The Liberal government's decision to slash the film industry tax credit broke an election promise made by Stephen McNeil during the final days of the 2013 election campaign.

On Oct. 1, 2013, McNeil stood on the floor of Longtail Studios in Halifax, an animated video game developer with 25 employees, to announce a five-year-extension of the tax credit.

"To help spawn further growth in film and digital media industries, a new Liberal government will also expand the film tax and digital media tax credit for the eligibility of an additional five years," McNeil said.

"We will also look to streamline the application process to more effectively ensure companies are able to realize the financial benefit of this tax credit more quickly.

We have a strong labour force that is highly skilled in the information technology and digital media and we must exploit this strength by investing in our creative workers and entrepreneurs."

Last week, the province announced it was slashing the film tax credit — essentially a guaranteed payroll rebate on eligible labour costs — from 100 per cent to 25 per cent. 

Productions can recover the remaining 75 per cent only if they pay corporate income tax. Few companies make enough money to pay tax.

Industry threatens to leave province

Actors such as Mike Smith, who plays Bubbles on the Trailer Park Boys TV series, as well as Academy Award-winning film producer Michael Donovan, founder of DHX Media with 200 employees in Halifax, reacted by saying the change to the financing will "destroy" an industry that depends on banks for loans, backed up by a taxpayer subsidy for wages.

trailer park boys

Mike Smith, who plays Bubbles on the Trailer Park Boys TV series, says the film tax credit cut will "destroy" an industry that depends on banks for loans, backed up by a taxpayer subsidy for wages. (YouTube)

DHX Media told CBC News it opened its studio after the province announced the tax credit would be stable for five years.

It is now actively considering moving its animation studio from Halifax to British Columbia, where it owns two other studios and the tax credit is about 33 per cent.

In October 2013, the general manager of Longtail Studios told journalists she was happy about the promised five-year extension to the tax credit.

"We need certainty in our business. We need to know what we will be doing in the next few years so this five-year extension will be good for us," said Estelle Jacquemard.

"It helps us attract highly skilled people and pay them what they are worth."

McNeil was in his Annapolis constituency on Monday, but his press secretary Laurel Munroe denied the premier broke an election promise.

"The film tax credit still exists, just in a different format," she said.

Figures from the Canadian Media Production Association show in 2013, film, TV and animation generated $123 million in Nova Scotia and more than 2,000 jobs. The cost to the government  for the credit was $26.45 million or 35 cents of every production dollar spent here.

Another broken promise

Last week's provincial budget also made no mention of a sound recording tax credit also promised by McNeil at the same news conference on Oct. 1, 2013.

Eligible companies were to receive a 20 per cent tax credit for expenditures on sound recordings for emerging Canadian and Nova Scotia artists, up to a maximum of $750,000.

Instead, the 2015-2016 budget announced a new $6-million Creative Economy Fund to begin in April 2016. People in the film, music and sound recording and publishing industries will be eligible to apply for funding with the criteria to be established.

Last May, Nova Scotia actress and NDP Culture and Heritage critic Lenore Zann said Stephen McNeil  "deserves an Academy Award for promises he made to Nova Scotia's film and music industries prior to election day in 2013."