New dollars: $544 million attributed to film productions

Tax breaks bring movie makers to Mass.

By Steve Leblanc
Associated Press
Quincy Patriot Ledger, Mar 27, 2008

Recent tax incentives passed by the Legislature and supported by Gov. Deval Patrick have collectively saved movie makers as much as $138 million in the past two years, according to a report by the state Department of Revenue.

The report points out that some of the lost revenues will be offset by increased personal income, business and other taxes generated by film productions that wouldn’t have been made here without the tax breaks.

The report also finds that the 88 film productions with end dates between 2006 and 2008 – and thus eligible for the film tax credits and sales tax exemptions – spent a total of $544 million in the state.

“That’s essentially what the credits were intended to do, bring new dollars to Massachusetts,” said Nicholas Paleologos, executive director of the Massachusetts Film Office.

Paleologos said the true economic boost to the state is likely more than $1 billion when indirect spending is added in.

“In a gloomy economy, the one glimmer of light is over here on the creative economy side,” he said.

The first version of the film incentive law took effect in January 2006 and created a 20 percent tax credit for payroll expenses, a 25 percent credit for production expenses and a sales tax exemption.

An updated version, which took effect last year, increased the payroll tax credit to 25 percent, lowered the threshold to qualify from $250,000 in expenditures to $50,000, and eliminated a $7 million cap for tax credits on any single movie.

The tax credits have been an undeniable boon to film production in Massachusetts.

In 2005, the last year before the tax credits took effect, the state saw just one major movie shot here – the Oscar-winning “The Departed,” although a large portion was actually shot in New York.

This year, as many as a dozen major movies could be shot in the state, according to Paleologos.

“These pictures were going to get made, the only question was where,” he said. “That could have been Rhode Island or Ontario or Hungary, but it turned out they were shot here and that’s in large part because of the incentives.”

But the Department of Revenue report also cautioned that any estimate of the economic impact of the tax credits “needs to take into account the reduction in state government spending that occurs as a result of decreased tax revenues available to state programs.”

The tax breaks have also drummed up talk for construction of a movie studio. Many of the productions shooting here now are using temporary warehouse space, including an empty mall space in Brighton,

Rep. Ronald Mariano of Quincy has a bill that would offer tax incentives for the construction of a film studio. Possible locations include the former South Weymouth Naval Air Station and undeveloped land in Plymouth.

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