Is Louisiana's tax credits paying off? According to a new report, Louisiana's tax credit system is worthless.
Since 2009, Louisiana has offered a 30 percent base tax credit on qualified in-state expenditures covering production costs, salaries of actors, directors and producers. An additional 5 percent tax credit is given for salaries to state residents up to $1 million in individual salary. In addition, there is no per project cap in Louisiana.
Consequently, Louisiana's general film/TV tax credit system has generated 10,800 jobs in 2013, generating $471 million in personal income and $1.6 billion toward's the economy. But, according to a study released last month by the state's Department of Economic Development, Louisiana's tax credit system is worthless. That on Louisiana's best day they are able to get back about a dollar for each dollar spent. It was previously reported that Louisiana was only getting 23 cents on the dollar back in taxes from the tax credit system which means the state was simply throwing money away, according to the study.
However, The MPAA and the Louisiana and Entertainment Assn., argued that the previous study did not take into account tourism.
According to Van Stevenson, senior vice president of the MPAA, that is why this new study went beyond similar prior studies in other states to also include the impact of tourism. Typically, when state legislatures look at the results of tax incentives, they do not include tourism.
The study by the Louisiana Film and Entertainment Association and the MPAA revealed that people who had watched shows like True Blood, NCIS New Orleans and Duck Dynasty, as well as older TV shows and movies including A Streetcar Named Desire, came to Louisiana specifically because the shows were filmed there. It found that 14.5 percent of visitors surveyed using an online sampling system (which is not scientific in the classic sense) came because they had watched a show set in the state. [The Hollywood Reporter>
So, when you take tourism into account, it shows that tourism driven by movies and TV shows created an additional 22,700 jobs and generated $767 million in personal income and up to $2.4 billion in economy output. Which means overall, according to the study, movie and TV production supported as many as 33,520 jobs and generated almost $4 billion in economic impact.
The new study commissioned by the MPAA argues that the return on investment to Louisiana tax credit system basically breaks even, which is better than a 23 cents return. But, it shows that Louisiana is just as profitable with or without the film tax credit system because, the state is at best able to break even.
They argue that the return on investment to Louisiana tax coffers breaks even. Their own study showed that in 2013, production and tourism spending related to movies and TV shows generated state tax revenues of $95.1 million and local tax revenues of $85.9 million, for a total of $181 million. According to the Louisiana Department of Revenue, $178.9 million in tax credits were redeemed that year. [Variety]
Some lawmakers are calling for significant changes, like limiting the expenses that can be claimed and capping the annual credits at $300 million. However, Gov. Bobby Jindal has not scaled back the program in his latest budget meaning the tax credit system will continue in Louisiana.
Change is not something producers are interested in. Recently, North Carolina ended their tax credit system
for a grant program. Since then, several movies and TV shows have skipped town and relocated to other states like Georgia and Pennsylvania.. If reports continue to suggest that Louisiana's film and TV tax credits are worthless expect lawmakers to pull the plug on the program which will drive more and more shows to competing cities like Atlanta.
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