Filmmakers in Georgia should do more to earn tax breaks, lawmakers say
Fox News
Top Georgia lawmakers say moviemakers should be required to do more than just show a peach at the end of the credits to get the top benefit from Georgia’s lucrative film tax credit.
Thanks in large part to tax breaks, productions including “The Hunger Games,” the Marvel movies, the Fast & Furious installment “Furious 7” and many others shot in Georgia have made the Peach State a hub for movies and television shows that might otherwise have been shot in Hollywood in an earlier era. The program has supported thousands of Georgia jobs and the creation of several thriving studios.
In a news conference Wednesday, legislative leaders said they want companies to meet four of nine goals to receive the top 30% credit on Georgia income taxes. House Ways and Means Committee Chairman Shaw Blackmon said that would include things such as shooting in rural Georgia, hiring more Georgia workers and supporting production studios in the state.
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“We’re certainly not limiting the credit at all,” Blackmon, a Bonaire Republican, told reporters after the news conference. “I think what we’re trying to do is provide more value and a better return on investment for the taxpayers and sustain the credits at the same time, so that industry has an opportunity to continue to thrive.”
That’s the biggest announcement to come out a monthslong review of all the tax breaks that Georgia offers to various industries. Lawmakers also said Wednesday that they want to at least temporarily suspend a sales tax exemption on equipment offered to data centers. So many data centers are opening or expanding in the state that it’s causing a notable drain on the power grid, leading Georgia Power Co. to say it quickly needs to build or contract for new electrical generation capacity.
The announcements are a relatively modest outcome of the review, which Republican Lt. Gov. Burt Jones touts as a way to shore up tax revenue so that Georgia could further cut its income tax rate for all residents and businesses.
“The only way to do that is by assessing all the tax credits and incentives that are out there right now, adjust some of them, eliminate others,” Jones said “And that’s what we’re working on.”
Jones and others said reviews would continue.
There had been talk of capping the number of film tax credits Georgia would issue in a year — the state is projected to give out $1.35 billion in credits this year alone, and is one of six states without a cap. But industry groups lined up at hearings over the summer to defend the breaks as spurring economic activity, and House lawmakers have been more likely to defend the tax breaks.
The film tax credit has spurred a big increase in movies and TV shows made in Georgia, but state-sponsored evaluations show the credit’s cost outweighs its economic benefit. A study last year by Georgia State University suggested the state saw a return of less than 20 cents on the dollar.
Any production company can claim credits once they spend $500,000 on films, television shows, commercials or music videos distributed outside the state. Credits start at 20% of production spending, but rise to 30% if a movie or television show displays Georgia’s peach logo. The bill would raise this threshold to $1 million.
The credits can only be used to reduce outstanding state income taxes owed, and can’t be redeemed for cash. However, the credits are transferrable — production companies can sell them to any individual or business with state income tax liability.
In 2022, the state auditor estimated $1.4 billion in such taxes were outstanding. Some lawmakers fear there could be an unexpected spike in redemptions, hurting state revenue. So Blackmon said lawmakers want to limit redemption of transferred credits to 2.5% of the previous year’s state revenue, or about $900 million currently.
House Speaker Jon Burns said the primary reason for suspending Georgia’s sales tax exemption on equipment used in data centers is because of concerns about electricity use. Georgia Power testified in regulatory hearings last month that 80% of a forecast jump in electricity demand would come from data centers. The Atlanta Journal-Constitution found at least 18 data centers are being developed or expanded in Georgia.
“These centers currently are using a disproportionate amount of our state’s energy,” said Burns, a Newington Republican. “We have to make sure that we balance that and we have resources available.”
The data centers tax credit is projected to cost the state $44 million in foregone sales tax revenue this year, according to a 2022 University of Georgia study. However, that same study showed that data centers were an overall economic boon to Georgia.
Blackmon said that if lawmakers allow the state to resume giving sales tax exemptions, lawmakers want to require the relatively few employees of such data centers to make double the state’s average wage, up from 110% now.
https://www.foxnews.com/politics/filmmakers-georgia-do-more-earn-tax-breaks-lawmakers-say