Saturday, August 06, 2016

Arc Productions Followup

All the Free Money that Arc Productions got from the Provincial government? Even though Arc went belly up, the subsidy is all good.

A Toronto movie and TV animation company that abruptly closed this week — leaving more than 500 jobless — won’t have to repay a $23-million Ontario government grant it got in a splashy photo op with Sir Elton John in 2009.

Arc Productions had long ago met job-creation obligations in the deal, Economic Development Minister Brad Duguid said Friday, defending programs that dole out taxpayer money to help businesses expand.

“They fulfilled their end of the bargain,” he told reporters at Queen’s Park after Statistics Canada reported the province lost 36,000 jobs in July as the provincial unemployment rate held steady at 6.4 per cent.

“You can’t hold a company responsible to operate forever because they’re operating in the real world.”

Progressive Conservative MPP Monte McNaughton said the company’s failure is why he’s been pressing the government for six months to release a comprehensive list of government handouts to corporations and details on how many jobs were created.

“The government needs to come clean . . . so all taxpayers can see whether they’re getting value for money,” said McNaughton, who has called the money “crony capitalism” with no transparent guidelines, targets or measurement of results.

A fw weeks ago I heard from an industry bigwig: "Tax subsidies are here to stay."

Today at the IA District 2 Convention in San Diego I heard a labor leader say: "Tax subsidies are here to stay."

So, you know, I'm starting to believe that tax subsidies, otherwise known as Free Money, are here to stay.

I just wasn't aware that tax subsidies stick to companies that have gone bankrupt. I mean, aren't there a bunch of employees who have yet to be paid?

Read about Arc Productions going bust here.


Mark Mayerson said...

Steve, tax subsidies are a direct result of free trade. Before various trade agreements, countries or regions would require a certain amount of local talent to be included in any production for the local market. Quotas and tariffs made it happen. The auto pact between Canada and the U.S. is an example. Canada told the American car companies that if they wanted to sell in Canada, they had to make a certain percentage of their cars in Canada.

Under free trade, quotas and tariffs had to disappear. Therefore, in order to get local employment, the only tool left to governments was tax credits and they had to be available to any company, regardless of national origin.

Quotas and tariffs didn't cost the government anything. They could actually be money makers. Now we're in the absurd situation where tax payers are subsidizing massively profitable corporations. In the current U.S. political campaign, people talk about jobs lost due to trade agreements, but nobody is talking about tax revenue lost due to the same agreements.

I'm not an economist and have no idea if these tax credits are cost effective in terms of tax revenue lost vs. employment gained. However, I'm sure if you asked the man or woman on the street in Canada if their tax money should go to subsidize companies like Disney, Fox or Sony, they would say no and be shocked to learn that it's happening.

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