B.C. government comes through with surprise help for new media sector

The new media lobby in British Columbia was taken aback this week after a surprise announcement by the provincial government of new tax credit measures to help the sector. In its February 18 budget, the fiscally conservative Liberal government announced a $5-million increase in venture capital tax credits that could attract as much as $17 million a year in new investment in new media companies, as well as a 15% top-up tax credit for productions using digital animation and special effects. The move came as a surprise given the government’s reticence at loosening the purse strings since being elected in May 2001. But New Media BC head Jane Green says the Liberals have been a model of accessibility since taking power, and frequent requests by both her organization and representatives of the video games industry were clearly taken to heart. For the new media equity capital program, a $5-million pool of income tax credits will be made available to attract seed capital investment in start-up and developing companies. Individuals and corporations that purchase shares in qualifying new media companies, or in qualifying venture capital corporations that are established to support new media, will get a 30% tax credit on their share purchases. It’s expected the credits could attract up to $17 million for the new media sector. The digital animation and visual effects tax credit will provide a refundable corporate income tax credit of 15% for digital animation and visual effects. The credit will be calculated as 15% of B.C. labour expenditures incurred for animation or visual effects, and will be an addition to either the province’s Film Incentive BC tax credit or the Production Services Tax Credit. A B.C. government official speaking on background explains that while valid questions about the necessity for public spending might arise from the announcement, especially since recent unpublished numbers collected by New Media BC indicate a thriving and growing new media industry in the province, the Liberals nonetheless felt the initiative was important to keep the province competitive with its confederates. It also made a conscious decision not to pursue the same course as Ontario, which funnels tax credit-eligible money through labour-sponsored funds. B.C. has opened the program, instead, to direct investment as well as through third-party vencap funds after a study into the effectiveness of Ontario’s program. The structure should also make it easier to fund companies as a whole without assessing initiatives on a project-by-project basis such as in film. Green says the programs are exactly as the association was pushing for. "B.C. didn’t have a program of incentives for investing in new media, unlike Ontario and Quebec. This solves two of our biggest problems. One was access to capital, and two was having a level playing field with the rest of Canada. We didn’t have as competitive a program as the rest of Canada and now we do." She adds, "This is beyond my expectations, it really is…We’ve been talking with them through two budget cycles, and we’re actually quite pleased that it came through in this budget cycle because I didn’t expect it to come through so quickly. We’ve been talking with them extensively since they got in, for the last two years. They did their own feasibility study last fall, which we helped them with. We’ve been having quarterly meetings with the minister of Competition, Science and Enterprise, who’s in charge of our sector and keeping them regularly updated. They’ve had a very open and accessible communications plan with us." The money will flow into a thriving new media sector in the province, Green says. Preliminary data from an industry study to be published in May shows nearly 800 companies active in the field – a substantially higher number than the 200 counted five years ago before the dot com boom and bust. "I think sees a lot of potential in this industry and they want to attract investment."

B.C. government comes through with surprise help for new media sector

Broadcast | February 20, 2003

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