Despite potential alterations to the province’s tax credit regime, B.C. studio heads are asserting there is no cause for alarm in the wake of provincial budget announcements.

In last week’s budget, the British Columbia government said it would work with the film industry to “limit the growth of the film tax credits across 2016/17 through 2018/19.” The province’s Production Services Tax Credit is labour-based and currently set at a base rate of 35% for projects meeting Canadian content requirements, and 33% for in-province labour spend for foreign productions.

The weakening dollar has meant production activity in British Columbia has increased by over 50%, from about $1.1 billion to $1.6 billion in 2014/15. As such, the cost of the province’s film tax credit to the government is also increasing, and is estimated to hit $239 million in 2015/16. With the current exchange rate, the government argued the provincial tax credit could be reduced by over 50% and still ensure the net cost of British Columbia labour would be less than that it was from 2010 to 2014.

However, Vancouver Film Studios president Pete Mitchell noted that while he welcomes the discussions, basing long-term policy decisions on the Canadian dollar’s current performance may be short-sighted.

“Right now we’re looking at the world through a 72 cent lens, and that’s not going to last forever…The fact of the matter is that the long-term exchange rate for the past 10 years runs at about 92 cents, so we need to design a system that works at 92 cents as well.”

He is, however, optimistic. “I’m not alarmed, I’m interested,” he told Playback Daily. “By contrast to what happened in Ontario, at least we’re starting off on a better footing here,” he added, in reference to the lack of industry consultation prior to Ontario’s 2015 budget, in which the province’s credit was cut. “I think the elements are in place to find a solution that going to work for everyone as best as possible.”

North Shore Studios president Peter Leitch said he agreed with the glass-half-full point of view and welcomed the discussion between the industry and the government, given the wild fluctuations in the dollar over the past year.

“When the dollar is a 72 cents, it’s probably is time to have that discussion. We’re happy that we are engaged in the process. We see the government as being an important partner for the industry,” said Leitch.

Discussions between the provincial government and B.C.’s production industry are ongoing. Mitchell said he understood the government would like a conclusion to be reached within the next six weeks.

The province’s production industry employs approximately 20,000 people and has eight major studios with a combined total of more than 1 million square feet of studio space.

Image: Cliff Hellis, Flickr Creative Commons