Film tax credit cuts make sense, Halifax think tank says

Not government’s job ‘to prop up businesses’

The provincial government shouldn’t back down on cuts to the Nova Scotia film tax credit, the head of a Halifax-based economic think tank said Wednesday. “The business of government is not to prop up businesses,” said Marco Navarro-Genie, president and CEO of the Atlantic Institute for Market Studies. “It’s to run a government.”

In an interview ahead of a massive rally slated to take place outside Province House in opposition to the film tax credit cuts, Navarro-Genie said the Liberal government made the right decision in last week’s budget. “The real point ought to be whether government should be engaged in doling out public money to money-making industries,” he said. “It’s not government’s place.”

Navarro-Genie said government shouldn’t cherry pick industries to subsidize, essentially choosing winners and losers. Instead, he said the province should tally up all the subsidies offered to industry and invest the money into an across-the-board tax cut. He said this would be more fair as it would put all industry on equal footing.

“What’s happened here is we get bogged down in the sentiment of it because it’s real human beings who may lose their jobs and there is no sugar coating that,” Navarro-Genie said.

“But in the long run we are doing everyone else a disfavour because we are creating conditions for this sluggish economy to continue to be sluggish and we are doling out free money that we don’t have,” he said. “That is really the point here. This is money Nova Scotians don’t have.”

Navarro-Genie said government is elected to make tough decisions, and it should stick to its guns.  However, changes to the film tax credit could gut the growing industry as media companies threaten to pull up stakes and move elsewhere.  DHX Media, Halifax’s children’s entertainment powerhouse, is warning that it may have to shutter its animation studio as well as move production of This Hour Has 22 Minutes elsewhere.

Other popular television programs such as the Trailer Parks Boys have also spoken against changes to the film tax credit, saying it makes production in the province unsustainable.

Before the changes ushered in this week, the province’s film tax credit refunded up to 50 per cent of eligible salaries.  Although that 50 per cent figure is still in place, now only the first 25 per cent of that is fully refundable.

In other words, only 12.5 per cent of wages are now eligible for the provincial subsidy, instead of the full 50 per cent. That’s a 75 per cent slash in the film subsidy in one fell swoop. The remaining 37.5 per cent is a credit that can be applied against taxes owing, although the majority of production companies wouldn’t tap into this.

Although the film industry and Finance Minister Diana Whalen met Tuesday to discuss the changes, the two sides came away from the meetings with different conclusions.

While industry representatives said the province was prepared to compromise on the drastic changes to the film tax credit, Whalen suggested the industry would have to adapt to the changes.

Article originally appeared in the April 15 Chronicle Herald