From Today’s Globe:
VANCOUVER — British Columbia appears poised to offer improved incentives to its $1-billion dollar film industry, as it tries to level the tax playing field with other Canadian provinces, including Ontario. B.C. Premier Gordon Campbell is set to hold talks with film sector officials this week, a sign his government may be prepared to match Ontario by raising the tax credit on foreign productions to 18 per cent from 11 per cent.
Until last year, Ontario had a tax credit of 11% on foreign films. As did Quebec. As did BC. But then the Ontario government thought — A HA! — if we jack up the credit to 20% we can steal some of the business currently going to those other provinces. Deux peuvent jouer dans ce match, said Charest, seeing McGuinty and raising him another 2% to 20%. And now BC looks set to ante up as well.
Then we’ll be back where we started, with everyone on a level playing field: each will have the same relative amount of film business, except with the taxpayer taking a bigger hit. Game theorists out there will recognize this as a 3-player prisoners dilemma, also known as an arms race, also known as beggar thy neighbour’s taxpayers. This is something that should outrage lefties, since it is straightforward rent-seeking by big entertainment conglomerates.
In his excellent column in the Post this weekend, Andrew Coyne suggests that preventing these sort of collective actions problems from getting out of hand is precisely why we have a federal government.
I agree. If only we had a federal government, instead of a headwaiter to the provinces.
There is a lesson in here, for the provincialists who think that the Council of the Federation can serve as an effective replacement for the federal power, by allowing the provinces to coordinate amongst themselves. I’d explain, except I’m too busy trying to figure out how the equalization programme can have a guaranteed escalator clause.