Tke/ Tax—Skeitex Yea,S
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Tke/ Tax—Skeitex Yea,s. By Wyndham Wise "I think they squandered a grand opportunity and it's largely the fault of producers who were shameless and greedy, people of dismal taste, who were more interested in making deals than films and who made a lot of money for themselves. And so Canadian films do not enjoy a larger reputation anywhere and it's a pity...a lot of damage has been done." — Mordecai Richter, Cinema Canada, May 1985 More feature films were made in a hectic 30—month period from the fall of 1978 to the spring of 1981 than at any other time in our short cinematic history. This essay, originally written as part of a master's degree program at York University, attempts to provide some insight into what happened when Canadian feature—film policy was made up by greedy producers, clueless politicians, bottom—line consultants and inventive lawyers and accountants. Its not apretty We. I TAKE ONE 17 CANADIAN CINEMA Claude Jutra (A tout prendre, 1964) from certifiably Canadian and therefore Quebec and Don Owen (Nobody Waved qualified for the benefits of the CCA. Good-bye, 1964) from Ontario gained international recognition for their original The fledgling corporation had some early work, while Allan King (Warrendale, 1967) successes under the directorship of Michael pioneered the techniques of direct cinema. Spencer. Don Shebib's Goin' Down The In response to this growing movement, Road, 1970, Bill Fruet's Wedding In White, the federal government of the day 1972, Peter Pearson's Paperback Hero, 1973, initiated certain policy changes. In 1964, and Ted Kotcheff's The Apprenticeship of the cabinet approved, in principle, the Duddy Kravitz, 1974, among others, drew establishment of a loan fund to foster and critical acclaim, if only modest returns at promote the development of a the box office. There was a growing sense Kate Jackson and Elliott Gould in feature-film industry. The cabinet, in of real excitement about the future Alvin Rakoff's Dirty Tricks. accepting the recommendations made by possibilities of the industry; however, it an interdepartmental committee under the soon became apparent that the CFDC, with direction of Guy Robage, the film its small, rotating budget, was proving The year 1978 was a watershed for the commissioner, charged the committee inadequate to the challenge of stimulating Canadian film industry. Several factors fell with the responsibility of preparing growth in production. There was a call into place that year, which created an specific proposals. These proposals were from an ad hoc industry lobby group, the unprecedented growth followed very made a year later by O.J. Firestone, a Council of Canadian Filmmakers (CCFM) quickly by an equally unprecedented professor of economics at the University and others, for an enforceable quota system decline. Tax-shelter financing for of Ottawa, in his Report of Film placed on the major exhibition chains. The feature-length films had existed prior to Distribution: Practices, Problems and CCFM's "Winnipeg Manifesto," issued in 1978. A 60 per cent tax write-off for Prospects. Firestone recommended an October 1973, called for "the development investment in Canadian films was available accelerated capital cost allowance (CCA) of practical methods for the distribution of as early as 1954. As the pre-1978 tax for producers, joint international film Canadian films to the Canadian public legislation did not distinguish between agreements, the establishment of a film including an immediate quota system with films with a significant degree of Canadian development corporation and a film a minimum objective of approximately 20 content and those without, there was no industry advisory committee. Most of his per cent screen time being given to incentive to invest in Canadian productions recommendations were eventually Canadian films." In a related brief as opposed to films made elsewhere. The adopted in one form or another, but never presented to the CRTC by the CCFM idea of actually making features in Canada as a comprehensive package. during the 1974 licence-renewal hearings was simply not considered viable. There for the CBC, Peter Pearson, then the was little history and no feature-film The first step was outlined in the speech chairman of the CCFM, made the point industry to speak of in 1954. Certainly there from the throne in 1965 and proposed that that, "of the 101 completed feature films was the talent and artistic energy to create a Crown corporation be established with the CFDC has invested in over the past five the films, but without a financial base or the responsibly of administering a years, only two have been screened by the production infrastructure in place, this $10-million revolving fund. Legislation to English network." Despite the best efforts talent was forced to work abroad. Directors establish such a corporation was