Sunday, May 06, 2012

Vancouver, the Rising Hub

Tax subsidies are powerful tools.
Vancouver has been invited to host its own showcase day at a digital effects conference in Germany this week that brings together industry leaders from around the globe ...

“The world is taking notice and everyone is talking about Vancouver as a rising star and we’re joining London and Los Angeles as a global leader in digital media,” said [Vancouver Mayor Gregor] Robertson. “I think there is a lot of growth ahead of us.” ...

When MPC [Moving Picture Company] Vancouver first opened its doors in Yaletown at the end of 2007, it had 30 employees. Last week it moved into its new facilities on Hamilton Street with space for 300 people. ...

As studios have chased tax breaks in and out of the U.S., Vancouver has prospered. It's got an educated talent pool, it's got infrastructure, it's got a decades long tradition of being "Hollywood North."

Pixar has an outpost in Vancouver, and Disney Toons used to. (Diz Co. had a studio in place for a few years during the 1990s.) But the cost-of-living, as VFX Soldier points out, is the highest in North America. Which might indicate that the city, absent the tax goodies, could have challenges down the road attracting all the work it would like to bring into town.

It's always useful to remember that our fine entertainment conglomerates are unendingly interested in getting more bang for their buck, and always on the lookout for bigger, better government handouts.

Long live free enterprise!

7 comments:

Jonathan said...

steve, could you break down the numbers please. How do the tax subsidies work, and what does a studio save by opening there. For instance, what percentage would they save per "seat".

njen said...

The movie studios do not open in Vancouver, but they have the production for a movie move there so they can save with the tax subsidies.

The VFX studios get nothing out of the tax subsidies by opening there except for the promise of more work from the movie studios.

Steven Kaplan said...

Not entirely true ..

The province of British Columbia offers the Interactive Digital Media Tax Credit which will refund 17.5% of eligible salary and wages. So, there is a small benefit.

However, for the most part, the vfx studios are being told by the production companies to go to Vancouver .. or any land that offers a tax incentive. The Canadian government as well as the British Columbia province will pay the production studio for sending the work up north .. in CASH. Its now a deal-breaker caveat in the (inappropriately named) "bidding process".

While I can give an overview of the numbers, the Canada Film Capital has set up an overview page that goes into much greater detail than I can.

Also, a great site that talks about US and Canadian tax incentives is Stop Runaway Production.

njen said...

Ahh, I didn't know about the salary refund...but hold the phone, the production companies get recompensed in actual cash? Holy crap...

Anonymous said...

Yup. Actual cash. It seems to me the major reason houses are forced to open in BC is because only payments made in the province are eligible for the credit. If the work is done by a house in LA, that spending will not be eligible for the BC credit, even if the rest of the project shot in Vancouver.

But the point about it being CASH is the big one. If the jurisdiction offers a refundable credit, then the cash payout comes directly from the government. If the jurisdiction offers a transferable credit (more common in the US), then the producers sell the credits for cash. $1 in credit usually fetches 90-cents. Point is, film incentives are covering a chunk of the budget.

http://www.stop-runaway-production.com/2012/05/05/film-incentive-script-change-they-are-cah-incentives-not-tax-incentives/

Steven Kaplan said...

The implications are boggling to the mind. What I can't figure out is how Canada and specifically British Columbia can keep this up with the regular municipal needs for that tax money .. as well as supporting a social health care system.

It just seems unsustainable.

Steven Kaplan said...

And don't get me started on the legality of all of this.

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