HST opens doors for booming B.C. film industry, studio exec says

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Restaurateurs hate it and voters came out in droves to sign a petition opposing it, but a big player in British Columbia's film and television industry says the HST means tremendous cost savings for his sector, and will make B.C. a more attractive location for Hollywood productions.

"We are extremely happy that the HST has been brought in," said Peter Leitch, chair of the Motion Picture Production Industry Association of British Columbia and president of Mammoth Studios and North Shore Studios.

Before the introduction of the harmonized sales tax, the film industry paid PST on goods and services, but because production companies were not viewed as manufacturers, they could not recover that money from the government. It was a sore point for the industry - which generated $1.3-billion last year in B.C. - and Mr. Leitch said it made the province less competitive as a shooting location.

The HST, like the GST, is recoverable, and that reduces many production costs by 7 per cent. "That's extremely significant in a marketplace where the difference of 2 or 3 per cent can take a project from here to New Mexico or Louisiana or possibly Ontario," Mr. Leitch said, adding the reduction helps counter a higher Canadian dollar for foreign producers. Ontario has also recently introduced the HST.

The cost savings affect a long list of production rentals and purchases, from lighting and cables to wardrobe, hair and makeup costs, and even the studio's air conditioning units and the lumber used to build sets.

"Everything that you see here would have been cheaper in the post-[HST]world, except for the studio itself," Mr. Leitch said on the set of the USA Network series Psych, shooting its fifth season at North Shore Studios.

Mr. Leitch estimated the cost savings for a series such as Psych at approximately $35,000 per episode. For a big-budget, $80-million film, he says the cost savings brought in by the HST could total $1.4-million. He stressed these were rough estimates.

Mr. Leitch was speaking at a news conference organized by the pro-HST Smart Tax Alliance (which includes the MPPIA) to counter the rash of negative publicity the new harmonized sales tax has unleashed.

"There's been a tremendous amount of acrimony and criticism directed at the harmonized sales tax and at the government over the past few months and it's important to bring some balance, I think, into that public discussion," said Jock Finlayson, executive vice-president for Business Council of British Columbia, and a spokesperson for the alliance.

In June, Mr. Leitch and about 20 other B.C. film industry professionals travelled to Los Angeles, to market B.C. as a film location and spread the word about the HST. They held about 30 meetings and the reaction to the new tax was positive, he said.

When pressed, he singled out 20th Century Fox executives as being "absolutely thrilled" about the HST. The Hollywood studio is currently shooting Caesar: Rise of the Apes in Vancouver, and recently wrapped production on the star-studded The Big Year (with Jack Black, Steve Martin and Owen Wilson) in B.C. as well. Both productions, said Mr. Leitch, benefited from reduced costs for goods and services purchased on or after July 1, when the HST came into effect.

However, Mr. Leitch was unable to name any specific productions that have come or are coming to B.C. as a result of the HST. "You're not going to get a project specifically coming for a specific tax credit or an HST or whatever. It's an accumulative thing and they … look at the bottom line."

Anti-HST campaigner Chris Delaney, who owns a film and television production company specializing in animation, says any cost savings his industry experiences will quickly be eaten up by additional labour costs.

"The film industry is made up largely of labour and all those people that work in it have to pay the HST," he said. "So when the costs go up for them, it won't be long before the unions and the individuals in the companies come back and ask for a raise. It's gonna be a wash at the end of the day."