Film Tax Credits Provide Little or Negative Return

Blog, Taxation, Steve Lafleur

The Globe and Mail ran an excellent piece yesterday by David Campbell on the inefficiency of film tax credits. According to Campbell:

“In 2008, this industry generated a negative direct gross domestic product (GDP) in New Brunswick. You didn’t read that wrong. For every dollar of industry output, the GDP created in New Brunswick was a negative $0.16. In other words, as a result of the direct economic activity for each dollar of output, the economy shrank. No other industry in the province generated a negative direct GDP in 2008.”

This is particularly relevant to Saskatchewan, as the provincial government recently axed its film tax credit to the chagrin of the arts community. But given that most of the benefit from film tax credits in provinces that don’t have well established film industries is exported, their opposition is misplaced. The non-economic rational behind subsidies to the film industry is to promote local culture. This is not what the tax credits have done. If we’re going to attempt to promote local culture, direct, transparent subsidies make far more sense than opaque tax credits to the film industry.