Video game developers want B.C. to renew Interactive Digital Media Tax Credit

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A few years ago, video-game developers in British Columbia worked hard to convince the provincial government that the industry deserved a tax credit. With the Interactive Digital Media Tax Credit (IDMTC) set to expire in 2015, they aren’t wasting any time getting ready to persuade politicians that the tax credit should be renewed and even expanded.

Howard Donaldson, president of DigiBC, an association of digital media and wireless companies, said the IDMTC simply “stopped the bleeding” and that more than 5,000 industry jobs have been lost in the province since 2008. At a DigiBC town hall meeting at the Vancouver Rowing Club on February 6, Donaldson told the Georgia Straight he’d like to see the IDMTC continued and the amount raised.

“We’re very happy about the tax credit,” he said, “but when you compare it to what’s out there, it’s very low.”

The IDMTC came into effect on September 1, 2010, and it expires on that day in 2015. It’s good for 17.5 percent of eligible salary and wages involved in the creation of interactive products, including video games, educational software, and simulators. Any company with a permanent studio in the province can register for the tax credit.

The Straight requested interviews with Minister of Finance Michael de Jong and Minister of Jobs, Tourism, and Skills Training Shirley Bond, but neither was available. According to the B.C. Ministry of Finance, there were 28 registrants in 2011–12 and 49 registrants in 2012–13. As of the end of January, 52 companies had filed to receive the IDMTC in the current fiscal year.

NDP technology critic George Heyman, who was circulating among the crowd before the DigiBC meeting, told the Straight that digital industries are “great for our province”. Studies have shown that tax credits bring in more revenue than they distribute, and they increase employment in related industries, according to the Vancouver-Fairview MLA. Heyman said the IDMTC seems like a “win-win”.

“The Liberals promised to expand the tax credit, and we’ll be looking at the budget to see if they keep their promise,” he said.

Provincial officials wouldn’t indicate how much has been paid out through the program, but Donaldson said he was told that it was about $30 million a year. He contrasted that figure with the economic impact of the industry in the province. For each person working in video games, Donaldson claimed, two additional jobs are created, with vendors that contribute to the creation of games and businesses that support developers.

“The tax credit affects the hiring of three people,” Donaldson said.

Which is why Todd Tessier, chief financial officer for Recon Instruments, which develops wearable technology, calls the IDMTC “not a subsidy, but a competitive fiscal policy that is sustainable”. Tessier, who said he “worked closely” with the Ministry of Finance while he was employed by the investment-capital branch of the provincial government, is part of the DigiBC team that will be making a case for the extension of the tax credit.

DigiBC is trying to raise $75,000 from its membership to fund an updated report that will establish the importance and potential of the industry.

“The more accurate our information is, the better position we’ll be in to support the industry,” Donaldson told the audience at the rowing club.

Four panellists shared stories about the IDMTC in an effort to convince the assembled that supporting the upcoming research is worthwhile. They all agreed that, administratively, the program is great, with Silicon Sisters Interactive CEO Brenda Bailey Gershkovitch saying it is “easy to work with and easy to apply for”.

James Hursthouse of Roadhouse Interactive and John Lutz of Electronic Arts joined the other panellists in calling for the IDMTC to be amended so that work performed by contract employees is eligible and for the application fee (between $1,000 and $5,000) to be removed.

Lance Davis, CFO of Slant Six Games—which he noted has “wound down significantly”—said that the studio benefited tremendously from the IDMTC. But because of a lack of communication about the program, Slant Six didn’t apply for the credit in its first year. “I can unequivocally say…if we’d had the benefit of this perhaps one year before, there’s a strong possibility Slant Six would be here today,” Davis added.

Donaldson said informal surveys by DigiBC indicate that there are currently 3,250 full-time employees in B.C. who are employed making video games, the same number as in 2009. In the five years prior, he said, the provincial industry had been growing steadily.

Donaldson said the number of people employed by the sector in Quebec doubled after a similar tax credit in that province was increased—to 30 percent (37.5 percent for French-language products) of all labour costs, including contractors—in 2007. He thinks a tax credit of 30 percent would do the same for B.C.

“At 40 percent, we could create 4,500 jobs,” Donaldson said.

Comments (3) Add New Comment
Let's make it equitable.
Why are they only proposing giving subsidies to politically sexy industries and not all industries? If the evidence is so clear, like Heymen says, shouldn't all businesses be afforded the same opportunity? Every business now competes globally and could benefit from government subsidies or lower taxes. Enough of the corporate welfare schemes.
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HellSlayerAndy
The video game industry is a nearly $100 billion and over ESPECIALLY the last five years...revenue has practically doubled due to mobile apps? Of course educational software biggest customer IS government itself?
These guys still can't make a go of it?
One WOULD have thought that these guys were so busy making money that they wouldn't even have the TIME to lobby for tax breaks or grift their own industry to produce another study saying how their industry is so important.
Don't be fooled like the 90s when these grifters had your corrupt politicians build lavish call centers, only to have them bug out to Hungary, Minnesota or India when the price is right. At least then some shitty politician could cut a ribbon on a physical space that employed a few hundred people, albeit temporarily.
Now, one of the most successful local companies, Klei, only employs 9 people and they would be successful virtually anywhere, tax breaks or not.
Just get rid of the tax breaks and the programmer 'talent' and the industry will survive -- it's the MBAs that will simply have pull up stakes in order to chase their next grub stake.
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Mark Glazer
OIDMTC (Ontario Interactive Digital Media Tax Credit) is a Media Tax Credit that helps Canadian Corpoations that are involved with interactive product development such as : mobile application development , web application development, games, e-learning and certain types of interactive marketing products. Graphic Designers and other associated product development costs can be compensated using this program. The rate is dependant on your qualification and ranges from 35%-40%. To find out if you qualify, you may take the OIDMTC Qualification Assessment Tool:

http://www.mediafunds.ca/test2b-%20OIDMTC%20Questionnaire%20Assessment%2...
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