Entertainment professionals may get it best, the idea that when someone describes ‘the stuff of legend,’ the ‘stuff’ ain’t necessarily connected to reality. For instance, the legend of Al Capone owes very little to the fine points of tax law, except that it was the squinty print on some American tax statute that sent him to the Big House in the end.

Taxes were just never intended to be sexy. Even though they’re all around us – and they’re making the service industry claustrophobic right now (see story p. 1) – we’d rather not take them out for a drink. Rather than associate ‘Capone’ and ‘taxes,’ movie people would more likely recall Robert De Niro as Capone and Kevin Costner as Eliot Ness in that mesmerizing shootout scene in The Untouchables, the one that unfolded in almost torturous slow motion on the steps of the train station in Chicago. With a legend that glamorous, who needs reality?

We could ask that question of The National Post, which ran a page 1 story July 13 beneath these two sexy headers: ‘Quebec audit finds massive tax abuse,’ and ‘tv and film companies to be ordered to repay millions of dollars in tax credits.’

Finger off the trigger, there, Mr. Ness, and have a calm look at the facts. As with entrepreneurs in many other industries, producers can apply for tax credits. But the regulations are not worded precisely enough, so interpretation and debate run rampant. Lawyers and accountants talk to the government, and producers are obliged to secure advance rulings to put financing plans on a firmer footing. Federal and provincial revenue agencies periodically review the use of taxpayers’ money – taxpayer advocacy seems to be at the heart of The Post’s sensationalized headlines – and Revenue Quebec is auditing about one third of Quebec’s approved tax credit disbursements from 1996 to 1998. And they say they want more information on most of those being audited.

So?

Revenue Quebec hasn’t yet suggested ‘millions’ must be repaid, although it could well be millions, as sodec’s advance tax rulings for ’96 to ’98 total just under $215 million. The Post story admits that no number has been specified, but further down. Sure, the rules need tightening, and the standards applied to production budgets and labor cost reports must be applied fairly across the board. But Quebec producers cannot be entirely faulted for reacting as they have to The Post article, and for concluding the lack of context in the article, the hasty conclusions it draws and the impression of ‘massive’ illegal activity it conveys, are maddeningly unfair. Yes, Cinar is under investigation for tax irregularities, but does that mean suddenly that 21 Quebec production companies have gone bad? Quebec producers are also wondering whether the Toronto-based Post wants this type of article to give Toronto an edge over Montreal in the fierce competition for foreign shoots. We can’t know if that’s correct, or if it’s a stereotypically nationalist type reaction to heated criticism from English Canada, but it’s still a valid question. Meantime, one official from sodec maintains that, while Revenue Quebec is auditing one in three tax credit awards, Canada Customs and Revenue reviews them all.

High time to tighten the rules, apply interpretations even-handedly across the industry and keep to a minimum the opportunities for gun-slinging journalism.