Montreal: Quebec Finance Minister Yves Seguin’s June 12 budget reduces the refundable production tax-credit benefit for all categories of productions by 12.5%, with the notable exception of the production service credit. The cut yields a general maximum tax credit for French TV and English-language production of 14.6% against total costs.

APFTQ president and CEO Claire Samson says the tax-credit reduction will cost producers $21 million next year.

On a point of principle, Samson says the film and TV production tax-credit program actually represents a proven net benefit to government, which taxes more than its gives back, based on the higher production volumes generated by the credit.

A small consolation, or perhaps an indicator of more support in the future, the Liberal finance minister’s budget clearly recognizes the ‘strategic and pivotal’ role of tax incentives in the cultural sphere. Cultural industries were spared the worst – most industry tax-credit programs were reduced by 25% or more.

Another major change is a ruling that makes certain TV magazines and variety shows ineligible for the tax credit. This includes programs dealing with renovation, construction, decoration, gardening, horticulture, sports, recreation, hunting, fishing, motor vehicles, fashion, beauty products, cooking, wines and alcohol, tourism and travel.

The ruling eliminates ‘variety shows and television magazines of which six or more episodes are broadcast per month, with the exception of such shows intended for children under 13.’

APFTQ chair Jacquelin Bouchard says the elimination of the tax credit for daily primetime magazine and variety shows will have a ‘major negative impact.’ Bouchard says the tax credit is often the only source of financing for variety and magazine productions, other than the licence, and that many producers pay the bills from magazine production and use those revenues to support the development of more ambitious priority programs and export production.

Other classes of excluded productions include programs intended to raise funds, reality TV shows, ‘making of’ productions, a production other than a documentary consisting completely or almost completely of stock footage, and all categories of games, questionnaires or contests, with the exception of educational broadcasts in the form of games, questionnaires or contests intended for children under 13.

The budget also states, ‘A change will also be made to ensure that the tax credit for Quebec film and television production, with respect to a film or a series, does not exceed $2,187,500.’ The long-standing cap for content productions had been $2.5 million.

Factoring in the 12.5% reduction, the value of the tax credit as a percentage of total production costs for French-language feature films and unique documentaries, and giant-screen productions is 19.68%.

For all other productions, including French-track TV and English production, the value of the tax as a percentage of the budget (maximum effective rate) is 14.58%.

According to Line Beauchamp, Quebec’s culture and communications minister, the budget allocates $15 million to fund film and audiovisual programs, most of which are administered by SODEC. The minister says the $15 million represents a ‘short-term’ response to the industry’s need, and she has committed herself to a policy review.

The changes to the refundable tax-credit program apply to productions filing after Aug. 31, 2003, as well as to productions that file prior to Sept. 1 but are deemed to have been insufficiently advanced as of Budget Day, June 16.

The basic Quebec production service tax credit, for reasons of jurisdictional competition, according to the Seguin budget, remains unchanged at 11% of manpower costs.

-www.finances.gouv.qc.ca