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Better tax credits lure B.C. video game makers to Ontario

Video game developers, and film companies, hunt for greener pastures with richer incentives


 

Rockstar Games, maker of the hit video games Max Payne 3 and Bully, recently announced it is shutting down its 35-person Vancouver studio and expanding operations in Oakville, Ont. The announcement comes on the heels of the departure of UbiSoft and Radical Entertainment.

The reason for the exodus: taxes. More specifically, the lack of generous tax credits used to keep game makers in town. The B.C. government introduced its first major break for video game developers less than two years ago, offering a 17.5 per cent tax credit for labour costs. At the time it was a significant lure, but it hasn’t stopped companies from looking for greener pastures—much greener pastures, it turns out. The Ontario government offers a tax credit for 37.5 per cent of labour costs. Quebec now has an equally generous subsidy. On top of that, the provinces also offer a much lower cost of living for employees compared to Vancouver.

Many analysts argue that increasing tax credits is hardly the smartest way to establish a healthy, permanent industry and long-term economic growth. “The problem is, it becomes a bit of a one-up game, where everyone tries to beat each other at different rates,” says Peter McCaffrey, a policy analyst at the Frontier Centre for Public Policy. “There’s always going to be somewhere else that’s cheaper because they offer a particular incentive, but I don’t think that’s sustainable.”

Canada’s film industry has seen a similar fight between provinces luring companies with richer and richer incentives. This month, Saskatchewan broke that trend and lowered its tax credits to 25 per cent from 45 per cent. As a result, Vérité Films, which was the producer of Corner Gas, announced it was moving the bulk of its company from Regina to Toronto, where the provincial tax credit is as high as 40 per cent.

“Anytime you cross the threshold of a 20 per cent tax credit, you really are beginning to buy the business,” says Pat Bell, B.C.’s minister of jobs, tourism and innovation, when asked about the effectiveness of video game subsidies. “There’s limited value in terms of what it’s providing.”


 

Better tax credits lure B.C. video game makers to Ontario

  1. This is not about taxes, it’s about cash. Since the tax credits are refundable, they are redeemed for cash. They are not paying 47% lower taxes….they are getting reimbursed for 47% of what they pay their workers in cash from the government coffers.

  2. I’m afraid this is not an accurate reflection of what happened in Saskatchewan. The government (without any warning) cancelled a refundable 45% tax credit on labour and announced a non-refundable tax credit of 25% on all spend to be signed into law in the fall. The latter is a non workable credit in the current system, leaving the Saskatchewan industry with virtually no credit at all that it can use to finance productions. THAT is why people are leaving.

  3. THE SASKATCHEWAN GOVERNMENT DID NOT LOWER ITS TAX CREDIT.It cancelled its tax credit and replaced it with a non refundable credit that has no definitive value up front that would lure a company to produce in the province. Seeing that, film companies would over look Sask based on a non refundable program, Verite and other companies have seen there will be no future for them in the province and so were essentially ‘forced’ to go where they could continue working. It is also of note that the Sask gavernment tried to paint the tax credit as a grant, so people would see it as their tax dollars being given away. Not the case! The credit was a refund of taxes they spent while producing in the province, that they only received after meeting criteria set out in the credit guidelines, criteria that included emplying a certain percentage of local labour, people who live and contribute tax dollars to the province.

  4. Yikes, inaccurate reporting here. I’m disappointed, I always love Maclean’s, but your magazine seems to be gravitating to the ideological right. SK cut its film credit, which brought in about $6 for every $1. Almost all industries have incentives and subsidies, including the richest, like oil and gas. Art and culture are very important, and in the case of SK, were even making money.

    A recent progression of disappointments, Maclean’s. This girl will not be renewing her subscription.

  5. What the hell, Maclean’s!? No name on this piece of work either, of course. You used to be considered a viable source for news and information, but this is completely inaccurate. DO YOUR RESEARCH–The SK film credit was not reduced, it was eliminated. It brought six times what it cost. How many industries can say that? This new era of journalism is sickening, no research, you just report whatever you’re told in a press release. And no name? I used to be a subscriber, but no longer will be.

  6. This article is not accurate. The is NO TAX CREDIT IN SASKATCHEWAN. They didn’t reduce it they abolished it – READ THE NEWS ITS ONLY THE BIGGEST STORY IN SASKATCHEWAN about a lying government who spun the tax credit to the public as a grant.

  7. As a longtime Macleans subscriber, I am thoroughly disappointed in the lack of reporting facts. I wondered when any information about the axing of the SK Film Employment Tax Credit would come to light in your magazine… and obviously it still really hasn’t on your end. This is a big deal to those of us living in Saskatchewan who are unable to work in our home province in a career we love. Please do your due diligence as journalists, and investigate the truth instead of spreading the propaganda we’re sick of hearing/seeing.

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