:

    Why do Americans always feel entitled to film work. Is it not up to the producers where they want to make there film. Hollywood is not the only place in the world to make a film, yet, when one is made elsewhere they cry ‘runaway film’. It is a global economy now, old school rules and boys clubs just don’t work in this new world.

  17. [...] VFX Soldier – BC Taxpayers Lost $100 Million on Film Subsidies in 2011 [...]

  18. yves says:

    I had a look at several posts about a lot of economic related topics on this blog….. I work in the industry , and studied /graduated in economics for 5 years in university, and i have to say that the economic reasoning that is involved in most of those posts is very basic, partisan, incomplete and therefor misleading…
    I don t wish to defend subsidies or any other economical involvement of public administrations ….but what i have read leave me skeptical ….
    All i will say is ; IF ” In 2011, productions spent about the same amount: $1.18 billion
    In 2011, the BC government increased the amount spent on film subsidies to $220 million. ” …whether or not the BC government get is money back ( i would think they do, but that s an other topic.. ) whether or not you agree on how and to who, the money gets distributed back …. … , you still have a billion coming from the Hollywood ( i assume it pays most of it ) that ends in Vancouver every year…., you still have a growth of your GDP and a bigger positive commercial balance… , you still have a bigger economy ,capable of leverage-ring more interesting rates to finance itself
    At the end of the day , one way or an other , the BC area ( i didn t say the administration ) is still richer of a billion ; and you will have a hard time to find an economist ( not a politic ) to argue that is a bad thing…

    Quickly;
    if you thing subsidies in VFX are so bad and outrageous … ( once again i am not trying to defend them ) you should have a look at what your government is doing with agriculture or the car industry…

    An other thing ; incentives are just an economic tool , and so is taxing rate on societies , staff or currency value…. they all can get manipulate to achieve the same results : so saying that we should get rid of subsidies is a little bit like saying that we should or can get rid of economy …… i seriously doubt that !

  19. Charlie, Vancouver says:

    Californian citizens have “lost” $191 Million on film subsidies; I especially like the $22 million grant to Twitter alone in 2011! : http://www.nytimes.com/interactive/2012/12/01/us/government-incentives.html#CA

  20. Charlie, Vancouver says:

    The idea that pulling the tax credit would result in a %15 reduction of BC production is suspect if not totally bananas. There are an infinite number of almost financed projects. In my 15 year career I personally know of several projects that were on hold until this tax credit completed the financing and greenliit the show. Perhaps these shows would have found full financing without this credit, perhaps not.

  21. Y cuando usted decide comprar una chaqueta de las veces, primero tenemos que mirar la etiqueta del producto del collar atado, terciopelo que contiene menos del 50% de la cantidad que usted tiene que prestar atención, y ya no cumple con las normas mínimas establecidas por el Estado.

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