IATSE Tells Saskatchewan to Reintroduce Refundable Tax Credit, Or Else

5:37 AM PST 05/24/2012 by Etan Vlessing

The U.S. union's Canadian pointman tells premier Brad Wall that an exodus of talent from the province will mean a loss of millions in tax revenue.

TORONTO – Saskatchewan premier Brad Wall remains an enigma to Saskatoon and Regina-based film and TV producers.

First he cancelled the Canadian province’s 45 percent film tax credit, then bucked a North American industry trend and replaced it with a non-refundable 25 percent tax incentive of little use to local filmmakers.

Head-scratching Canadian producers, worried about the hit to Canada's reputation for tax credit stability, have deemed Wall either smart like a fox, ideologically-driven against Hollywood producers, or blind to the reality of film and TV economics.

And Wall has had Hollywood stars like Sons of Anarchy's Kim Coates rallying outside the provincial legislature for an end to a long-running tax credit fracas that threatens to send local talent to Vancouver and Toronto in search of work.

So now with time running out before the Saskatchewan production sector is hollowed out, the Canadian industry has brought in its biggest gun.

John Lewis, international VP and director of Canadian affairs for IATSE, in a May 22 letter told Wall, hmmm.... how to word this... you don’t know what you’re talking about.

“There are few industries that are as mobile as the film industry,” Lewis told Wall, giving him a film and TV production 101 lesson.

“It is an industry capable of packing up and setting up elsewhere in a matter of days,” he added.

Lewis told Wall production companies require financing up front to develop, pre-produce and then go into production on film and TV projects, and that "government support is an essential piece of the puzzle."

He was responding to an April 16 letter from Wall to IATSE where the provincial leader argued the 45 percent refundable tax credit set to be axed at the end of June amounts to little more than a public handout that returns little to the province in terms of taxes.

“While it is called a ‘tax credit,’ the SFETC is effectively a government grant to one particular industry that is not available to other sectors of our economy,” Wall wrote to Lewis.

The continuing stand-off between Wall and the Canadian industry hinges on how taxes are paid for film and TV work done in the province.

Wall contends drive-by film and TV shoots by foreign producers lead to taxes being paid when talent and workers return to Toronto or Los Angeles, while the Canadian industry contends production dollars spent locally in Saskatchewan have a 6-to-1 multiplier effect in supporting the province.

Lewis warned Wall his non-refundable tax credit spells doom for the local film and TV production sector.

“As productions leave the province, Saskatchewan will lose thousands of jobs and millions of dollars in tax revenue,” IATSE's Canadian boss wrote.

He urged Wall to reintroduce a refundable film tax credit “for a two-year period to allow for more consultation.”

Earlier industry negotiations with the provincial government proved counter-productive as Wall ignored industry advice and introduced a non-refundable tax credit that banks do not recognize as collateral for production loans.

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