Fiscal assassins
My teenage son, like millions of others his age apparently, plays a video game with the charming appellation Assassin’s Creed. This bothers my wife and me no end. How creepy can a game title get? But he’s a good kid, works hard and uncomplainingly at his studies and sports, and seems very well balanced so if he wants to spend an hour every other day blowing off steam by blowing up bad guys — we hope it’s the bad guys who get blown up — we figure that’s a deal we’ll take, though we’d obviously prefer his gaming passion was for cribbage.
What’s really galling, though, is that we’re paying for the video game. Not directly. House rules are that our son finances his own junk entertainment purchases. But indirectly, through our tax dollars. Last week Quebec’s premier and her finance minister showed up to see and be seen and, importantly for their own future employment, to play at being “job-creators” at a grand opening by Ubisoft, the animation company that makes Assassin’s Creed. The ministers were there to participate in Ubisoft’s announcement of a new $378-million investment involving 500 new jobs in Montreal’s leading-edge animation industry. To grease the skids, government will be providing “fiscal incentives” of almost $10 million.
That’s in addition to a long-standing and just-expanded tax credit for this industry of as much as 37.5 per cent against the salaries of these new well-paid ($70,000 on average) employees. So the cost of each new job works out to be at least $20,000 and probably substantially more.
I have a deal for the ministers. If they give me, say, $50,000, I solemnly promise to spend it all. I’ll spend it at golf courses, restaurants, theatres, clothing stores, bookstores, movie houses, home renovation centres, landscapers, cabinet-makers — I’ve got a long list of things I could do with $50,000. I might even buy a religious symbol or two unless my subsidy forbade that.
Most of my spending would create jobs. Many of the businesses I’d patronize wouldn’t be big international operations like Ubisoft with handsome profits (more than $90 million last year). The golf courses, restaurants and renovators whose services I use don’t make anything near that. In fact, several seem to be just hanging on, no doubt partly because of the high taxes they face. My $50,000 alone won’t keep them in business but if all my neighbours had a little extra money to spend, which they would have if our taxes were lower, we might well be the difference between employment and unemployment for them.
By contrast, the 500 new Ubisoft jobs seem pretty much guaranteed whether the government helps or not. The company’s CEO, Yannis Mallat, told CBC that what “makes us stay here is the insane amount of talent” available in this industry in Montreal.
Question: If your city has an “insane amount of talent in an industry,” why are you bribing that industry’s companies with tax breaks and subsidies? If you’ve got gold deposits, do you need to bribe mining companies to come and dig them up? If you’ve got prairies and sunshine, do you need to subsidize grain farmers? So if you really are a world leader in animation, if you really do have advantages other centres don’t — as the government loves to emphasize and even take credit for in virtually all other contexts except during handout announcements — why do you need to subsidize it? You might even want to think about taxing the animation industry a little more than other jurisdictions would. If the benefits it enjoys from being in Montreal are really as considerable as you claim, it wouldn’t leave just because of a little extra tax. If the sun shone only on your tomatoes and nobody else’s, you could tax tomato exports and the world would still want them.
My little joke about accepting a $50,000 subsidy myself to help out with local employment wasn’t actually a joke. Subsidies and tax breaks for business have to come from somewhere. If some businesses pay less, the rest of us, including other businesses, pay more. And these higher taxes kill jobs. Governments can’t have it both ways: They can’t argue that tax breaks for animation create jobs but higher taxes for everyone else, other businesses included, don’t kill jobs. When they’re deciding which jobs will get help our fiscal assassins are also deciding which others will die.
So it boils down to an argument that jobs in animation — jobs making games about assassins — are somehow better for the economy or (who knows?) maybe even the society than the other jobs we kill because taxes are higher and investment and consumption therefore lower outside the government’s favoured industries.
Business handouts have one and only one clear and obvious payoff. They allow politicians to go to press conferences and pretend to be “creating jobs.” In this respect at least, Quebec is not at all distinctive. Politicians in all jurisdictions and of almost every political persuasion — even Conservative, shame on them — love to claim these magical powers.
It only works of course because the media and public are so credulous. Taxpayers’ creed: The minute we start responding instead with mockery and contempt, the whole scam will shut down.