Georgia’s top lawmakers say filmmakers should be required to do more than just flash a peach at the end of the credits to get the maximum benefit from Georgia’s lucrative film tax credit.
Thanks in large part to tax breaks, productions like “The Hunger Games,” Marvel movies, the Fast & Furious installment “Furious 7” and many others filmed in Georgia have made the Peach State a hub for movies and television shows that would otherwise have been filmed in Hollywood at an earlier time. The program has supported thousands of jobs in Georgia and the creation of several thriving studios.
At a news conference Wednesday, legislative leaders said they want businesses 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 like filming in rural Georgia, hiring more Georgia workers and supporting production studios in the state.
“We’re certainly not limiting credit at all,” Blackmon, a Republican from Bonaire, 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 taxpayers and sustain credits at the same time, so that the industry has a chance to continue to thrive.”
That’s the biggest announcement to emerge from a month-long review of all the tax breaks 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 is causing a noticeable drain on the power grid, prompting Georgia Power Co. to say it needs to quickly build or contract new electric generating capacity.
The announcements are a relatively modest outcome of the overhaul, which Republican Lt. Gov. Burt Jones is touting as a way to shore up tax revenue so Georgia can further lower its income tax rate for all residents and businesses.
“The only way to do that is to evaluate all the tax credits and incentives that exist right now, adjusting some of them, eliminating others,” Jones said. “And that’s what we’re working on.”
Jones and others said the reviews would continue.
There had been talk of limiting the number of film tax credits Georgia would issue in a year: the state is expected to award $1.35 billion in credits this year alone, and is one of six states without a limit. But industry groups lined up at hearings over the summer to defend the breaks as a stimulus to 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 television shows made in Georgia, but state-sponsored evaluations show that the cost of the credit outweighs its economic benefit. A study last year by Georgia State University suggested the state returned less than 20 cents on the dollar.
Any production company can claim credits once it spends $500,000 on movies, television shows, commercials or music videos distributed out of state. Credits start at 20% of the production spend, but increase to 30% if a film or television show displays the Georgia Peach logo. The bill would raise this threshold to $1 million.
Credits can only be used to reduce unpaid state income taxes and cannot be redeemed for cash. However, the credits are transferable: production companies can sell them to any individual or company that must pay state income taxes.
In 2022, the state auditor estimated that $1.4 billion in such taxes remained outstanding. Some lawmakers fear there could be an unexpected increase in refunds, hurting state revenue. So Blackmon said lawmakers want to limit the bailout of carryover credits to 2.5% of state revenue from the previous year, or about $900 million currently.
House Speaker Jon Burns said the main reason for suspending Georgia’s sales tax exemption on equipment used in data centers is concerns about electricity use. Georgia Power testified in regulatory hearings last month that 80% of the projected increase in electricity demand would come from data centers. The Atlanta Journal-Constitution found that at least 18 data centers are being developed or expanded in Georgia.
“These centers currently use a disproportionate amount of our state’s energy,” said Burns, a Republican from Newington. “We have to make sure we balance that and have resources available.”
The data center tax credit is projected to cost the state $44 million in forgone sales tax revenue this year, according to a 2022 study from the University of Georgia. However, that same study showed that data centers were an overall economic boon for Georgia.
Blackmon said that if lawmakers allow the state to resume sales tax exemptions, lawmakers want to require the relatively few employees of such data centers to earn twice the state’s average salary, up from 110% currently.
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