N.S. film tax credit gone but not forgotten

When Stephen McNeil's government closed the books on the 2017-2018 fiscal year last month, itmarked the official end of Nova Scotia's film tax credit.

The final $5.3-millionpayout shows up as a single line item on page 297 of a 349-page document issued by the Finance Department, called Volume 3, SupplementaryInformation.

It's not the Hollywood ending envisioned by Finance Minister Bernie Boudreauwhen the Liberal government of John Savage introduced the credit in its 1995 budget.

"Film production has become a fast-growing industry offering great opportunities for a province such as Nova Scotia," he said at the time."To assist in the development of this industry and in realizing the substantial economic gain it has to offer Nova Scotia, funding of $3 million will be provided through the Nova Scotia Economic Renewal Agency to assist local film production firms."

"The Film Industry Incentive Program will provide a refundable credit for local firms equal to 30 per cent of their eligible Nova Scotia salaries, to a maximum of 15 per cent of their total production budget."

Over the years, the credit survived at least two tax reviews and successive governments made it more generous, culminating in the 2007 decision by the Progressive Conservativegovernment of Rodney MacDonald to bump the credit up to a maximum of 60 per cent of allowable costs, if a production wasshot in a rural community. That made it the most generous in Canada.

Massive protests

The current provincial Liberal government is banking on afilm incentivefund to continue to fuel Nova Scotia's film industry, albeit less generously.

The creation of the fund three years agoin the 2015 provincial budgetblindsided the industry, which had no idea the change was in the works. The government reasoned a fund would be more transparent than a tax credit, and would allow the province to control the amount of taxpayers' money doled out.

At the time, finance officials worried that left unchecked, the credit would growwell beyond the $20 million set aside that year to pay for the production incentive.

Killing the credit sparked one of the largest, loudest protests ever staged outside Province House.

Although close to 100 filmmakers and televisionproducers have since tapped into the incentive fund, Screen Nova Scotiaexecutive director Laura Mackenziesaid the fund has not been as enticing as the old tax credit, especially to major production companies.

"We're not seeing as many big, Hollywood films coming, that's for certain," said Mackenzie. "And that is really just because our tax credit or our incentive, either one is just not as competitiveacross Canada.

"We've got to be the leader in Canada if we want to see the large foreign productions coming here."

'The industry has adapted'

The year after the provincial government announced the end of the tax credit was its biggest payout year $38.1 millionin 2016-17. That's roughly how much the film incentivefundhas paid out during the two full years it has existed.

Despite the difference, McNeilsawthe fund as a success.

"I believe we've seen lots of activity here in the province," McNeilsaid. "The industry has adapted to the new formula."

He added that the fund is more open and transparent.

'We've lost many, many, many jobs'

But some in the industry see things differently. At Screen Nova Scotia's annual awards gala last May, host Jonathan Torrens and others used the occasion to publicly deride McNeiland his government for having replaced the credit with a incentive fund.

Screen Nova Scotia, as the industry representative,is eager to put the tax credit controversy behind it. But there's no denying that the effects of that decision continue to be felt.

"We've lost many, many, many jobs. We've lost many young people here in Nova Scotia that are now out working in Toronto and Vancouver," Mackenzie said.

"For Screen Nova Scotia, that's our biggest loss. That should be the government's greatest concern as well."

'A workable system'

Filmmaker, writer and director Paul Kimball's film Exit Thread, was the last feature film to receive the tax credit. The $258,678 he received last spring helped offset the cost of production. The film was shot inHalifax, West Chezzetcook, Wolfville and near Hubbards.

Although not happy with the unilateral way the McNeilgovernment brought in the change, Kimball is ready to endorse the new incentive fund.

"I feel the eventual course correction in consultation with industry restored stability and a workable system that reflects the complex fiscal realities of both film financing, and that the province faces in general," he wrote.

"I also understand that many of my colleagues disagree with that assessment."

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