The Government of Ontario has announced plans to expand its film and TV production services tax credit beyond a foreign production’s Ontario labor spend. The move followed by two weeks a similar announcement in Quebec, as both provinces move to sweeten incentives to foreign producers.

Announced by Finance Minister Dwight Duncan, the existing Ontario Production Services Tax Credit – itself enhanced to 25% in February of this year – will include, if passed by the legislature, ‘the purchase or rental of qualifying tangible properties such as equipment and studio rentals.’ The amendments would take effect for expenditures incurred after June 30, 2009.

What’s not clear is whether the Ontario credit will cover the slightly less tangible costs such as airline tickets, hotel rooms and craft services, as does the enhanced Quebec credit. A spokesperson for Ontario’s Ministry of Finance was not at liberty to comment, reiterating that the credit was still ‘proposed.’ In that sense, the Ontario credit certainly differs from the Quebec credit, which was affirmed by Quebec’s National Assembly on June 12.

Directors Guild of Canada – Ontario CEO and executive director Ron Haney was ‘deeply grateful,’ and noted in a statement that ‘over $200 million USD in production has already confirmed it will stay in the province as a result.’

The Ontario announcement concluded with a tantalizing note: ‘The province is also committed to working with British Columbia and Quebec to coordinate better ways to attract business’ – a remark which could be read as a plea to its provincial peers to stop the cycle of upping the ante. At a certain point, the tax-credit scheme may become a race to the bottom.

Asked for his interpretation, Quebec film commissioner Hans Fraikin said: ‘I’m not sure what they mean because I haven’t had a call from them yet.’ Fraikin said he has mounted, along with Ontario and B.C., the Canada Alley at the Location Expo tradeshow in L.A. for the last three years. ‘There’s no greater manifestation of cooperation than that.’