In less than a month of lobbying, the film industry was able to crack BC's new finance minister. Colin Hansen has promised to implement some ‘interim measures' to save BC's film industry from packing up and heading to Ontario.

In late December, the Ontario government boosted its labour tax credit for foreign film productions to 18% from its previous 11%. One short week later, the Quebec government upped its credit to 20% yet BC was only offering a measly 11%. In no time, the industry responded by demanding BC match Ontario's 18% tax credit and took its case to the public and the provincial government.

Industry folk repeatedly argued that in order to remain ‘competitive' the province had to match the credits offered by Ontario. Only an industry completely dependent on government hand-outs would argue that an increase in the dole would make them more competitive. But, taxpayers should hear the full story before allowing their wallets to be pried open.

BC's film industry may have originated from a low loonie and tax incentives, but after 15 years of highly successful productions, it has a reputation that it can hang its hat on. It has an experienced, reliable and skilled talent pool that other competing jurisdictions, like Romania, haven't been able to match. British Columbia and the industry's hub, Vancouver, have a multitude of competitive advantages over the rest of Canada, including Ontario. To list but a few: diverse settings like mountains, oceans, urban centres, year-round shooting, film industry infrastructure, proximity to Hollywood and a growing domestic base.

The Vancouver Sun's Michael McCullough points out that California not only has the world's highest production costs it also has no tax credits. How do they do it? That's the question BC's film industry should be asking, rather than looking to taxpayers to buck up.

BC's Production Services Tax Credit (PSTC) is a refundable corporate income tax credit. What that means is when a production company is filing a tax return, it can claim 11% (soon to be 18%) of the labour costs incurred while making a film. The credits are then applied to reduce the tax payable and the balance is paid out to the production company. But here's the catch: McCullough notes that production companies are transitional and have a budget set by their parent (usually foreign) company and operate on a cash-neutral basis. So, with no income to report and an eleven percent tax credit, production corporations fare pretty well in BC courtesy of the taxpayer.

Industry advocates are quick to point to the $1.4 billion in production dollars brought in during its 2003 banner year. However, assuming that the majority of those dollars were from foreign productions, a crude calculation puts the taxpayers' bill at $1.5 million. If the industry contributes so much to the economy, why are taxpayers having to subsidize it?

The tit for tat tax credit game has only one loser: the taxpayer. There will always be other jurisdictions that will out-subsidize BC. Louisiana offers a straight 20% subsidy for production costs, is that the next industry demand? It is not the job of the government to keep up with incentives but the industry's role to remain competitive.

Perhaps the most troubling sign for BC's film industry isn't the increase to Ontario's tax credits but rather its automatic reliance on government to solve their competition woes. Why should BC taxpayers be forced to subsidize an industry that isn't willing to make some sacrifices for itself? Why should taxpayers subsidize any industry that isn't competitive? And who decides which companies deserve a break?

It is a disappointing sign that Colin Hansen's first big move as finance minister is to bow to industry pressure in just three short weeks. Minister Hansen will surely have many more industry representatives banging at his door before February's budget asking for similar treatment. The floodgates will open and a new era of corporate welfare will begin to take root, something the Campbell Liberals commendably promised to scrap.

The demands of the BC film industry are identical to the outrageous transfers of taxpayer money to mega-corporations like Bombardier in Quebec or any of the auto manufacturing companies in Ontario. The best way to end the tax incentive competition is to level the playing field through trade agreements and legislation that prohibit unfair and costly corporate welfare schemes.