BC Minister Admits: Province Loses Money On Subsidies

Uh oh. Looks like what I’ve been posting about all along came true:

Bennett said government numbers now show the province loses revenue for every job created in the film industry, making it hard for the industry to make a case for any significant increases to the tax credits.

Of course the Minister caveats the news with the idea that he thinks the numbers are wrong. Funny how they never had an issue with the math when it showed supposedly positive numbers. This is sort of what happened in New Mexico when independent studies showed they were losing money on their film subsidy program, so film officials hired Ernst & Young to come up with their own report showing dubious big returns.

BC’s Premier is standing firm:

Premier Christy Clark is ruling out an Ontario-style “race to the bottom” of tax breaks for the B.C. film industry, insisting her province’s taxpayers are being generous enough with the current $285-million per year.

“The comparison is often with Ontario, which is engaged in a race to the bottom to try and provide these tax credits,” Ms. Clark told reporters during a news conference to announce government support for a new campus for Emily Carr University.

The question remains: Just how much more money do BC film advocates need? From what I understand they will try to exempt the film industry from the recently re-instated sales tax by designating the film industry as a manufacturer.

After all, this is what the studios internally asked for:

A point that should be added … is that industry will be asking for the following amendment to be made to the PST definition,” said Lora Carroll in a note to Alec Tully of the ministry’s government communications and public engagement department. “When B.C. reverts to PST, define digital/film, TV production and post-production as ‘manufacturing’ for the purposes of calculating PST

Oh, that would be interesting wouldn’t it?

Soldier On.

About these ads

32 Responses to BC Minister Admits: Province Loses Money On Subsidies

  1. Dave Rand says:

    “If we could show that we are not buying these jobs, it would be helpful,” he said.”

    Yeah watch me pull a rabbit outa my hat.

    http://www.vancouversun.com/touch/story.html?id=7860966

    • globalConspiracyRus says:

      It’s all coming true! The subsidy war is over, BC is going down the tubes!

      Or

      Minister says $285million subsidy programme to continue unchanged. BC VFX subsidies completely unaffected for the foreseeable future.

      So what was the news again?

  2. Dave Rand says:

    What it all really boils down to …Politics and image.

    http://www.theprovince.com/touch/story.html?id=7864800

    • chrisian says:

      As you like to cut snippets from articles. Not supporting but only fair you show both quotes unless you dont give a damn.

      But, Bennett added, those numbers may be wrong.

      “My intuition is that is probably not accurate, but the information that we have makes it looks like it’s accurate,” he said, adding there are irregularities in how some data is collected that may need to be corrected.

      • Ashes says:

        Please, obviously this is politian trying to get out of the fact that he supported something that’s causing the government to lose money. That statement translates into:

        “I can’t admit I’m causing taxpays tons of money even though reports show I have. I need to some time until I can pay someone to make a report that refutes this.”

  3. chrisian says:

    can you post how much New York is currently losing to film incentives??

  4. Ashes says:

    It hasn’t been around long enough to tell yet, but probably quite a bit. Hopefully, NY will get rid if it when, not if, that happens.

  5. Steve says:

    If a tax break results in a net loss to the state, then it should be cancelled (unless the activity of some critical, over-riding importance e.g. health). In these situations, I don’t think you will be needing any kind of Kickstarter-funded campaign to get the the tax breaks revoked. They just will be.

    If the tax breaks result in a net profit to the state, then that’s just good business and should be encouraged (especially in these times) .

  6. Harold Kesterman says:

    Yeah, you point to an article that cites BILL BENNETT, the most criminal, right-wing nutcase in BC about his opinion on the film industry? Next time, how about you ask George Bush how the Iraq War went?

    It’s disillusioning to see this website filled with support for extremely conservative politicians. Christy Clark is one of the most corrupt politicians in Canada, and yet this site seems to throw support behind her. There’s a reason she has to go to Alberta to raise money for her party, no one in BC will give her a dime.

    • VFX Soldier says:

      I don’t support any politicians, just the facts. Look if these film subsidies made a huge return in tax revenue for the government they would be everywhere saying that and easily increasing it.

      • Harold Kesterman says:

        Yes, that post was clearly a politically-motivated one. Bill Bennett and Christy Clark are staunchly opposed to any arts funding and are very much for large scale, debt-incuring infrastructure programs. When he was premier, Bennett tried to pin all of British Columbia’s financial woes on public school teachers and not the billions of dollars he was throwing away on highways that no one used or coal plants in a province where 90% of electricity comes from hydro sources.

        Frankly, by quoting Bennett, you loose huge amounts of credibility on a topic you claim to know a lot about.

