Various groups – representing Canadian actors, directors and producers – want Ottawa to tax foreign-based streaming services, like Netflix, to help pay for more Canadian content.Andrew Harrer/Bloomberg
The story of Bre-X – the biggest mining scam in Canadian history – is finally coming to the big screen.
Sadly, there isn't much that's Canadian about the movie Gold, which stars American actor Matthew McConaughey. The film was written, directed and largely financed by U.S. companies, and shot in the United States and Thailand. Its international cast has just one Canadian, Quebec-born Bruce Greenwood, in a relatively minor role. Investors lost $6-billion in the sensational fraud that rocked Bay Street in the 1990s. It's a tale of international intrigue, shady stock promoters, faked drilling results from a remote jungle gold mine and a geologist's untimely plunge from a helicopter. So why aren't Canadians telling the story of one the best real-life dramas to come out of this country in decades?
Movies, and particularly TV shows, are enjoying a renaissance in the age of video-streaming services such as Netflix and Apple iTunes.
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And yet, the wave is largely bypassing Canada, which continues to export talent (and stories), but a paltry amount of its own cultural product.
Enter the idea of a Netflix tax. Various groups – representing Canadian actors, directors and producers – want Ottawa to tax foreign-based streaming services to help pay for more Canadian content.
The federal government appears to be open to the idea. The Globe and Mail's Bill Curry reported last week that Ottawa has been testing the public mood about a Netflix tax in recent focus-group sessions – specifically, how to support Canadian content when fewer Canadians are purchasing cable-TV subscriptions. The government tested various options to raise money for Canadian content, including tapping telecom companies' smartphone and Internet revenues, mandating that foreign streaming services spend more on Canadian content or giving consumers the option of making a voluntary $2 contribution on their telecom or Netflix bill.
A Netflix tax might well be a worthy idea. New Zealand, as well as various U.S. states and municipalities, are already going that route – in part to recoup tax revenue they've lost from tumbling sales of CDs, DVDs and cable services.
There is the issue of tax fairness. Canadian cable companies and Internet providers must collect the HST, while foreign services such as Netflix and Apple do not. Even Canadian Radio-television and Telecommunications Commission chairman Jean-Pierre Blais has expressed surprise that Ottawa hasn't already moved to level the playing field.
But it's not at all clear that higher taxes will deliver better Canadian movies and TV shows in the digital age.
Ottawa and the provinces already spend more than $1-billion a year on TV and film production, through tax credits as well as Telefilm Canada, the Canada Media Fund and the National Film Board. Many provinces also offer credits and subsidies. Ottawa also gives more than $1-billion a year to the CBC, which is seeking $318-million a year more so it can go ad-free.
In spite of this significant investment, Canadians are not watching enough homemade content. The market share of English-language Canadian films at the box office has consistently been less than 2 per cent in recent years, or well below the 5-per-cent federal target.
Nor are we particularly successful in the export market. For example, Britain exports six times as much cultural product per capita as Canada does, Richard Stursberg, a former CBC and Telefilm executive and industry lobbyist, pointed out in a recent University of Ottawa report, Cultural Policy for the Digital Age.
"The system has worked well, up to a point," Mr. Stursberg argued in the report.
Government cash has helped spawn a significant industry that produces a lot of content. Unfortunately, most Canadians aren't watching it, he laments.
Subsidies and tax breaks are producing quantity, but apparently not the quality Canadians want.
Mr. Stursberg would abolish the various federal grants, loans and spending mandates for broadcasters and impose the HST on foreign-streaming services. He would then steer most of the money almost exclusively into tax breaks for the industry.
Canada's record on targeted tax incentives to encourage particular corporate behaviour is uneven, at best. Tax credits for research-and-development are a case in point.
The risk would be that the country produces even less quality programming than it does now.
What Canada needs is a regime that fosters larger, well-capitalized companies capable of producing globally competitive and compelling Canadian viewing.
Surely, Canadians, not foreigners, should be reaping the profits from the telling of our best stories.