Santa dropped in early for Ontario’s beleaguered film and TV production sector with news that Queen’s Park is to hike tax credits for foreign and local producers shooting in the province over the next three years.

The Ontario provincial government, unveiling a mini-budget last month to offset the pain and damage from the high dollar, proposed raising the tax credit for local producers to 35% from 30% of labor costs.

And Los Angeles producers, bringing about half of Ontario’s service business, will see their basic tax credit rise to 25%, from a rate of 18%, on condition their location shoots in Ontario occur between Dec. 31, 2007 and Jan. 1, 2010.

Ontario’s finance ministry said in background papers that the proposed tax-credit hikes aim ‘to support growth and increased jobs in Ontario’s film and television sector.’

The move follows a full-court press by provincial producers and other industry stakeholders to get Premier Dalton McQuinty’s Liberals to ease an industry crisis brought on by the high loonie and increased competition from rival locales, including eastern Europe and various American states.

The hope was Queen’s Park would either hike the value of the tax credits, or broaden them to include all producer expenditures, not just labor costs. With its move, the provincial government made good on a 2007 election platform that promised more tax-credit investment.

‘This government has acted quickly on its campaign promise by including this initiative in [last month’s] fall economic statement in the House, and we are very happy indeed,’ said Brian Topp, co-chair of FilmOntario and executive director of ACTRA Toronto.

Queen’s Park forecasts that the proposed tax-credit hikes will inject $50 million in financial support to the local production sector over the coming year.