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British Columbia Reduces Production Incentives but Expects Little Impact

Vancouver is hot.

There are at least 47 productions currently shooting in the city and in the province of British Columbia, including Netflix’s “A Series of Unfortunate Events,” the second seasons of Amazon’s “The Man in the High Castle” and Lifetime’s “UnReal,” and the follow-up to “50 Shades of Grey.” And that’s not counting animation and visual effects projects. In short, the area is busier than ever, with no signs of slowing down.

Tax incentives have long contributed to the region’ popularity, and with the Canadian dollar at new lows, goods and services are even cheaper for the Hollywood types who head north to shoot.

In fact, the economics are so friendly that the B.C. government has decided to take advantage of the situation. It announced this month that, beginning Oct. 1, it will decrease the production services tax credit to 28% — 5% lower than the previous rate — which will save the province a projected $100 million in annual payouts. The rate for digital productions, animation, and visual effects work also will drop, to 16% from 17.5%. The changes will not affect productions that were under way prior to Oct. 1, and the domestic production credit will remain unaffected.

In explaining reasons for the reduction in tax credits, acting B.C. film commissioner Robert Wong, who’s also VP of promotional organization CreativeBC, says that the more shooting there is in the province, the more money the government must pay out in incentives. “The way things have been going over the past two years, with so much production activity here, the tax burden was starting to increase.”

The local industry, which is largely represented by the Motion Picture Indus-try Assn. of B.C., says it recognizes the province’s fiscal challenges in meeting a balanced budget but wants to make sure the incentive reductions don’t adversely affect production. It reached out to the government to discuss the inclusion of a transition period that would allow for sustainable credits while maintaining a competitive edge.

“They felt that it was important that the reputation and predictability of the program was maintained here in B.C., so that essentially anything that was already committed wasn’t going to be impacted by the changes in the tax credit program,” says Wong. “[They] didn’t want to punish or hurt anyone who had already committed to doing a production here.”

Major industry stakeholders like Paul Bronfman, co-founder of North Shore Studios and chairman and CEO of William F. White Intl. (Canada’s largest provider of production equipment), think the effects from a reduced tax credit will be minimal.

“The government is facing a deficit just like they are in Toronto,” Bronfman says, pointing out that, in contrast to Toronto, the B.C. lawmakers have consulted extensively with the industry, resulting in a smoother transition plan. “In Toronto they just laid the hammer down last year and didn’t grandfather anything,” he says.

While Bronfman says tax credits are a major factor in determining where a project shoots, he adds that “as long as the exchange rate remains around 80¢ U.S. per Canadian dollar — even at 85¢ you can get away with — I think that the industry will be able to absorb a 5% cut.”

But he warns against relying too much on a movable metric. “I’ve been around the block for about 40 years, and rates go up and down all the time, so you don’t want government policy based on a cheap exchange rate,” he says.

Bronfman and Wong maintain that finances alone don’t draw productions to B.C. Experienced crews, breadth of locations, and multiple studio facilities continue to be a major draw, they say. Bronfman cites 2012, a time when the Canadian dollar was on par with the U.S. dollar, as one of the province’s busiest years.

“Vancouver has so much more to offer than just being a cheap destination,” he says.

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