Written by on May 2, 2014. Posted in Incentive News

New report urges caution over expansion of California filming incentive

A new report has urged caution over any plans to expand California’s filming incentive programme. The study warns that competing with rival incentives elsewhere in the US could be very expensive for the state especially as it says the tax credit does not “pay for itself”.

Published by the California Legislative Analyst’s Office, the report concedes that there is a case to expand the state filming incentives, but urges authorities to pay particular attention to the costs involved.

“If the Legislature wishes to continue or expand the film tax credit, we suggest that it do so cautiously,” the report states: “We highlight several factors to consider. Specifically (1) responding to other jurisdictions’ subsidies could be very expensive and (2) for state government, the film tax credit does not ‘pay for itself’.”

However, the study also considers the potential impact on California’s “flagship industry” if the filming incentives are not improved.

“Given that other states and countries are offering subsidies, it may be difficult for California not to provide subsidies and still retain its leadership position in this industry. That is, it may be reasonable for California to provide subsidies to ‘level the playing field’ and eliminate the economic incentives to locate productions outside of California.”

If the Legislature wishes to continue or expand the film tax credit, we suggest that it do so cautiously.

Legislative Analyst’s Office, California

Proponents of the filming incentive are understandably focussing on the parts of the report that best support the cause.

“The California Legislative Analyst's Office issued a report that confirmed what independent economic analyses of California's Film Tax programme have found: that the programme has merit,” said Assemblymen Mike Gatto and Raul Bocanegra, authors of a bill designed to boost the incentive: “Today's report states that it's ‘reasonable’ to continue and expand the programme.”


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