        If you’re interested in purely unbiased facts – and I think you should be – the truth is that tax credits or “subsidies”, as you like to call them, are far more heterogeneous in both application and impact across jurisdictions.

        Ernst & Young ran the impact of taxation policy on the film industry, and it is a more much complex issue than the one line “it’s all a race to the bottom” nonsense we get out of right-wing politicians.

        http://www.smpia.sk.ca/assets/files/pdf/Motion%20Picture%20assoc.%20film%20credit%20study%20EY%202012.pdf

        “Look if these film subsidies made a huge return in tax revenue for the government they would be everywhere saying that and easily increasing it.”

        Talk to any trained economist across the political spectrum and ask them if they are for or against lowering corporate taxes. All of them will say they are for it. But ask the same thing to any politician? Good luck with that one. Your assumption that politicians make wise financial or economic decisions is hopelessly naive.

      • VFX Soldier says:

        2 weeks ago I didn’t even know who Adrian Dix and Christy Clark was. He’ll I didn’t even know BC Liberals are considered conservative by some.

        The E&Y report has easily been debunked as MPAA propaganda. They paid E&Y to do the report and supplied their own numbers to make it look good. None of that data is public. Do you think the mpaa would release a report that shows a loss?

      • vfxIntlTraveller says:

        The point Harold Kesterman is making is that you are cherry picking the stats you choose to put up on this blog to support your position in just the same way you’re claiming that the likes of the MPAA etc are doing to support theirs and that many of your stats and quotes come from discredited right wing nutcases.

        Claiming ignorance about the provenance of the “facts” doesn’t get you out of jail on this one – none of us outside of BC would have any idea of who Christy Clark and Bill Bennet are, but ten seconds and one Google search later we get a pretty good idea.

      • VFX Soldier says:

        Lol, the numbers I provided are from a bc govt report put up by the save bc film people. If you have better stats let me know.

      • Harold,

        Two things:

        1. The report you linked to was paid for by the MPAA, which means the bias red flag exceeds the one you are worried about with Bennet.

        2. Even the report concedes that film incentives do not generate enough new tax revenue to pay for themselves.

        Did you read the report?? It does not support your claim.

  7. Harold Kesterman says:

    “2 weeks ago I didn’t even know who Adrian Dix and Christy Clark was. He’ll I didn’t even know BC Liberals are considered conservative by some.”

    So you wandered into a conversation you know virtually nothing about, and immediately claimed to be some kind of expert on the topic.

    BC has been involved in Hollywood film production for over 35 years, and for you to come in, do two weeks of research, throw support behind a government who are so loathed by their own people, that they have to leave the province to raise money, makes me wonder if your own funding campaign wasn’t the recipient of these same groups.

    Frankly, if you feel that the E&Y report is biased, then why don’t you use some of your funds to get PWC or KPMG to run a more “neutral” report”? I’ll take the conclusions of an auditing firm over a politician, especially politicians that are opening trying to strangle a given industry, any day.

    The more you just toss around names that you don’t seem very familiar with, about a part of the world that you seem to know very little about, the more this blog seems less like an outlet for thoughtful discussion and more about random rage at “those tax subsidized Canadians”.

    • VFX Soldier says:

      No I’ve been writing about the subsidy problem for the last 3 years and predicted this would happen: it would get more expensive for BC as another market like Ontario would offer more. Are you not denying this would happen?

      Why would I need to fund a study when you already have one in 2005? You want to dispute the numbers? Do it.

      Look I know you’re passionate about this issue but I’m sorry, BC is losing money on this and they can’t afford to give more. Anyone saying that they will give more just wants your vote.

      • Harold K. says:

        “it would get more expensive for BC”

        What does that mean? This sentence makes no sense. You mean the value of the tax incentives rises to match that of Ontario/Quebec? And if so, is that *more* expensive than the industry being displaced to another province? If so, instead of “subsidies” (which are your word for tax rebates), how about the playing field gets levelled the other way? Why not no tax on the film industry anywhere? Why does any industry need to be taxed at any level? There are no corporate taxes in Nevada: why doesn’t the film industry move there? Oh wait, because there’s no production industry there. BC has a comparatively huge industry, which it has had for decades, and now many of those workers are out of work.

        So, is it getting more expensive for BC to be dolling out unemployment checks or to be matching current tax incentives in other jurisdictions? The answer is: who knows? You certainly don’t. This government you keep quoting definitely doesn’t. And who cares? The important thing is to keep the industry moving at this moment, because watching it bleed to death is a worse alternative than keeping it healthy.

        You keep going on about how you would like to see the “end of all government subsidies”. Well Mr. Free Market Liberatarian, can you name one major “sustainable” industry that receives no support from a government?

