Ontario-based producers andservice providers received an early Christmas gift as the province increasedthe labour-based production tax credits for foreign and domestic productions.

Effective Jan 1 2005, the Ontario Production Services Tax Credit for foreignproductions will increase from 11% to 18% and the Ontario Film and TelevisionTax Credit for domestic productions will increase from 20% to 30% for five years,while maintaining the 10% regional production bonus for projects shootingoutside the Toronto area.

The foreign production credit will be subject to review before the end of 2005,the domestic by 2010.

The announcement was anticipated by the industry - the Liberal government ofpremier Dalton McGuinty had campaigned on the notion before last year'sprovincial election but it contained a bonus: an absence of a cap on labourcosts, a particular sticking point in negotiations between the industry and theprovince.

Local stakeholders were quick to applaud the decision. "The more than 20,000 people who work in Ontario's film and television business were giventheir future back today," said Brian Topp, executive director of theToronto branch of performers guild ACTRA and co-chair of lobby group FilmOntario.

Provincial culture minister Madeleine Meilleur said the C$2bn generated annually by the production sector made it a crucial part of Ontario's economy.

Not surprisingly, the British Columbia Motion Picture Industry Association (MPPIA) has called on its province to take immediate action to match Ontario's coming increases.

"The British Columbia Government must ensure that our industry is on a level playing field with our main competitor", said Peter Leitch, MPPIA chair and vice president and general manager of Lions Gate Studios in Vancouver. British Columbia's domestic and foreign tax credit percentages are currently the same.