AZ Senate Approves Continued Tax Credits for Film Industry

Apr 19, 2012

State senators voted Wednesday to resurrect a program giving generous tax credits to movie and TV producers who come here to make their shows.

The state had offered these credits before. But they were allowed to expire after a 2009 report showed they generated about $2.3 million in additional taxes -- but lost the state more than $8.6 million. This new program has similar size credits -- a dollar-for-dollar offset to what individuals and companies owe in income taxes. But Senator John Nelson said this one is different. More to the point, he said it is modeled after what other states already offer.

"Utah has been in production for six years," Nelson pointed out. " They have created 4,000 jobs and raised over $150 million. New Mexico, in a similar timeframe, and currently they've raised about 9,000 jobs and have become very productive in providing income to the state."

But Senator Ron Gould said the problem with giving income tax breaks to one particular industry pretty much means that everyone else has to pay higher taxes.

"I think that Arizona should have low, broad-based taxes where everybody pays the same rate," said Gould. "I don't think that merely because an industry has enough money to hire a cadre of lobbyists to come down and influence the Legislature that they should receive a special tax break."

Senator Al Melvin, however, said he thinks it's worth taking the risk.

"I think it will result in jobs and will rejuvenate the film industry in the state," said Melvin. "Our universities have degree programs for the film industry and television. We have a rich history in this field. This merely brings us on par with other states that are for this type of industry."

But Senator Sylvia Allen said the whole concept runs afoul of what she thinks a free market should be. She said it is designed to give people the freedom to succeed.

"But it also could give you the freedom to fail," she said. "And what has happened over the years is that businesses and others have tried to get government involved in the market so that they could somehow be guaranteed that they won't fail."

The law bars tax credits for productions deemed obscene. But Gould said that still allows movies and TV shows that put Arizona in a bad light. He said that's what has happened in New Mexico with the Breaking Bad TV series which is not only filmed there with tax credits but also is set there. Gould said the show glamorizes drug dealing, murder and prostitution.

"I would imagine that the average New Mexican taxpayer, if you told them that their tax dollars, money out of their wallets, was being paid to these people to make that kind of garbage that disparages the state of New Mexico, they would hang their head in shame," Gould added. "They would break out the pitchforks and the torches and march upon the Capitol."

A final vote sends the bill to the House.