        No? You can’t? Awww…. too bad.

    • Look at the big picture says:

      Wow. Is this the most ironic comment in the history of the internet? It just may be.

    • Harold, you seem totally unaware that the BC film tax credits are “refundable” for a reason: the production companies set up by US studios do not owe or pay corporate income taxes in BC. At all. The $250 million+ issued in tax credits are almost all refunded as direct cash payments to the production. They should be called “subsidies” and NOT “tax credits”.

      • Harold K says:

        Call them whatever you want. It doesn’t change the argument.

      • Harold,

        I am calling the refundable tax credits because that’s what they are. I don’t “want” to call them that. That’s just what they are. BC Film & Media, the group that administers the program also calls them “refundable tax credits”.

        With that settled, you said it “doesn’t change the argument”. Exactly what argument are you making? I had to re-read your comments above to try and understand what it is you are arguing.

        It seems clear you think the tax credits function to lower the corporate income taxes production companies pay in BC. And you suggest that eliminating the program would effectively raise their corporate income taxes. In either case, you are completely missing the point. US Studios and the temporary production companies the establish in BC for any given project DO NOT OWE OR PAY CORPORATE TAXES. You mentioned Nevada having 0% corporate tax rate. Guess what, for foreign studios in BC, they also have a 0% corporate tax rate.

        From the start, a relocating production does not pay or owe any corporate taxes to BC. With the refundable credits or without them, the result is the same: a proco that doesn’t pay any corporate tax. Eliminating the credits will save the Province money because they are refunded for cash right now. $200 million in tax credits means $200 million in cash paid out to procos that don’t owe a dime in corporate taxes.

        Finally you suggest it will cost BC more to pay the direct production workers unemployment benefits. The maximum weekly benefit in BC is 55% of your “best 14 weeks of earnings in the 52 weeks before applying”, with a maximum of $485 per-week benefit.

        So, take a highly paid industry worker who makes $90,000 working on productions under the PSTC. If he or she goes on unemployment, the maximum they will get in EI for the year is $25,220 ($485 per week X 52 weeks). Yes, that is a steep cost to BC. But not as steep as the $29,700 in cash refunds BC will pay out for the film tax credits given to the proco that employed this person.

        Of course, no one wants this to happen. But the facts remain, film tax credits of the size and scope in BC (not to mention the even bigger ones in Louisiana or Ontarios) cost more in cash paid out from the coffers than they return in new revenue. Since they are paid out as cash refunds to procos who do not pay or owe taxes in BC, it is free money from a taxpayer pot the proco did not pay into. And the free money is used to make a movie without being out of pocket for the full amount. Free money from the taxpayers that you do not have to fully pay back to the taxpayers is, by definition, a SUBSIDY.

        An argument would be over whether this is good or bad policy. Feel free to take whatever side you want. But what I have said is not an “argument”. It’s just fact. And if you can’t admit or accept that, then your argument is not with me; it’s with reality.

      • Harold K says:

        “So, take a highly paid industry worker who makes $90,000 working on productions under the PSTC. If he or she goes on unemployment, the maximum they will get in EI for the year is $25,220 ($485 per week X 52 weeks). Yes, that is a steep cost to BC. But not as steep as the $29,700 in cash refunds BC will pay out for the film tax credits given to the proco that employed this person.”

        What number is missing from your equation above?

      • My bad. It’s missing the $4,480 in taxpayer revenue the BC coffers will be richer if this worker is unemployed or moves to Toronto. Sure, he/she is not making $90k and that sucks for them. But the collective public will have more money if they don’t have to subsidize this person’s wages than if they do. The needs of the many outweigh the needs of the few. Stop being selfish Harold.

  8. usefullogic says:

    As a general supporter of the cause and someone who has followed the blog for a little while now… These seem like legitimate criticisms. Context is everything and unfortunately its far too easy for readers who are passionate about an issue to be spoon fed only one side of the story.

  9. Ike says:

    Harold lost all credibility when he couldn’t figure out that current film minister Bill Bennett is different than 1980s BC Premier Bill Bennett. They’re not even related. Come on, man, do some research! VFX Soldier is!

  10. Peter Carr says:

    This argument is ridicule’s. The bottom line ks jobs. Government isn’t in business. Government is there to ‘look after’ and/or ‘support’, for lack of any better terms, those it represents. Those who elected it. What industry that receives any governent support has made a profit for that government?. Seriously. And to entertain the idea of abolishing all subsidies is idiotic. There would be no industries of any kind, there would be no social housing, social services, welfare which VFX Artists are going to need when employer’s from their own countries up root and move to China. And on British Columbia?, man you need to do better research.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 1,130 other followers

%d bloggers like this: