The Saskatchewan Government made some news this week when it ended subsidies to the Saskatchewan film industry. Naturally many Can-con celebrities have lined up to lend support and arguments for keeping it. What really puzzles me are the economic arguments. An online petition claims:
-The film industry created 1200 jobs in 2009/10 alone.
– It’s not money out, it’s money in.
– Don’t eliminate the SFETC!
“Every dollar of tax incentive for the film industry returned six dollars in economic activity,” Steve Wells, Ph.D. & Clyde Posey, Ph.D.”
It pains me to have to point out that taking money from one person and giving it to another has not created anything!
The imagined jobs come at the expense of the ones that could have been gained by individuals keeping and spending their money in the first place. Only a PhD, a politician or an actor could be so self-absorbed not to see this.
In fact, its worse than just a “one for one” trade-off since money going into this industry creates a false signal to other economic participants. Labour and capital ends up being lured away from productive activities into non productive activities. From the Star Phoenix article: “the change will force him to move his family and business elsewhere.” This seems like a bad thing since one less person is spending money on things. But if everyone else is paying to keep him here, they are all better off (economically) without him.
Also incomprehensible is how an industry can be so economically valuable yet experience a death-blow without tax money. The death-blow only serves to prove this is an economic drain and not an economic asset.
The final bizarre argument is the notion that the tax incentive encourages outside money to be spent here when it otherwise would not have: “it’s not money out, it’s money in.” By that logic, we should be offering all tourists half-price vacationsin Saskatchewan where taxpayers pay the other half of the bill. See how long it takes for that to make us rich.
I will gladly listen to arguments supporting a subsidy because it has cultural merit that benefits everyone. I may or may not agree with that but at least it’s not based on an economic falsehood that insults my intelligence.