High Georgia lawmakers say moviemakers ought to be required to do extra than simply present a peach on the finish of the credit to get the highest profit from Georgia’s profitable movie tax credit score.
Thanks largely to tax breaks, productions together with “The Hunger Games,” the Marvel motion pictures, the Quick & Livid installment “Furious 7” and plenty of others shot in Georgia have made the Peach State a hub for motion pictures and tv exhibits which may in any other case have been shot in Hollywood in an earlier period. This system has supported hundreds of Georgia jobs and the creation of a number of thriving studios.
In a information convention Wednesday, legislative leaders mentioned they need firms to satisfy 4 of 9 objectives to obtain the highest 30% credit score on Georgia earnings taxes. Home Methods and Means Committee Chairman Shaw Blackmon mentioned that would come with issues reminiscent of taking pictures in rural Georgia, hiring extra Georgia staff and supporting manufacturing studios within the state.
“We’re certainly not limiting the credit at all,” Blackmon, a Bonaire Republican, instructed reporters after the information convention. “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 largest announcement to return out a monthslong review of all of the tax breaks that Georgia affords to numerous industries. Lawmakers additionally mentioned Wednesday that they wish to at the least quickly droop a gross sales tax exemption on tools provided to knowledge facilities. So many knowledge facilities are opening or increasing within the state that it’s inflicting a notable drain on the facility grid, main Georgia Energy Co. to say it rapidly must construct or contract for new electrical generation capacity.
The bulletins are a comparatively modest consequence of the evaluation, which Republican Lt. Gov. Burt Jones touts as a solution to shore up tax income in order that Georgia might further cut its income tax rate for all residents and companies.
“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 mentioned “And that’s what we’re working on.”
Jones and others mentioned opinions would proceed.
There had been discuss of capping the variety of film tax credits Georgia would difficulty in a 12 months — the state is projected to offer out $1.35 billion in credit this 12 months alone, and is one among six states with no cap. However business teams lined up at hearings over the summer time to defend the breaks as spurring financial exercise, and Home lawmakers have been extra more likely to defend the tax breaks.
The movie tax credit score has spurred a giant enhance in motion pictures and TV exhibits made in Georgia, however state-sponsored evaluations present the credit score’s value outweighs its financial profit. A examine final 12 months by Georgia State University advised the state noticed a return of lower than 20 cents on the greenback.
Any manufacturing firm can declare credit as soon as they spend $500,000 on movies, tv exhibits, commercials or music movies distributed outdoors the state. Credit begin at 20% of manufacturing spending, however rise to 30% if a film or tv present shows Georgia’s peach brand. The invoice would increase this threshold to $1 million.
The credit can solely be used to cut back excellent state earnings taxes owed, and might’t be redeemed for money. Nonetheless, the credit are transferrable — manufacturing firms can promote them to any particular person or enterprise with state earnings tax legal responsibility.
In 2022, the state auditor estimated $1.4 billion in such taxes had been excellent. Some lawmakers concern there could possibly be an sudden spike in redemptions, hurting state income. So Blackmon mentioned lawmakers wish to restrict redemption of transferred credit to 2.5% of the earlier 12 months’s state income, or about $900 million at present.
Home Speaker Jon Burns mentioned the first cause for suspending Georgia’s gross sales tax exemption on tools utilized in knowledge facilities is due to issues about electrical energy use. Georgia Energy testified in regulatory hearings final month that 80% of a forecast bounce in electrical energy demand would come from knowledge facilities. The Atlanta Journal-Constitution found at the least 18 knowledge facilities are being developed or expanded in Georgia.
“These centers currently are using a disproportionate amount of our state’s energy,” mentioned Burns, a Newington Republican. “We have to make sure that we balance that and we have resources available.”
The info facilities tax credit score is projected to value the state $44 million in foregone gross sales tax income this 12 months, in keeping with a 2022 University of Georgia study. Nonetheless, that very same examine confirmed that knowledge facilities had been an total financial boon to Georgia.
Blackmon mentioned that if lawmakers permit the state to renew giving gross sales tax exemptions, lawmakers wish to require the comparatively few staff of such knowledge facilities to make double the state’s common wage, up from 110% now.
