The Legault government on Thursday refused two opposition motions asking it to postpone until 2025 the establishment of a cap on the tax credit to which the visual effects and animation industry is entitled.
Following the cry of alarm from around twenty players in the sector, the Liberal Party and the Parti Québécois in turn tabled a motion on Thursday to ask the government to delay until at least January the application of a limit of 65% on expenses eligible for the tax credit for animation and visual effects studios. This major tax change was announced in March, in the last budget, and is due to come into force on Friday.
Industry representatives argue that the imposition of this measure is far too radical. This will inevitably result in loss of contracts and layoffs, we insist. While it takes time to find a solution with the government, the industry is campaigning for the old rules to remain in place until January, hoping to attract some big American productions this summer.
This sector, which has experienced phenomenal growth over the last decade in Montreal, hired more than 8,000 people in 2022: a figure which fell last year to just under 4,700 employees due to production delays caused by strikes by actors and screenwriters in Hollywood. If the tax credit is capped, the number of visual effects and animation employees could this time drop to 2,600, according to the Quebec Cinema and Television Bureau.
However, the CAQ government believes that Quebec will remain competitive in this area, even after the changes made to the tax credit. In the office of the Minister of Finance, Eric Girard, it was emphasized on Wednesday that aid to the visual effects and animation sector “was disproportionate”. A consultation carried out last year led the government to come to this conclusion. Quebec preferred to improve the tax credit offered for foreign filming.
The video game industry also sees the terms of its tax credit being tightened. But the entry into force of the changes for this sector has been set for January.
