Imagine if every business owner in Saskatchewan walked into a government office each year and was reimbursed for half the money the business paid to its employees.
That would bankrupt the province.
As strange as that scenario sounds, that’s what’s going on right now with the film industry. For years film companies have been getting 55 percent of their labour costs reimbursed by Saskatchewan taxpayers through a provincial government subsidy.
If a film company in Saskatchewan spent $100,000 on wages, it would have received $55,000 from the government.
While the base subsidy is 45 per cent, it’s often topped up to 55 per cent if the film meets certain criteria. The subsidy program is also called a ‘tax credit,’ but in reality it’s a handout program that has given away more than $100 million of taxpayers’ money over the past decade.
So why should the film industry receive preferential treatment? Good question.
Chances are, the corner store by your house, the mechanic you take your car to and the little machine shop you pass by on the way to work receive nothing in terms of government handouts. The vast majority of businesses do not receive any corporate welfare from government.
Nor should they. If a company has a good business model, it should be able to get by without any handouts. Instead of choosing favourites and deciding to subsidize one business and not another, governments should reduce taxes and leave more money in peoples’ pockets.
That way, taxpayers could decide for themselves which businesses receive their money. Some might choose to support the film industry by buying more DVDs, watching more movies in theatres or investing in the production of a film. Others may choose to support a struggling corner store or perhaps use the money on something else.
The point is taxpayers, not bureaucrats and politicians, would decide.
The film industry has rejected such an approach, noting that other Canadian provinces still take money from taxpayers and hand it to film companies. That’s true, but other provinces are also running deficits this year. Not to mention the fact that two wrongs do not make a right.
The reality is, the Wall government has tabled what many have called a “razor-thin” budget surplus this year. Thus, in order to balance the budget, it had to make some tough choices – give millions to movie companies or spend money on things like the new colon cancer screening program.
Naturally, those in the movie industry are upset by the decision to discontinue their special subsidy. If you worked for a business that had grown dependent on government handouts, you would be upset too if the government pulled the funding.
However, therein lies the danger with government subsidies. Organizations grow dependent on the handouts and cry out when governments decides to do things like fund cancer screening instead of the movie industry.
There are plenty of businesses out there that create jobs, buy local products and support the local economy without receiving subsidies. The film industry should be no different.
Premier Wall’s next step should be to encourage other provincial premiers to follow suit – not just on film subsidies, but all business subsidies. Like they say, there is strength in numbers.
Some may not like the film subsidy decision, but the Premier made the right choice.
Colin Craig is the Prairie Director for the Canadian Taxpayers Federation
