Quebec weighs changes to the province’s film tax credit

The Godbout Commission, examining Quebec's overall tax regime, offered recommendations to provincial government that has sent chills through the indie production community.
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Film tax credits have always been about a clash of competing political goals – between economic development agencies and cultural departments that see incentives as investing in the future, and financial ministries that see only a current cost in lost tax revenue.

Now it looks like finance department officials eyeing increased tax revenue for cash-strapped provincial governments are setting the agenda these days.

After the Ontario government reviewed that province’s film tax credits for budgetary savings, now it’s Quebec’s turn to put its film tax credits under the microscope.

The Godbout Commission, the mandate of which was to find competitiveness, fairness and effectiveness in Quebec’s overall tax system, last week unveiled a wide-ranging report on the province’s tax regime that has sent chills through the indie production community. 

The report recommends a $100,000 salary ceiling for the Quebec film tax credit’s labour incentives, above which tax offsets can no longer be claimed.

“There’s some good news in the fact that Godbout recommended to keep the tax credits for audiovisual content, but there’s bad news in that they recommend some cutbacks for the tax credits,” Pierre Even, a partner at Montreal-based indie producer Item 7 and member of the Coalition of Independent Producers of Quebec Cinema, told Playback Daily“You have actors, directors and screenwriters that take part in many episodes, so they can work a long time and make more than $100,000.”

The recommended reduction in the labour-based savings for the Quebec film tax credit, if adopted by the provincial government in its budget next week, will come on top of an earlier move in June 2014 to cut the province’s film and TV tax credits by 20%.

The latest tax credit chill in Quebec and Ontario also underlines prescience in British Columbia, whose government in 2013 chose not to match the 25% all-spend rebate in its rival eastern Canadian locales and stick with a 33% rebate on labour spending.

Now as the local film tax credit looks to reduce offered savings to indie producers in Ontario and Quebec, there’s also the Godbout Commission recommending Quebec’s production services tax credit program for foreign producers be phased out between 2020 and 2023 because it has no cultural or financial gains for the French-speaking province.

“Their own studies and those of the finance department say it’s not beneficial to Quebec finances,” Even told Playback Daily. “Our studies show the [production services] tax credit costs 25 cents on the dollar, and brings back 32 cents. So they make some money.”

The Coalition of Independent Producers of Quebec Cinema in a statement Friday said that, not being able to see the studies on which the Godbout Commission relied to call for the outright abolition of the production services tax credits “appears to us not only incomprehensible, but more damaging to the economy of Quebec.”

That coalition includes micro_scope, Item 7, Max Films, Melenny Productions, Christal Films, Cinémaginaire, Go Films, Caramel Films and Vision 4.

When it comes to the multimedia tax credit for Quebec, however, the Godbout report recommends restoring recent cuts.

The Godbout Commission recommends an increase of the multimedia tax credit from 30% to 35% for category 1 titles available in French, including video games, and from 24% to 28% for category 1 titles not available in French.

The recommended increase for category 2 tax credits, which includes training and learning titles, is from 21% to 25%.

The non-binding recommendations from the Godbout Commission come a week before Quebec finance minister Carlos Leitäo unveils a provincial budget.

Item 7′s Even is betting the Quebec provincial government will not adopt the Godbout commissions advice on film tax credits.