This blog was compiled with the assistance of a prominence industry professional currently based overseas.
The Hollywood Reporter, the bible of film and TV production in the World’s largest and most successful film production centre, reported on March 24, 2011 on the negative effect tax cuts will have on the Canadian Province of New Brunswick’s film. An extract from the report suggests that, “There will be more than 30 companies here that will be affected. Most will be forced to move to other provinces that support media and they will bring their productions with them,” Maurice Aubin, president of Media NB and director of Mozus Productions said. Canadian provinces like British Columbia, Ontario and Quebec in the last two years have managed to woo Los Angeles producers by juicing their film tax credits as debt-laden U.S. states like New York, Michigan and New Jersey either reduce or scrap their Hollywood tax breaks.”
The report goes on to refer to the amount in tax revenue lost to New Brunswick due to the tax breaks. What is kept under a veil of secrecy is the amount of tax that is actually paid in connection with these ventures, tax that will no longer accrue to New Brunswick, but instead will now benefit the respective treasuries of Ontario, Quebec, Alberta and British Columbia.
The report continues, “New Brunswick’s film tax credit cost the province $4.4 million in 2008-09, and $3.3 million in 2009-10. The Atlantic province has paid out $2.7 million to film and TV producers in the current fiscal year, and aims to phase the production tax break out in 2011-2012.” Which would mean that instead of receiving 0% tax on $0, New Brunswick is concerned that instead of receiving $10 million, it only received $6 million. Therefore, instead of receiving $6 million, it is prepared to receive nothing and let that $6 million go to the other provinces.
What has that got to do with Barbados, you ask?
It has everything to do with the lack of forward thinking in the new Cultural Industries Bill (CIB) on the part of the Ministry of Culture and the drafters of the Bill – The Draft Cultural Industries Bill Needs To Be Widely Debated. There is a substantial hole in the film industry market as a result of “…debt-laden U.S. states like New York, Michigan and New Jersey…” that Barbados, through proper, timely and effective legislation, could take advantage of to the benefit of all Bajan industries. Bear in mind the Barbados government is cash strapped and has therefore proposed to float a 50 million dollar bond to fund the development of the cultural industry. To capitalize on the opportunity which has emerged in Canada and exist elsewhere, the effective implementation of the CIB should not rest solely and exclusively with the Ministry of Culture, it is a cross-ministry matter that ought to be designed to attract a new and lucrative industry to Barbados. We can do it!
No disrespect to Minister Stephen Lashley but the Ministry of Culture is traditionally assigned to the low man on the ministerial totem pole. Although to be fair former Prime Minister Owen Arthur took culture under his wing in his final term, the debate continues why he did so. While such an approach can continue when it involves theatrical ventures, Crop Over and other such entertainments. Not to forget in-house training videos, workshops and audio recording and local TV commercials the budgets of which are comparatively small. However, when it affects the possibility of generating millions of dollars in foreign exchange inflows to Barbados, it becomes a matter of high national priority and should be handled with the importance it deserves. The glaring inefficiency of the draft CIB demonstrates that the Ministry of Culture is not sufficiently sensitive to what is required.
As a result of BU’s research and collaboration with players in the industry there is the opportunity to attract international business where a TV commercial costs over US$1 million to produce, a small-budget film costs US$10 million to produce, a low-budget TV series of 26 episodes costs US$20 million to produce. Then, there is the production of animation films and video games, all costing in the millions of US dollars to produce. Can local policymakers begin to fathom the opportunity which exist to expand our forex revenue stream and at the same time jump start indigenous cultural industries? What about tourism? The need to float a 50 million culture bond becomes unnecessary and we all know there is zero appetite for the bond anyway.
Take the example of New Brunswick which was offering a tax credit of 40% to attract film production, which means that it had an industry that was paying 60% of its regular taxation, it would mean that Barbados had a new industry from which it was deriving at least 60% of a tax where before there was nothing. So, instead of 100% of 0 foreign exchange flowing into Barbados, it would be looking at US$600,000 out of US$1 million. Can the relevant players understand the arithmetic? Do they even see the opportunity?
Unfortunately Barbados does not have the professional experience and proficiency required by international producers and directors, the tax incentive would have to be greater than 40%, to use this number as a benchmark, and Barbados would have to issue work permits to those whom the producers consider necessary to maintain the quality of their production. However a compensating factor can be to stipulate that in exchange for additional tax breaks, Bajans be hired for training and mentorship purposes. The result is that in time as the indigenous knowledge pool and proficiency improves international producers/investors will be comfortable to come to Barbados and hire only Bajan technical people without undue concern that the quality of their productions would be compromised. Obviously government policy governing the quantum of the tax break can be correlated to the rising expertise in the country. BU believes that the draft CIB does not adequately address what is a massive opportunity waiting to be plucked! The CIB in its current form will be tossed into the garbage by those currently looking for alternative sites to setup.
In seems Barbados is happy to maintain the status quo which is to be treated to press reports and photographs of the Minister of Culture and other “bureaucrats” in the ministries, attending cultural events and symposia overseas and holding cultural symposia in Barbados – all at the expense of Barbadians. To france with building a cultural industry if the boys are gorging on remains of the fatted calf.
To the decision makers we hope are reading this blog note the following websites which appear to have escaped the ministry of culture when it conducted its due diligence.
To address a rising concern of BU. Recently we use some initiative -which the traditional media has been loathed to do – and contacted three top international producers in Hollywood, Canada and London. The Internet is available to all and sundry and is burdened with too much information some times. We submitted the draft CIB and asked them if they would take the time to comment. Incredibly all three did so, asking that their names be withheld to avoid prejudice in future dealings with the government of Barbados. BU posted a blog on the matter and also to the Facebook site The Empire Strikes Back because of the number of interested parties in the arts and culture sector who are members on that page. If one is to extrapolate from a few relevant comments, it has to be concluded that there is a degree of tunnel vision that is going to succeed in making a viable industry in Barbados, a non-starter. There seems to be a reluctance to take on board the broader implications of such an industry and the need for relevant legislation and expertize.
In the world of film for example we are told the guiding principle is the Budget. How much will it all cost? Which location and country offers the most advantageous tax breaks? Do they have the necessary technical requirements like power, accommodation (hotel, set, catering etc.), ground transport, security and policing, shipping facilities for raw footage or adequate processing facilities on-site, or does it all have to be brought in? If brought in, will work permits be readily available without problems or will the greasing of the hands of local authorities and politicians be required? How much will it cost? A consequence of the process flowing smoothly is that the word will go out to prominent. The result, it is a recipe for success.
There was a meeting held on April 5 to discuss the CIB by interested person who frequent the Empire Strikes Back Facebook Page who are to be commended. However BU understands contributions and discussions on the CIB are being conducted under the cloak of confidentially and secrecy. Is this a matter of national security? Why should the feedback process on a piece of draft public legislation avoid national discourse? Would it not be constructive if a suggestion from one party has the catalytic effect on others thereby generating needed momentum in the public arena to ensure a braodbased input?
NO, NO, NO the importance of an adequate, not perfect CIB, is a national imperative to sustain economic prosperity. The agendas of a few must not lead this initiative.