Ontario producers did not get their wish from Minster of Finance Greg Sorbara, who on May 18 delivered a new provincial budget in Toronto, keeping the hot-button Ontario Film and Television Tax Credit at 20% despite calls for a significant boost.

Lobbyists had hoped the Liberal government would up the tax credit by as many as 13 percentage points to make the province more competitive on the national and world markets. Ontario has been losing business to other regions – notably the Prairies, the Maritimes, Australia and the Czech Republic – for years, a slide worsened in 2003 by factors including the SARS outbreak in Toronto and slow progress on building proposed mega-studios.

‘This is really, really disappointing,’ says Ira Levy, exec producer at Breakthrough Films & Television in Toronto. ‘This is a government that in its party platform said it was out to promote indigenous filmmaking in Ontario.’

The Liberals did, however, renew the previous government’s pledge to remove the ‘grind’ on equity, repeating a paragraph word-for-word from the 2003 Tory budget which, although introduced by then-minister Janet Ecker, was not acted upon before the fall election. At the time, the PCs suggested they would change the tax credit later in the year, although talks with industry groups soon stalled.

Eligible labor costs will now no longer be reduced by equity investments from government agencies for shoots that began principal photography after March 27, 2003. Ontario was the only province with an equity grind.

‘It’s a positive thing that they lined up with the feds on the equity grind,’ says producer Patrick Whitely, co-chair of the lobby group Film Ontario. ‘Under the circumstances we should be happy.’

Film Ontario had also hoped to see improvement to the Ontario Production Services Tax Credit, which targets foreign shoots. The 11% credit was not mentioned in the budget.

Two OFTTC rules have also been tweaked to bring the credit in line with the Canadian Film and Video Production Tax Credit. Labor expenses may now be incurred as early as two years before principal photography, and the OFTTC will allow people outside the production company to hold interest in a film or TV shoot.

Laszlo Barna, chair of the CFTPA, welcomes these changes but repeats calls for an increased tax credit. ‘After SARS, a high dollar and tax incentives from other provinces, Ontario needs to stay ahead of the game to stay competitive. This will definitely help, but we need to continue to fight for an increase in the tax-credit rate.’ Production in Ontario dropped 36% last year, according to the CFTPA.

The OFTTC takes 20% off labor costs for Ontario-shot and -posted projects by Canadian prodcos with permanent offices in the province. Emerging producers get a higher rate, 30%, and a 10% regional bonus is also offered to shoots in outlying areas.

More lucrative breaks are offered by provinces such as New Brunswick, 40%, and Manitoba, 35%.

Producers say Ontario will continue to underperform in the coming year, failing to attract sufficient foreign business and losing domestic shoots to other provinces.

‘What we have to do is continue to make our case,’ says Levy. ‘Unfortunately our greatest argument will now be migration [of shoots] to other regions.’

‘We could be doing better,’ says Ken Ferguson, president of Toronto Film Studios. ‘We’re losing to jurisdictions with much better infrastructure.’