Film industry left reeling By Oona Woods The ramifications of the federal tax policy towards film that took effect on Jan. 1 1999 are being felt throughout the industry and could set back the number of productions filmed locally. Revenue Canada announced that as of the first of this year they would look for compliance from foreign actors with regard to taxes. This means that instead of a 15 per cent withholding tax, actors on productions filming here could pay 50 per cent of their wages to Revenue Canada. There is a reciprocal agreement with the federal tax agency in the US and a similar agreement had been in effect with some states whereby actors could claim back the portion they had paid to the Canadian government. However, in what could be seen as an effort to discourage the financial drain of foreign location shooting, the state of California will not recognize any taxes paid abroad. National Revenue Minister Herb Dhaliwal says that this is where the problem lies, not with the Canadian taxation system. He says that people have the wrong impression and it is not a change in policy or law that has come into effect but rather a request for compliance with federal law. However, Reform Party MP John Reynolds announced last week that already the Universal feature film Curious George and three made-for-TV movies have pulled out of their shooting schedules in B.C., costing the province a potential $110 million in film production revenue. "It galls me that the government, specifically Revenue Canada, would move to change the long-established agreement they had with US film production studios, without informing the B.C. end of that industry," says Reynolds. "I know for a fact, that this bombshell was dropped on the industry without any formal notification or public announcement by Revenue Canada." Jane MacCarthy of the Sea to Sky Film Committee says that someone in Ottawa isn’t doing the math or thinking about the repercussions. It is rumoured that Sylvester Stallone and the film De-Tox, which is currently in production in the Mad River area, were on the verge of pulling out but MacCarthy says they are already committed to this area and have formed agreements that pre-date the New Year’s Day tax hike. "It is more likely to be stuff happening down the line that will be impacted," she said. "With an average of 30 feature film, TV series, movies and commercials shot annually, the Sea to Sky Corridor is the busiest area for filming outside of the Lower Mainland. While it is difficult to track spending, the economic impact of filming in the Corridor is estimated to be at least $2 million annually," a release from the Sea to Sky Film Committee states. MacCarthy points to Campbell River as an example of a town brought back to life by film. "The film industry has provided economic diversification for a number of communities in B.C. A case in point is Campbell River... a town that was hit hard by the closing of the fishery and saw mill. The town has been revitalized thanks to six months of filming for Disney’s 13th Warrior, starring Antonio Banderas, and more than $20 million in direct local spending." Reynolds says it is an Ottawa-based decision taken with no regard for the impact it would have on the B.C. economy. "The film industry in B.C. generates $750 million in revenue. Nine out of 10 productions shot in B.C. are of US origin, leaving one production left, which in no way can sustain the infrastructure and Canadian jobs these productions generate in B.C. The film industry in B.C. is the last vestige of any growth industry we have. And now we have Ottawa shutting it down. Does anyone in Ottawa get the picture?" Reynolds says that it is clear that Revenue Canada won’t be collecting tax on the $750 million revenue spent in B.C. because half of nothing is nothing. "It would, if these Revenue Canada officials stopped to think, be in the federal government’s best interest to leave things as they were, given that when the US industry pulls out the remaining $600 million, the feds lose the 15 per cent withholding tax as well, leaving them nothing." Petitions and protests against this tax on foreign actors have been circulating throughout the film schools, and offices of the industry in Vancouver. Dhaliwal says that he will be meeting with representatives of the Canadian film industry today (Jan. 22) to try and move forward.