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Quebec gov’t revamps pic tax-credit program

MONTREAL — The Quebec government has introduced significant changes to its successful film and TV tax-credit program, and the modifications will hit English-lingo film producers the hardest.

In its budget presented Tuesday in the National Assembly in Quebec City, the ruling Parti Quebecois announced that the tax credit was being reduced from 18% of a pic’s budget to 15%, and that the tax credit can no longer exceed C$2.5 million ($1.8 million) on any single project.

Also, the government will limit overall annual spending on the tax-credit program to $40 million. Last year, tax credits amounted to $47 million for local producers. That total will rise to $51 million for the fiscal year ending March 31, 1997.

But the tax credit is actually increasing for French-lingo features, going from 18% to 20.25% in an effort to boost home-grown French production.

The tax credit has existed since 1991 in Quebec and has been one of the key motors driving the recent upswing in film and TV activity in the province.

During the first year of its application, the tax credit helped spur $103 million worth of production. Last year, the total budget of films and TV shows with tax-credit assistance was $243 million. The program has been so successful that it has been copied in Ontario, Nova Scotia and at the national level by the federal government.

Many of the prominent producers working in English features in Montreal complain that the government is putting a damper on a booming biz and that the nationalist, pro-French Parti Quebecois government, which hopes to take Quebec out of Canada, is making a political decision to penalize English-lingo productions.

“We are living in Quebec and we all know the agenda (of the government),” said Pieter Kroonenburg, president of Kingsborough Greenlight Pictures, which has a $50 million production slate this year. “It’s not fair, but it’s not surprising. It’s cutting off your nose to spite your face. It’s been the English-language creators that have created the boom over the last few years.”

Capping the tax credit at $1.8 million per project only hurts English-language pics because French-lingo features always have much smaller budgets, according to Nicolas Clermont, president of Filmline Intl. The cap only impacts films with budgets of $10 million and more. Clermont is set to begin pre-production on a $16 million thriller, and the tax credit changes have already cost him a sizable chunk of cash for that project alone.

“It penalizes commercial films with universal appeal,” said Clermont, one of Montreal’s busiest producers. “We’re trying to control our destiny by making larger films.”

The Quebec producers argue that the tax credit actually makes money for the provincial government via all the taxes paid by personnel hired for the shoots, and that it generates even more income for the province thanks to other economic spinoffs, like hotel-room rentals and restaurant purchases. But officials at SODEC, the Quebec film and TV funding agency, said the tax-credit program trim is a normal part of the government’s overall cost-cutting measures.

“Within the present economic context, there are cuts almost everywhere, and $40 million is an enormous amount of money to give to the film and TV sector,” said Suzanne Laverdiere, G.M. of cinema and TV production at SODEC. “We believe that the overall volume of production will not be affected by these changes.”

Support for French-lingo features is being upped because that sector faces the greatest financial difficulties, said Laverdiere, who noted that it is much harder to cobble together international pre-sales for a film in French than for one in English. Bigger-budget English pics tend to generate pre-sales and do not need the government’s support, Laverdiere said.

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