Editorial: Tax credit for films should be preserved

Newburyport Daily News
February 22, 2010

Hollywood doesn’t qualify as a golden goose for the Massachusetts economy — yet. But a new study from the University of Massachusetts at Boston confirms what North Shore residents have 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.
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.

Gov. Deval Patrick, however, 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.

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, it is not just actors, directors, producers or studio owners who benefit from the program. It is local businesses and workers, some in sectors that have been particularly hard hit by the recession, like construction and transportation. Jobs and economic activity are what produce the long-term, sustainable tax revenue that the state desperately needs.

Just in the past couple of years, the local area has hosted several movie projects. “The Proposal,” starring Sandra Bullock, Ryan Reynolds and Betty White was filmed in Rockport, Gloucester and Manchester. “Edge of Darkness,” directed by Mel Gibson, did some filming in Merrimac, including the final climactic scene of the movie. Essex reaped $150,000 from Adam Sandler’s “Grown Ups,” for the use of Centennial Grove, and is said to have injected more than $1 million into the local 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 has been that the state can tax its way back into prosperity.

When the recession hit, people lost jobs or had their wages frozen, the response from Beacon Hill was to make them even poorer, with a 25 percent sales tax increase and a new tax on alcohol that drove many customers to New Hampshire. And the governor is still lusting after an increase in the gasoline tax.

Those higher taxes have produced some more revenue, but not nearly as much as officials have predicted. And the message continues to be sent that Massachusetts is 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 current census is complete. It is because people would rather live somewhere other than Massachusetts.

It is the film industry that is in focus right now. But it is actually about every industry. It is the private sector that creates the jobs that produce the tax revenue that is the lifeblood of government. If government keeps raising the price of doing business here, it will ultimately collect less and less.

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