Skip to content

How changes to Georgia’s film tax credit would impact entertainment industry, Peach State’s economy

ATLANTA, Ga. (Atlanta News First) – One of the reasons behind Georgia’s booming status as a film and TV industry leader is the generous tax credit offered to companies simply for filming in the Peach State.

Entertainment companies can receive up to 30% off their bottom line by bringing their productions to Georgia.

But when lawmakers return to session at the Georgia Capitol this winter, the credit could be at risk of being severely reduced. If that happens, entertainment industry leaders said the billions of dollars the credit brings to the state could start to dry up too.

“We have thousands of jobs in Georgia that depend on this,” said Randy Davidson, CEO of Georgia Entertainment News. “Productions and film are looking for a credit. If Georgia doesn’t offer that, they just move around until they find it.”

Georgia’s uncapped film credit brought in an estimated $4.4 billion in 2022 and $4.1 billion last year alone, according to the Michigan Department of Economic Development. It also cost the state over $1 billion in lost tax revenue, a trade-off some lawmakers are skeptical of if the relatively new industry starts to even out.

“Any business in Georgia that you pay 30% of their costs, they’re probably going to do well,” said Rep. Chuck Hufstetler (R-Rome). “Are they creating jobs? Yes. Are they growing business? Absolutely. But how much does it cost to do that? That’s what we have to look at.”

The credit, in its current form, first came about in 2005 and back then, offered production companies around 10% in tax breaks for filming in-state. It’s since grown to become one of the most generous tax programs Georgia offers, which some lawmakers say isn’t fair.

Georgia lawmakers review state’s TV and film credit

“It is vibrant, it’s grown in Georgia. But we have to say, ‘What is fair to everybody?” said Hufstetler. “There’s other businesses (the state) can grow too.”

Lawmakers aren’t waiting until the legislative session starts in January to consider the fate of the film tax credit. A slate of state Georgia House and Senate lawmakers — the Georgia Tax Review Panel — have already held hearings on the fates of several Georgia tax credit programs, including the film incentive.

But it’s hard to ignore the benefits the credit brings with it. Aside from the billions in economic development, it also created an estimated 59,700 jobs in 2022, according to a study on the Georgia film industry conducted by U.K.-based data firm Olsberg SPI.

According to that same study, it’s the main reason so many entertainment companies are coming to Georgia. Based on surveys of production companies that shot in Georgia, the Olsberg SPI study determined that if not for the credit, the companies would likely have moved an average of 90% of their production elsewhere.

“We invested in it years ago and now we’re looking at something where we’re the lead in, we have a well-threaded economy because we have a creative economy which other states are trying to get,” said Davidson. “I would say, let’s continue to grow this responsibly in the state of Georgia.”

It’s not an easy process for companies to collect the credit. It’s heavily audited by accounting firms deputized by the state to watch over every dollar spent by production companies.

RELATED: Full Assembly Atlanta coverage

“We have to review for every production from the smallest to the largest, thousands of documents, every deal memo,” said Peter Stathopoulos, a certified public accountant with the firm Bennett Thrasher, who conducts the audits on behalf of the state. “It’s basically buying products, leasing products, that all have to be from Georgia vendors.”

Audits only became mandatory in 2020 after the legislature passed a law requiring them. By the numbers, Stathopoulos is convinced the industry is doing good things for the Georgia economy.

“It’s not just the economic returns that the economists talk about, it’s what are human capital flows. Are people moving to Georgia because of this industry? Are they coming to Georgia universities? Is Georgia’s brand generally rising or sinking,” he said. “These are all kinds if intangible factors.”

The industry’s growth also had the potential to expand existing businesses in Georgia. Construction companies, dry cleaners, florists and other businesses that are sometimes seasonal all get boosts from production work.

“Think wedding caterers or tent companies that operated for festivals, they’re able to utilize their businesses, grow their workforce, year-round,” said Jezlan Moyet, Davidson’s partner at Georgia Entertainment News. “Construction companies that were only focused on residential, now they’re building studios, they’re building sets and production designs. It’s created a whole other revenue for these small businesses — dry cleaners, florists, prop houses and antique companies, I mean the list goes on and on. There are so many lives and so many business owners that are touched by this, not just the filmmakers.”

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *