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Film tax rebate clears another hurdle to avoid expiration later this year

Film tax rebate clears another hurdle to avoid expiration later this year

Dustin Hurst
March 12, 2014
Dustin Hurst
Author Image
March 12, 2014
[post_thumbnail] Jeff Sayer, director of the Idaho Department of Commerce, favors extension of the state's film tax rebate.

Members of the Senate Commerce and Human Resources Committee have approved a bill that would continue a film tax rebate in the state, even though the incentive has yet to be put to use due to a lack of funding.

Idaho Department of Commerce Director Jeff Sayer urged the committee to continue the rebate program, which is slated to expire later this year. Sayer said he wants to use the rebate program, but hasn’t had time to study the issue.

The commerce department has not used the credit because lawmakers have yet to appropriate funding for the rebate, which legislators created in 2008. The director wants the rebate to stay in place because his agency plans to ramp up its efforts to lure movie productions to Idaho.

To receive the credit, the incentive must have funds available and producers must plan on spending at least $200,000 on production in the state. Additionally, 35 percent of the production crew must be from Idaho. Productions qualifying for the 20 percent tax rebate could receive a maximum of $500,000 back from the state.

Idaho Freedom Foundation President Wayne Hoffman opposed the measure, asking senators to kill the bill to block future corporate subsidies. “This is corporate welfare,” Hoffman said. “It’s as simple as that.”

Several public policy groups on the left and right have questioned the efficacy of such credits, rebates and incentives. While the credit remains wildly popular with production companies, critics suggest the promised economic returns associated with the rebates or credits rarely–if ever–materialize.

“Studies of specific state incentive programs confirm this finding, almost universally finding miniscule revenue gains for every dollar of film subsidies offered,” wrote the Mercatus Center’s Adam Therier on the topic. “In sum, film tax credit cronyism puts taxpayers at risk without any corresponding benefits to them or the state.”

According to The Tax Foundation, 37 states spent just less than $1.3 billion in movie production incentives in 2011, nearly a $100 million drop from 2010. Part of the reason for the reduction, the foundation said, was that policymakers woke up to the reality of the weakness of the incentives.

The Center on Budget Policy and Priorities, a liberal think tank, offered a rather strong condemnation of the incentives in a 2010 piece. “Like a Hollywood fantasy, claims that tax subsidies for film and TV production—which nearly every state has adopted in recent years—are cost-effective tools of job and income creation are more fiction than fact,” the group wrote. “In the harsh light of reality, film subsidies offer little bang for the buck.”

Hoffman warned lawmakers that supporting handouts for big movie production sends the wrong message to constituents. Hoffman said it’s like telling Idahoans that “Big Hollywood needs your money more than you do.”

Sayer countered in his closing testimony. “The reality is that they (incentives) do create jobs,” he said. “They are short term, but they are real.”

The measure now heads to the Senate floor for a final vote. The House approved the measure on a 49-15 vote last month.

Note: The Idaho Freedom Foundation publishes IdahoReporter.com.

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