As of midnight

Telefilm Canada has an unwanted battle on its hands.

High-impact modifications to Quebec’s refundable production tax credit program, the reduction of the credit from 18% of a program’s budget to 15%, and the introduction of a $2.5 million cap per production, including a troubling lack of definition as to what constitutes a series, has created an instantly serious shortfall for all categories of Quebec tv production, especially longer-format drama.

‘The impact is enormous,’ says Suzanne D’Amours, apftq associate director general.

Indeed, tv producers in Quebec are not only out three percentage points, but 1997 licence fees are down 5% based on new Licence Fee Program minimums. And to make matters worse, sponsorship funding will also be sharply reduced this year, says Telefilm’s Quebec operations director Louis Laverdiere.

With limited margins available to producers, the question becomes, `Who will make up the shortfall, Telefilm or the broadcasters?’

Shortfall aside, government should change its mind on the non-existent transitional period.

The $2.5 million cap announced in Finance Minister’s Bernard Landry March 25 budget went into effect the following day, and the reduced tax credit applies on productions starting principal photography after April 30.

Allegro Films president Tom Berry says he’s ‘baffled’ by the lack of transition time.

There was an extended grandfathering period when the feds went from the tax shelter to the credit system, he says, adding: ‘The minimum transition time required in this industry because of the long lead time in financing is six months. I’m quite surprised because I thought we had all made it quite clear to them how significant the transitional period is.’

The lack of transition time is even harder to understand in view of a new economic impact study from Bureau de la statistique du Quebec.

That document, using 1996 dollars, points out the 18% tax credit costs government $180,000 for each $1 million in certified production. On the revenue side, the study says $1 million in production generates income for the Quebec government in the form of taxes on salaries, $96,360; parafiscal taxes, $64,936; sales tax, $5,226; and other specific taxes, $4,507, for a break-even total of just under $180,000.

Under the new regime, while production costs and personal and services taxes remain the same, the tax credit generates a 20% net gain for government.

The apftq has written to the minister expressing its disapproval.

For a change, French-track tv series are in the same boat as English film and tv, so the issue here for the industry is basically not one of language politics, but more one of credibility.

Historically, Quebec has provided the most generous benefits for film and tv producers of all Canadian provinces. That hardly changes the fact producers have signed contracts they likely can’t fulfill. And credibility, at the end of the day, is said to be all a producer has left.