On this blog ( Roger Currie Storyteller ), on the Talk of the Town program which I host on Access 7 in Regina, and throughout the mainstream media in Saskatchewan, Premier Brad Wall has come under heavy criticism over his government’s handling of the Film Tax Credit issue.
Today ( Friday April 13th ) I received the following letter from the Premier.
April 13, 2012
Thank you for writing regarding the Saskatchewan Film Employment Tax Credit (SFETC).
Our government has committed to Saskatchewan people that we will work to keep our budget balanced and our economy strong. As the only province in Canada with a balanced budget so far this year, Saskatchewan has been able to avoid the drastic cuts we see other governments being forced to make in order to rein in their huge budget deficits. To maintain our balanced budget and strong fiscal position, however, we must focus taxpayers’ dollars on core programs that provide growth and sustainability for our economy and fairness for Saskatchewan taxpayers.
We are always faced with a great number of competing priorities, and consequently, with some tough choices to make. 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. This simply was not justifiable in the long run both in terms of cost and in terms of fairness to other industries and Saskatchewan taxpayers. After much consideration, we made the decision to discontinue the SFETC in this year’s provincial budget.
Following this announcement in the budget, I met with and listened to the concerns raised by the film and television industry. Our government has agreed with their request to extend the deadline for applications under this year’s program from March 31, 2012 to June 30, 2012. This will allow the industry to take advantage of the spring production marketing season and conclude business within the existing program.
April 13, 2012
We are prepared to look at other measures to support the industry but we remain committed to ending the tax grant program. During our meeting with film industry representatives we discussed several possible opportunities, including the industry taking over the Sound Stage in Regina with an offer for operating support. We talked about the possibility of a new tax credit for film producers based on reducing actual taxes paid in the province. And we discussed possible research and development incentives that may help the industry take advantage of digital media and production.
Some have incorrectly argued that similar grants occur in other industries such as oil and potash. Oil gets no subsidy. Potash companies receive a temporary decrease in royalties during major capital expansions like the construction of a new mine. This is significantly different for two reasons. One, this is a tax reduction applied against taxes payable in Saskatchewan, and the potash companies still wind up paying a significant amount of taxes and royalties in our province. Two, it is not a permanent tax reduction. The incentive ends after the capital investment ends, and when it ends, Saskatchewan potash producers pay the highest royalties in the world.
Both the oil and potash industries are huge net payers of taxes. On the other hand, 98 per cent of SFETC money paid was in the form of a grant, often to companies that set up only temporarily in Saskatchewan, while only two per cent was an actual credit against taxes paid in the province.
Our government has also moved away from ad hoc payments to farmers in this budget. We have advised agricultural producers to buy crop insurance and that no assistance will be available in the event of a crop failure unless they have crop insurance.
April 13, 2012
We recognize the benefit of seeing the film industry grow more substantively in the province and to shift the focus of our policy to Saskatchewan-based companies. The industry representatives I have spoken with share this objective. Our government will consider a non-refundable tax credit that would benefit companies permanently located here in Saskatchewan and paying taxes here in Saskatchewan. This would encourage the growth of the industry in our province in a way that is better for our economy and fairer to Saskatchewan taxpayers.
Our government continues to support arts and culture through investments to the Saskatchewan Arts Board, SaskFilm, SaskCulture, and the Community Vitality Program, guided by Pride of Saskatchewan, our province’s culture policy. In fact, our government has increased funding to the arts by over 30 per cent. And we will continue to work on innovative solutions to support the industry and provide incentives for investment in Saskatchewan. However, we will not compete in a bidding war with other provinces and U.S. states using taxpayer dollars.
I have forwarded your email to the Honourable Bill Hutchinson, Minister of Tourism, Parks, Culture and Sport, for his consideration.
Thank you for writing.
cc Honourable Bill Hutchinson
Minister of Tourism, Parks, Culture and Sport