Quebec jumped into the tax-credit ring late in December by upping credits for foreign productions to 20% from 11%, just a week after the Ontario government increased its Production Services Tax Credit to 18% from 11%.

The nine-point increase for foreign productions, announced by Quebec Finance Minister Yves Séguin on Dec. 30, boosts the province’s tax credit two percentage points higher than Ontario’s.

While Ontario’s recent hike increased domestic tax credits from 20% to 30%, Quebec’s remains unchanged at 29%. Quebec’s producers are expected to resume tax talks with the provincial government shortly.

Quebec producers may be breathing a sigh of relief, but producers in B.C., which currently has a tax credit of 11%, the lowest in the country, are pushing their government for an increase, but may have to wait until the B.C. government’s February budget.

‘The Quebec tax-credit increase is going to make a tremendous difference in the very short term,’ says Céline Daignault, VP for the Forum métropolitain de l’industrie cinématographique. ‘The minute Ontario announced the increase of its tax credit, we became almost a redundancy, but now we’re able to compete with Ontario on an even keel and even do a bit better.’

The FMIC is a coalition of film and television stakeholders, including more than 200 members of Quebec’s film community and representatives from the government, which met in Montreal Nov. 29.

The forum, under president François Macerola, intended to bring Quebec’s production community together with government to develop a plan to reverse the slowdown of foreign film production. As a result, both sides are now working to develop a new provincial film office.

Daignault says an economic impact study released at the forum helped encourage the government to increase tax credits.

The study found that every $10 million spent by a foreign production in Quebec represents net revenues of $1.2 million to the government, after taxes.

‘The government listened very carefully and understood the reality of the industry better,’ says Daignault of discussions and new data released at the FMIC.

Michel Trudel of Mel’s Cité du Cinema studio facility in Montreal says the tax-credit increase will be a great help. And while there are currently three major productions shooting at Mel’s studios, he says business was dead for eight months previous. Recent Mel’s productions include Darren Aronofsky’s The Fountain, 20th Century Fox’s Sunrise and Paul McGuigan’s Lucky Number Slevin, featuring Ben Kingsley, Morgan Freeman and Bruce Willis (see Film & Television, p. 13).

The soaring loonie, anti-runaway production lobbies and increased competition from new incentives in the U.S. have hit the industry across the country, but Quebec, Ontario and B.C. also face increased competition from higher incentives in other provinces.

In Saskatchewan, the tax credit sits at 35%, the same as Manitoba, which offers an additional 5% to producers who frequently shoot in the province, or who shoot outside Winnipeg’s city center. In Alberta, where foreign producers are required to partner with a local prodco, the Alberta Film Development Program provides a formula grant of 20% on Alberta spends. Tax credits in Nova Scotia and Prince Edward Island sit at 30%, and in New Brunswick and Newfoundland and Labrador at 40%.

Now, with Quebec and Ontario upping their credits, B.C. finds itself the only province in the country lacking competitive tax credits, a serious problem for a province in which approximately 80% of annual production expenditures come from L.A. On top of its 11% credit, B.C. offers another 6% break to productions shooting outside the Greater Vancouver Area.

‘Clearly the announcements in Ontario and Quebec over the last couple of weeks pose an immediate challenge to producers in B.C., both service and domestic,’ says B.C. Film president and CEO Rob Egan. ‘Certainly the industry is beating the drums very loudly and believes that a failure to increase tax-credit rates [in B.C.] would have significant implications for the industry here.’

Although the B.C. government is well aware of recent hikes in Ontario and Quebec and the concern generated within the local community, Egan says the government has said that any action on tax-credit rates would take place when the provincial budget is announced on Feb. 15.

‘From the industry’s point of view that delay is problematic, given the number of projects that get greenlit in the early part of the year,’ says Egan.

-www.sodec.gouv.qc.ca

-www.omdc.on.ca

– www.bcfilm.bc.ca