Despite evidence from studies that reveal subsidies for Hollywood cost taxpayers, a Senate Finance subcommittee approved a bill Wednesday that would increase the percentage of rebates offered to the state’s motion picture industry.
“This is about economic development jobs for the state,” said Sen. Paul Campbell, R-Berkeley County and sponsor of S. 163.
The bill would increase the rebate of employee wages to 20 percent of the total aggregate payroll – up from 15 percent – and “may not exceed” 25 percent for South Carolina residents”employed in connection with the production” when at least $1 million is spent yearly on total production costs in the state.
The total annual wage rebates offered by the S.C. Film Commission could not exceed $10 million, which is the existing cap.
Additionally, the bill would allow the state to rebate a film company up to 30 percent – up from 15 percent – of non-wage production costs if it has spent at least $1 million in South Carolina. The legislation would not change the section of current law that says the total amount of rebates may not exceed 26 percent of the general-fund admissions taxes collected the previous fiscal year and appropriated to the Film Commission.
The Sales and Income Taxation Subcommittee unanimously approved the bill co-sponsored by Sens. Yancey McGill, D-Williamsburg, and Billy O’Dell, R-Abbeville and the subcommittee chairman.
Noting the annual aggregate of $10 million, O’Dell said, “We aren’t using all of the money now.”
Campbell touted the local economic benefits from film crews staying for extended times in hotels and the money pumped into local economies.
The film industry spent $12.7 million with South Carolina businesses and vendors in 2012, with $3.8 million in rebates paid based on those expenses, said Tom Clark of the Film Commission. He also reported $72.3 million in film and television industry wages in South Carolina last year, with $5.2 million in rebates paid in that category.
The commission’s website lists incentives offered to the film industry, including:
- A rebate of 15 percent on wages paid to production personnel and subject to state withholding tax. Qualifying wages must be less than $1 million per person;
- A 15 percent rebate on goods and services purchased, rented or leased from South Carolina merchants, if expenses total at least $1 million;
- A sales tax exemption if spending on a project exceeds $250,000;
- A tax credit of up to $100,000 for production costs of a movie by an investor in the state; and
- A tax credit of up to 20 percent for investments in South Carolina production facilities, capped at $5 million per facility.
Campbell informed the subcommittee that he’s aware of a French company that is ready to move to South Carolina if this bill is approved this session and signed into law, though he provided no specifics.
Yet despite the panel’s approval of the bill, several recent studies show that incentives for the film industry don’t benefit tax collections.
As an example, AECOM, a global consulting firm with an office in Columbia, conducted a study in 2011 commissioned by the S.C. Department of Parks, Recreation and Tourism.
“For every $100 spent on (such) rebates, $31 came back in the form of taxes, a net loss as is the case with many other film incentive programs in the U.S.,” the study said.
“AECOM estimates that South Carolina would have received $304,000 in state sales tax and $23,000 in local sales tax revenue since 2007” absent the sales-tax exemptions for film and TV productions, The Nerve reported in January 2012.
An earlier study also showed poor returns to state coffers. College of Charleston economics professor Frank Hefner analyzed nine film and television productions made in South Carolina between 2006 and 2007. His study found a return of only 19 cents per rebated dollar, The Nerve reported.
Olson can be reached at (803) 254-4411 or curt@thenerve.org. Follow him on Twitter @thenerve_curt and @olson_curt. Follow The Nerve on Facebook and on Twitter @thenervesc.