Nova Scotia

N.S. film tax credit gone but not forgotten

Nova Scotia's controversial film tax credit is officially dead. The province paid out the last $5.3 million in credits early in 2018, marking the end of the 23-year-old tax break.

Provincial government closed the books on tax credit with final $5.3M payout in 2017-18

Nova Scotia's controversial film tax credit is officially dead. The province paid out the last $5.3 million in credits early in 2018, marking the end of the 23-year-old tax break. (CBC)

When Stephen McNeil's government closed the books on the 2017-2018 fiscal year last month, it marked the official end of Nova Scotia's film tax credit. 

The final $5.3-million payout shows up as a single line item on page 297 of a 349-page document issued by the Finance Department, called Volume 3, Supplementary Information.

It's not the Hollywood ending envisioned by Finance Minister Bernie Boudreau when the Liberal government of John Savage introduced the credit in its 1995 budget.

"Film production has become a fast-growing industry offering great opportunities for a province such as Nova Scotia," he said at the time. "To assist in the development of this industry and in realizing the substantial economic gain it has to offer Nova Scotia, funding of $3 million will be provided through the Nova Scotia Economic Renewal Agency to assist local film production firms."

"The Film Industry Incentive Program will provide a refundable credit for local firms equal to 30 per cent of their eligible Nova Scotia salaries, to a maximum of 15 per cent of their total production budget."

Australian actor Melissa Bergland is seen on the set of the 2014 film Relative Happiness in Hubbards, N.S. (Andrew Vaughan/The Canadian Press)

Over the years, the credit survived at least two tax reviews and successive governments made it more generous, culminating in the 2007 decision by the Progressive Conservative government of Rodney MacDonald to bump the credit up to a maximum of 60 per cent of allowable costs, if a production was shot in a rural community. That made it the most generous in Canada.

Massive protests

The current provincial Liberal government is banking on a film incentive fund to continue to fuel Nova Scotia's film industry, albeit less generously.

The creation of the fund three years ago in the 2015 provincial budget blindsided the industry, which had no idea the change was in the works. The government reasoned a fund would be more transparent than a tax credit, and would allow the province to control the amount of taxpayers' money doled out.

At the time, finance officials worried that left unchecked, the credit would grow well beyond the $20 million set aside that year to pay for the production incentive.

Killing the credit sparked one of the largest, loudest protests ever staged outside Province House.

Members of Nova Scotia's film and television industry protest outside the legislature in Halifax on Wednesday, April 15, 2015. (Andrew Vaughan/Canadian Press)

Although close to 100 filmmakers and television producers have since tapped into the incentive fund, Screen Nova Scotia executive director Laura Mackenzie said the fund has not been as enticing as the old tax credit, especially to major production companies.

"We're not seeing as many big, Hollywood films coming, that's for certain," said Mackenzie. "And that is really just because our tax credit or our incentive, either one is just not as competitive across Canada.

"We've got to be the leader in Canada if we want to see the large foreign productions coming here."

'The industry has adapted'

The year after the provincial government announced the end of the tax credit was its biggest payout year — $38.1 million in 2016-17. That's roughly how much the film incentive fund has paid out during the two full years it has existed.

Despite the difference, McNeil saw the fund as a success.

"I believe we've seen lots of activity here in the province," McNeil said. "The industry has adapted to the new formula."

He added that the fund is more open and transparent.

'We've lost many, many, many jobs'

But some in the industry see things differently. At Screen Nova Scotia's annual awards gala last May, host Jonathan Torrens​ and others used the occasion to publicly deride McNeil and his government for having replaced the credit with a incentive fund.

Crews work on the set of Pure. The show is set in Southern Ontario, Mexico and Texas, but it was filmed in Nova Scotia. (CBC)

Screen Nova Scotia, as the industry representative, is eager to put the tax credit controversy behind it. But there's no denying that the effects of that decision continue to be felt.

"We've lost many, many, many jobs. We've lost many young people here in Nova Scotia that are now out working in Toronto and Vancouver," Mackenzie said.

"For Screen Nova Scotia, that's our biggest loss. That should be the government's greatest concern as well."

'A workable system'

Filmmaker, writer and director Paul Kimball's film Exit Thread, was the last feature film to receive the tax credit. The $258,678 he received last spring helped offset the cost of production. The film was shot in Halifax, West Chezzetcook, Wolfville and near Hubbards.

"The new funding system works in a different way, and like the old system is not without its flaws, but I believe it works well in general," Kimball wrote in an email to CBC News.

Although not happy with the unilateral way the McNeil government brought in the change, Kimball is ready to endorse the new incentive fund.

"I feel the eventual course correction in consultation with industry restored stability and a workable system that reflects the complex fiscal realities of both film financing, and that the province faces in general," he wrote.

"I also understand that many of my colleagues disagree with that assessment."

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