Sask Film Tax Incentive Over

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.


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3 Responses to Sask Film Tax Incentive Over

  1. I think it is worth pointing out that the film makers are making this request of a government that is quite prepared to spend taxpayers money to create jobs in many different arenas. Canadians have just suffered our country’s biggest deficit ever for just such a dream.

  2. daviditron says:

    Yes, governments of all levels perform this shell game of announcing they’ve given Paul a job after they rob Peter. Calling it job “creation” is misleading and untrue regardless of what industry it is. If the government is going to spend our money, it owes us an honest justification. As my post tries to show, the nonsense we are fed to justify this kind of spending, is now being used to justify continuing such programs as the film credit.
    I hope the recent American experiment in massive government “job creation” and the 15 percent unemployment left in its wake will blow some of the smoke away from this kind of thinking.

  3. fadedearth says:

    “I hope the recent American experiment in massive government “job creation” and the 15 percent unemployment left in its wake will blow some of the smoke away from this kind of thinking.”

    That’s about as likely as the hope that it would work in the first place. State worship is ideology, not reason, & you can’t open any minds at this high level if they are closed at the base.

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