Keep on Keepin' On
In today's Pacific Business News, Stewart Yerton writes that despite the death of the 15-20% refundable production tax credit bill, the Hawaii film office and the state will keep trying hard to attract and stimulate production with existing incentives and resources.
Yerton also explains why a producer would have chosen the proposed 15-20% refundable tax credit over the 100% Act 221 investment tax credit, even though it may seem counterintuitive to do so: "Despite their generosity, the acts are often cumbersome for producers to use. Los Angeles studios typically have no Hawaii tax liability, so they must find local investors to whom the studios can transfer the credits through a limited partnership. Local lawyers and accountants must be hired for the transactions. And the local investor-taxpayer often buys the tax credits at a discount, paying perhaps 50 cents for a credit worth $1. Finally, all of this must be approved on a case-by-case basis by the state Department of Taxation. The failed bill would have eliminated the need for such gyrations...[and] would have required producers to choose between the Act 221/215 credits and the refundable credit, eliminating...'double dipping.'"
The article provides a good overview of the current state of incentives and the rationale for the failed bill, but there are two small points to note:
1. Last year's state production expenditures were $161M, not $166M.
2. The article and accompanying graph states that both the current film incentive program (Act 221 + 4% refundable credit) and the proposed program (Act 221 + 15-20% refundable credit) costs or would have cost the state $28 million per year. I just wanted to point out that this is just an estimate (not hard dollar figures of credits actually doled out) by the State Department of Taxation and the Council on Revenues.
State will court film industry despite incentive bill’s failure [PBN - pdf file]
Yerton also explains why a producer would have chosen the proposed 15-20% refundable tax credit over the 100% Act 221 investment tax credit, even though it may seem counterintuitive to do so: "Despite their generosity, the acts are often cumbersome for producers to use. Los Angeles studios typically have no Hawaii tax liability, so they must find local investors to whom the studios can transfer the credits through a limited partnership. Local lawyers and accountants must be hired for the transactions. And the local investor-taxpayer often buys the tax credits at a discount, paying perhaps 50 cents for a credit worth $1. Finally, all of this must be approved on a case-by-case basis by the state Department of Taxation. The failed bill would have eliminated the need for such gyrations...[and] would have required producers to choose between the Act 221/215 credits and the refundable credit, eliminating...'double dipping.'"
The article provides a good overview of the current state of incentives and the rationale for the failed bill, but there are two small points to note:
1. Last year's state production expenditures were $161M, not $166M.
2. The article and accompanying graph states that both the current film incentive program (Act 221 + 4% refundable credit) and the proposed program (Act 221 + 15-20% refundable credit) costs or would have cost the state $28 million per year. I just wanted to point out that this is just an estimate (not hard dollar figures of credits actually doled out) by the State Department of Taxation and the Council on Revenues.
State will court film industry despite incentive bill’s failure [PBN - pdf file]
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posted by mynette at
5:40 PM
