A leader in recent years, Quebec's visual effects and animation industry is suddenly lagging far behind internationally. Industry members are extremely concerned.
MONTREAL, May 29, 2024 /CNW/ - Quebec-based visual effects (VFX) and animation studios are sounding the alarm. The industry as a whole is facing a major revenue loss and reduced competitiveness following the decision announced in the Quebec government's latest budget. This unilateral decision imposes a 65% cap on eligible expenses, effective May 31, 2024. This represents a sudden, significant 28% cut in tax credits for the Quebec industry's international clients.
Quebec's visual effects and animation industry employs over 8,000 people in well-paying jobs. With an average salary of $82,000, the industry generated more than $1.4 billion in economic benefits over the last year. Also, over the years, and thanks to the efforts of successive governments, Quebec has succeeded in positioning itself as one of the industry's three major global hubs. It's an industry in its own right, distinct from video games and film production, and accounts for 40% of the creative industries' GDP.
Today, for each $1 granted in tax credits by the government, the visual effects and animation industry generates $6 directly in Quebec's economy. So, for each $1 saved by the government following the withdrawal of the tax credit, the Quebec economy will lose $6. In other words, we're about to deprive ourselves of an industry that returns 6 times more money to the Quebec economy than it costs to offer the tax credit. What's more, this is new money from abroad.
So the tax credit is much more than just a tax expenditure. It's also much more than an employment incentive. Today, it has become a measure of international competitiveness and an exceptional tool for wealth creation.
In this context, the Quebec government's decision is particularly disappointing. There was no prior industry consultation. The tight deadline leaves no room for the industry to adapt. In fact, it forces the industry to pressure its clients, the major Hollywood studios, since they have to submit their applications before May 31. This deadline doesn't take into account the business reality of the film industry, where major projects are planned months or even years in advance.
In this industry, creative artists are so passionate that they only want to work on major, high-profile projects. However, the measure adopted by the government will limit Quebec's access to the most important projects. Since these projects will now be completed elsewhere, there is a strong risk that Quebec talent will move to other places that are now more competitive than Quebec, such as Ontario, British Columbia, France and the United Kingdom.
As a result, thousands of jobs are at risk in the province. This significant level of uncertainty affects all companies in the industry, both Quebec companies and the foreign companies that chose to establish themselves here as a result of Quebec's efforts to attract them. Today, Quebec's reputation in the visual effects and animation industry is jeopardized.
The industry fully understands the Quebec government's budget difficulties. In fact, industry members have been very understanding and collaborative when it comes to this issue. The industry's ask is simple: the industry is asking Quebec Premier François Legault to postpone the effective date of the tax credit reduction until January 1, 2025. This delay will allow the government to work with the industry to come up with an alternative measure that will both satisfy the government and ensure the sustainability of the industry in Quebec. This request has been made to public decision-makers in the past weeks and months, but no official response has been received to date.
Quebec's 47 visual effects and animation studios deplore the cuts that will hinder this national source of pride at a crucial time when the industry is just recovering from the Hollywood strikes in 2023.
Even more, the government's decision risks depriving Quebec of significant future benefits.
"Quebec's visual effects and animation industry is world-renowned for its talent, its expertise, its technical resources and its overall service offering for international studios," says Sébastien Moreau, President and Founder of Rodeo FX. "Unfortunately, despite the immense talent in Quebec, a region's competitiveness is determined by tax incentives."
"The cuts to the film production services tax credit didn't take long to be felt," said Véronique Tassart, Director — Mergers and Acquisitions Transition, Cinesite. "Already some of our clients have told us that our bids are no longer competitive. All of the Quebec studios have had the same kind of feedback over the past 2 months. The survival of the industry in Quebec is now extremely precarious."
"This unilateral decision by the Quebec government significantly weakens the visual effects and animation industry, which has been established in the province for more than 25 years," affirmed Chloé Grysole, Managing Director of Canadian Activities, Framestore Canada. "We are extremely worried about the future of our studio and the industry at large in Montreal. If the situation is not rectified quickly, Quebec's attractiveness to international producers and studios will decrease exponentially."
Members of the visual effects and animation industry present at the press conference.
Blue Spirit Canada
BUF
Cinesite inc
Folks FX
Framestore
Game On
Groupe Kaibou Production
Hybride
L'Atelier Animation
Mathematic
Mikros Animation
MPC
ON Animation Studio Montreal
Outpost VFX
Pixomondo
Raynault VFX
Rayon FX
Real By Fake
Rodeo FX
Sony Pictures Imageworks
Squeeze
Syon media
Technicolor Canada
Union VFX
SOURCE Rodeo FX
please contact Serge Vallières: [email protected] | 438-372-3575
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