US To Offer Film Tax Credit?

by Mike Godfrey, Tax-News.com, Washington

19 October 2001

A bipartisan group of US politicians Wednesday introduced a bill designed to offer tax incentives to US film and television productions, in order to keep them from relocating to more accommodating countries, such as Canada.

The bill was co-sponsored by Republican David Dreier and Democrat Howard Berman, and is a companion bill to that submitted to Congress by Democrat Senator Blanche Lincoln in July. 'The legislation is designed to address the alarming trends in runaway production,' said Dreier, who is also the chairman of the House Rules Committee.

Like the earlier bill, the House legislation would provide a wage based tax credit for film and TV productions produced in the US, providing total wage costs are between $200,000 and $10 million. This, according to the senators, would normally amount to 25% of the first $25,000 dollars of wages per employee, rising to 35% for qualifying low income cases.

Dreier explained the reasoning behind the introduction of this new legislation: 'Most Americans believe that US industries can compete with anyone if the rules of the game are fair- and no industry in the United States believes in this principle more strongly than the US movie and television industry.'

Although this move will doubtless be welcomed by the American film industry, their Canadian counterparts are less than delighted, as the Canadian government already seems to be trying to knock the country's film sector out of the running all by itself.

There was widespread consternation earlier this month when the Canadian government announced its intention to do away with a film tax shelter, (which estimates suggest cuts production costs by around 6%), by the end of this year. It is difficult to predict how much of Canada's $1.3 billion in annual foreign film production will be lost if either, or both of these measures come into effect.

Recommended