Editorial: State should keep film industry tax credits in place

Gloucester Daily Times
Editorial Staff
February 19, 2010

Hollywood doesn’t quite qualify as a golden goose for the Cape Ann or Massachusetts economies — yet.

But a new study from the University of Massachusetts Boston confirms what residents of Gloucester, Rockport, Essex and Manchester have all been noticing in recent years: The state is one of the fastest-growing locations for film and television production.

So the worst thing government could do is discourage that growth.

Surely some of it is due to the region’s natural assets — its coastal vistas, topography and architecture are among the most desirable in the nation. And that’s especially true on Cape Ann, between Gloucester’s storied waterfront and Rockport’s downtown, best known in Hollywood these days as the stand-in for Sitka, Alaska, in Sandra Bullock’s 2009 comedy hit, “The Proposal.”
But some of it is also due to financial incentives — a $125 million tax incentive program that has made it cheaper to do business in Massachusetts than in some other locations.

Now, Gov. Deval Patrick, is considering capping the program at $50 million, as one piece of a package of savings to close a $2.7 billion structural deficit in the 2011 fiscal year.

There is some context to that. The state’s financial struggles are real, and the governor is in a very difficult position — whatever he cuts will make some people angry.

But this isn’t so much about making those in the film industry angry. It’s about a short-term gain that will very likely create a long-term loss. Indeed, this incentive is not just about actors, directors, producers or studio owners who benefit from the program — or local residents mingling with Salma Hayek and Adam Sandler at St. Peter’s Fiesta, as some did while they were in town filming the soon-to-be-released “Grown Ups” last summer at Essex’ Centennial Grove.

It’s about local businesses and workers, some in sectors that have been particularly hard hit by the recession, such as construction and transportation.
Jobs and private-sector economic activity are what produce the long-term, sustainable tax revenue that the state desperately needs.

So while Essex reaped $150,000 as a town from “Grown Ups” using Centennial Grove, it’s more notable that the summer-long film work injected an estimated $1 million or more into the Essex private-sector economy.
It would be foolish, not to mention expensive, to drive that activity to other states. In fact, the growth of the film industry here ought to prompt a wider discussion, including the governor and legislative leaders, about general tax policy.

The prevailing philosophy on Beacon Hill and even elsewhere has been that the state can tax its way back into prosperity.

But when the recession hit, people lost jobs or had their wages frozen, and the response from Beacon Hill was to make them even poorer, with a 25 percent sales tax increase. Now, the governor is still lusting after an increase in the gasoline tax, and municipalities have taken up a similar course — albeit in smaller steps — with Gloucester tacking on local addenda to the state meals and now a hotel and inn tax.

Those higher taxes can and have produced some more revenue. But all of them, combined, convey the message that Massachusetts is once again tax-happy, and a bad place to live, work and do business. Anybody who disputes that should explain why the state will likely lose a congressional seat after the U.S. Census is complete; it is because people would rather live somewhere other than Massachusetts.

The film industry is the one in focus right now — especially on Cape Ann, where groups such as seARTS continue to seek means of building our area’s “cultural economy.” But this issue is actually about every industry. And it is about the private sector creating the jobs that produce the tax revenue that is the lifeblood of government.

If government keeps raising the price of doing business here — particularly on a film industry that has found a friendly local workplace — the state and our local economy will ultimately collect less and less.

Trimming the film tax credit would be a very wrong turn.

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Editorial: Film tax credit boosts state economy



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