Monday, June 09, 2014

Lust for Free Money

When Loonies are being handed out, people hungry companies come running.

France's Technicolor is close to acquiring Mr. X Inc. to expand its offering of visual effects for film and television in Toronto, one of Canada's leading production centers, according to a person familiar with the matter.

An announcement of the transaction could come as early as Tuesday. ...

There's a lot of eager corporate welfare queens. (Huge surprise, eh?). But there appears to be some misgivings.

Ontario’s Liberal government continued to give out hundreds of millions of dollars a year in tax subsidies to TV and film productions despite a scathing internal assessment that questioned whether the money was the best way to help the industries.

A Ministry of Finance presentation obtained by The Canadian Press through a freedom of information request is highly critical of the long-standing tax credits, which allow up to 45 per cent of labour and a quarter of other production costs to be reimbursed from government coffers.

The 2011 analysis said the credits don’t appear to make the media sectors “sustainable” by bolstering exports or keeping lucrative ownership of creations inside Ontario, instead leaving productions reliant on provincial assistance.

The document suggested that pivoting from the subsidies, which are handed out after projects have wrapped up, to direct funding could be a better option, calling the credits “not an optimal delivery mechanism” for aid.

“Stakeholders need financing up front — not an option in the tax system.”

The internal criticism gets to the heart of one of the themes of the June 12 election campaign: whether, and how, government should be lending a helping hand to industry in the hope of creating jobs. ...

The document states the subsidies may be a “zero-sum game or simply a race to the bottom” as Ontario and other jurisdictions outdo themselves to offer juicier tax credits while the total number of film and TV productions remains static. It also suggests that production locations may be determined not so much by the subsidies, but rather by fluctuations in the Canadian dollar and other factors. ...

Free enterprise. Isn't it fine?


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