Tax Credits for Foreign Location Shooting of Films: No Net Benefit for Canada

The federal and provincial governments spend almost half a billion dollars a year providing tax incentives to encourage the production of films, videos and television programs in Canada by foreign firms. Although the subsidies are successful in achieving their stated objective of increasing employment in the film industry, the increase comes at the expense of activity in other sectors. This study uses a benefit-cost framework to demonstrate that Canadians are poorer, not richer, as a result of the film tax credits. It would serve the economic interest of Canadians for the federal and provincial governments to phase out support for foreign location shooting with appropriate transitional assistance for the workers affected. While elimination by all governments would provide the largest benefits, any jurisdiction taking unilateral action would realize a net benefit.