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Monday, June 16, 2008

Canadians oppose Bill C-10...but for all the wrong reasons

The Digital Home website is reporting that the majority of Canadians oppose Bill C-10. That’s the proposed legislation that would grant the Heritage Minister the power to deny film tax credits to productions that contain content that is offensive or contrary to government policy objectives.

A majority of Canadians (52%) believe it would be wrong for politicians to screen the content of films and deny tax credits based on whether or not they deem it to be offensive according to a new Ipsos Reid poll.

In Bill C-10, the Harper government has recently proposed that it would allow the Heritage Minister or a government committee to review the film content and either deny or apply tax credit requests based on their determination.

The study of 1002 adult Canadians, which was conducted over the phone between June 10 and June 12 2008, found that 52% of respondents believe it would be wrong for the government to screen the content of films and either approve or deny tax credits because it’s really censorship based on the ideology of the party in power.

In contrast, 45% believe its right for the government to screen the content of films and either approve or deny tax credits because it ultimately involves taxpayer’s money and they have the right to determine what’s in the public interest.

Respondents to this survey – both for and against Bill C-10 -- misunderstand the legislation, and so, apparently, do the researchers at Ipsos Reid.

It’s not censorship for the government to withdraw tax credits from a film, although I would argue it’s pretty darn close. The government is not proposing to ban controversial films; it is just proposing to deny these films access to the Canadian Film or Video Production Tax Credit.

Those respondents who support the bill are also doing so for the wrong reason. A tax credit is not “taxpayers’ money.” The tax credit program allows private film investors to keep more of their own money by paying less tax on their profits. So how does this bill involve “taxpayers’ money”?

The reason Canadians should oppose Bill C-10 is because it expands the power of the Minister of Heritage and leaves the $5 billion in annual subsidies to the arts community in place.

If the government doesn’t like what the film industry is producing, they should reduce or eliminate the subsidies to this industry. Using tax credit programs to direct the film industry to conform to the policy objectives of the government looks like a ham-fisted attempt at turning the Department of Heritage into the Department of Propaganda.

To learn more about Bill C-10, read this Western Standard news exclusive: "Will the Tories blink on Bill C-10?"

Posted by Matthew Johnston on June 16, 2008 in Canadian Politics | Permalink


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"...how does this bill involve “taxpayers’ money”?"

Opportunity cost. Presumably the government steals more from someone else as a result of stealing less from the film industry.

Posted by: K Stricker | 2008-06-16 6:14:33 PM

I don't think you can blame the film industry for the rapacious appetite of the state for tax dollars.

If we cut corporate taxes across the board, and the government looks to replace the lost revenue by increasing tariffs, would you oppose corporate tax cuts? And would you blame industry for the increased tariffs?

A tax credit is not a government subsidy.

Posted by: Matthew Johnston | 2008-06-16 6:28:00 PM

A tax credit is similar to a subsidy in that it allows the government to set an agenda for what industries they think we need more of.

I've personally made a lot more political donations than before the last couple of years knowing that money would be heavily refunded at tax time.

There's a very minor difference in my opinion between the government stealing my money outright and having them tell me what I can spend it on (in order to prevent them from stealing it).

Regardless of whether a tax credit is really like a subsidy or not, the government clearly wouldn't be speaking for most or all taxpayers in any case.

Posted by: K Stricker | 2008-06-16 7:13:15 PM


I'm wondering if there's a difference between how you and I think this tax credit is being applied. My understanding is that it is to encourage investment in film and video, i.e. the credit is on "eligible expenses of production."

You seem to be arguing the angle that the tax credit is on the profits of the film in question (which I believe not to be the case) so therefore the free market would have more say in which films would benefit most from the credit.

Posted by: K Stricker | 2008-06-16 7:21:39 PM

A tax credit is only useful if you owe taxes. And since the government doesn't have any real claim to the fruit of a man's labour, they can't refer to a tax credit as a subsidy.

Did you read comments made by the Fraser Institute and Walter Block on this distinction?

Posted by: Matthew Johnston | 2008-06-16 8:57:42 PM

I agree having the government bribe film producers with their own money is better than having them bribe film producers with other people's money.

I guess I've gotten off point a bit, but I object to the government's tendency to reward bad behavior (tax credits limited to a part of the production cost of a film).

I would prefer that they simply taxed revenues from film at a lower rate (if at all). That would allow the free market decide what content is worth bestowing a benefit upon. The government has created a false problem to solve by allowing tax credits on the costs of production only.

Posted by: K Stricker | 2008-06-16 9:27:38 PM

Since when did something as irrelevant as a TV show or a movie stake a claim on overtaxed Canadians?

Whether this stuff is crap or a work of genius, stop using my tax dollars on it. Sell your own damn tv shows.


Posted by: epsilon | 2008-06-16 10:02:15 PM

K - do you think that broad based tax relief is better than targeted tax relief (I include tax credits in the targeted tax relief camp) because it denies the government a powerful tool with which to engineer society and "pick winners and losers," as the saying goes?

Posted by: Matthew Johnston | 2008-06-16 10:31:28 PM

If Canadian film makers produce crap that no one will pay to see - that's not my problem. There should not be any tax credits for any films.

Governments make it expensive to create anything in Canada - Canadians prefer that over economic growth and jobs. If the guy making widgets has to suffer and/or go bankrupt - so does the entire film industry, it's only fair.

Posted by: philanthropist | 2008-06-16 11:38:48 PM

I was in support of C-10, but I'm come to question that support when I really started to think about the difference between a subsidy and a tax credit.

So, on the one hand, I think that the most vocal opponents to C-10 have gone about it the wrong way. They should be promoting the meme that bill C-10 effectively creates a new tax on pornography. By refusing tax credits to productions the government doesn't like, they're effectively raising taxes on certain types of content. It could easily be communicated that it's a tax hike, and the government is trying to make money off the production of pornography! It's a little tongue-in-cheek, I realize, but I think it would be an effective talking point.

On the other hand, I'm still unclear on how a tax credit for commercial enterprises that don't actually TURN A PROFIT isn't a de facto subsidy. If we want to cut taxes on film production, shouldn't those tax breaks be tied to how much money the production actually makes?

I have NO issue with expanding the minister's ability to restrict subsidies, even if the method seems ham-fisted. But I do disagree with giving the minister the ability to impose taxes arbitrarily.

Posted by: Anonymous | 2008-06-17 7:07:48 AM

"do you think that broad based tax relief is better than targeted tax relief"

That's exactly what I think. :)

Posted by: K Stricker | 2008-06-17 7:53:49 AM

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