Study Finds More Films Shot in Canada

The number of big-budget feature films produced in Canada has nearly doubled since the Canadian government began offering generous tax credits three years ago, according to a study released Wednesday.

About one-third of all feature films in North America were produced in Canada last year, according to the study commissioned by Raleigh Studios in Manhattan Beach, which hosts TV and film productions.

The study found that 36 movies with budgets of more than $5 million were shot in Canada last year, up from 21 in 1998. By comparison, 84 films that cost at least $5 million were shot in the U.S. last year, down from 107 three years ago, the study found.

“It used to be the small-budget-pictures leaving the country to save money, now it’s the larger-budget pictures, the bread and butter of the industry,” said Stephen Katz, an independent consultant who performed the five-month study for Raleigh Studios. “And the bigger the budget the more impact there is on the local production community.”

The report comes as concerns grow about the economic effects of runaway production. Some groups have estimated that the U.S. loses $10 billion a year in film and television production to other countries. And earlier this month, the Film & Television Action Coalition and the Screen Actors Guild petitioned the Commerce Department to determine whether the Canadian tax subsidies are legal under current trade agreements. The Commerce Department must decide by the end of the month whether an investigation is warranted.

“These figures bolster our contention that runaway production ... is growing quite rapidly and is directly attributed to the tax subsidies offered by the Canadian government,” said Lance Simmens, the Screen Actors Guild governmental affairs director. “You can see a rather significant spike in total dollar volume and the number of pictures shot.”

The Canadian government’s figures show that total film production in that nation increased by 12% to $2.8 billion in 2000, compared with a year earlier. About a third of those productions were foreign pictures shot in Canada.

The loss of film shoots extends beyond Southern California. Chicago has seen a 40% decline in film production during the last two years, said Ron Ver Kuilen, managing director of the Illinois Film Office. In 1999, film production boosted Chicago’s economy by about $120 million, but this year that figure is $72 million, he said.

Since November 1997, the Canadian government has offered an 11% rebate on labor costs for production workers who live in Canada. The following year, the Canadian government began allowing lucrative tax shelters that allowed producers with Canadian partners to defer taxes on productions shot in Canada. The Canadian government has said it would phase out these tax shelters next year.

The biggest draw may be the cheap currency exchange. The Canadian dollar is worth about 64 cents and by some estimates, producers can save up to 25% of a film’s production costs by shooting in Canada.

The Motion Picture Assn. of America did not comment Wednesday on the report.