of the CFDC, between the dominance of such as Norman Jewison, Arthur Hiller and introduced in June of 1966 and the the American distributors in the Canadian Daryl Duke, nurtured by the CBC in its Canadian Film Development Corp. marketplace and the indifference of the television infancy, left for Hollywood. (CFDC) was brought into being in CBC, very few Canadian feature films were Sidney J. Furie went to work in England February 1968, thus marking a significant being seen by Canadians. and Ted Kotcheff (who became known as change in government policy and the first Commonwealth director) made providing much needed support for an The federal government was not films in the United Kingdom and Australia. underdeveloped private sector. insensitive to the issue of quotas as Gerard They became the lost generation of Coproduction treaties were signed with Pelletier, then secretary of state, indicated Canadian filmmakers. Italy in 1970, the United Kingdom in 1975, in the First Phase of a Federal Film Policy, and the one with France (which had issued in July 1972: "We are aware of the In the early 1960s, a new generation grew originally been signed in 1963) was problem and we have begun studying up through the NFB to replace them. renegotiated in 1974. The CFDC was closely the system of distribution in These young filmmakers were determined charged with the responsibility of Canada and abroad. I can only say that we to remain in Canada and create films administering the coproductions and are...looking into quota systems...and the necessary to build a national cinema. determining which films would be problem of foreign ownership of our 18 WINTER 1999 111 FROM Donald Sutherland and Suzanne Somers in George Bloomfield's Nothing Personal. abroad." The report also confirmed what made any money, the investor never had the CCFM had been saying all along: "93 to come up with the total cash investment per cent of total distribution rentals from while profiting from a significant tax the Canadian box office were being paid to saving. Of course, it was in the investors the Hollywood majors." best interest if the film never got released. This tax loophole brought into play a new In 1975, Faulkner negotiated a voluntary type of film entrepreneur—the tax lawyers agreement with the two major theatre and accountants—who could make their chains, Famous Players and Odeon, where way through the complicated tax laws and the chains were to guarantee a minimum "lever" such investments on the basis of four weeks per theatre per year to the original down payment. This new Canadian films, and invest a minimum of breed of "producer" was not concerned $1.7 million in their production. This policy with the priorities of the CCFM and its initiative was accompanied with an "Winnipeg Manifesto." They were deal announcement by John Turner, minister of makers and representatives of large finance, in his budget speech that a new investment groups. They were adept at income tax regulation would allow legally exploiting a grey area over which investors to deduct in one year, against there was very little regulation and no income from all sources, 100 per cent of substantive government policy directive. their investment in certified feature films. By 1974, the abused CCA scheme had This provision was retroactive to include already established the widespread notion film productions begun after Nov. 18, 1974. that Canadian films were made to lose The Faulkner/Turner "two step" is a money and were box-office poison. classic example of the federal government's compromise on arts policy. In response to With the new 100 per cent write-off, four the cultural nationalists, the secretary of films were made at the end of 1975 that, state introduced a watered-down system for the first time, had budgets in excess of of voluntary agreements which were the $1-million mark. This represented the ultimately unenforceable, while the beginning of a trend that would have minister of finance offered tax subsidies significant impact on the growth of the distribution companies and film theatres." which help to create an artificial industry industry. Interestingly, just as Canada was When Hugh Faulkner replaced Pelletier, based on dubious "international" (i.e. making tax-shelter investment in film he promptly commissioned the Bureau of American) standards. more attractive, the U.S. government Management Consulting to do a study of enacted the 1976 Tax Reform Act which the industry in Canada for the arts and The 60 per cent write-off had become a effectively closed the tax-shelter loophole cultural branch of the secretary of state. farce, not unlike Zero Mostel's wheelings for film production. In Canada, the The Tompkins Report, as it became and dealings in Mel Brooks's classic, The tax-shelter game continued to be played, known, reaffirmed Pelletier's earlier view: Producers. Investors were assured of a albeit with slightly tighter rules.