Members of Nova Scotia's film industry say cuts to a tax credit will have a devastating effect on productions in the province.

In its spring budget, the provincial government announced Thursday that the film industry tax credit will only cover 25 per cent of eligible costs, allowing film companies to claim the other 75 per cent of the credit against taxes they owe to the province.

Eligible costs, including up to 65 per cent of salaries, can be fully refunded as it stands.

Finance officials admitted the changes would weaken the province's ability to compete with other jurisdictions for film
sector money. But Finance Minister Diane Whalen defended the move and said the existing credit was "one of the most generous in the country."

It came down to whether the province wanted to spend a dollar on health care or education, or to spend it on the film industry, Whalen said.

"I know I will continue to hear about the change," she said, in reference to the recent backlash by an outraged industry in the media.

"We simply cannot afford to maintain the credit in its current form."

'People are staggered'

The reaction from the industry came swiftly.

Thom Fitzgerald, a filmmaker, said Thursday afternoon that the move will effectively drive most productions from the province.

"All productions will be affected. I've got a crew that is shaking with the jitters. I don't see any possibility for the productions that I make to be made in Nova Scotia," he said.

Television producer and director Geoff D'Eon said the tax credit cut will devastate the industry.

"People are staggered by what this government has done. This is a disaster. The government doesn't want Nova Scotians to be in the television and film business. And that is what they are going to get," he said.

"Nobody knows if they are going to be able to execute their shows here. It is a competitive industry. This film tax credit was an essential ingredient to finance these shows."

The Department of Finance says currently, 99 per cent of all productions shot in Nova Scotia pay zero tax. 

'Done without consultation'

The province acknowledged film companies will have to restructure in order to reduce their costs as a result of the decreased tax credit.

It says companies receive about 35 cents for every $1 invested through the tax credit, while the government recovers about 25 cents on every $1 through taxes.

In 2013-2014, the Canadian Media Production Association said film and TV productions in Nova Scotia generated a total of $122 million, including $39.4 million in wages.

Maureen MacDonald, the interim leader of the New Democratic Party, said Thursday that the McNeil government was short-sighted in choosing to slash the tax credit.

"Ìt was done without consultation on an industry that has a significant impact on the province's economy," she told reproters.

Productions already underway will qualify this year for 100 per cent of the tax credit; it costs the province $24 million per year. Next year, the province expects to pay out only $6 million.

In addition, the province is promising to invest in 2016 in a new Creative Economy Fund to boost film, music and publishing. That $6 million fund will be run through the Nova Scotia Business Inc. and has a launch date set for next April.