Hollywood wants tax breaks to halt 'runaway production'

BURBANK, Calif. -- Changes in federal tax law will be pivotal in the fight against film and television productions moving to other nations that offer huge cash incentives, lawmakers and a coalition of film and television representatives say.

Six receptive members of Congress met last week with representatives of Hollywood actors, producers, technicians and post-production companies to discuss proposals designed to slow the flight of movie and television work to Canada, Ireland and other nations.

The entertainment industry coalition urged passage of a federal tax credit of 20 percent for film and TV wages -- for productions in the United States costing up to $10 million. They also seek improved depreciation allowances for television production houses, now required by federal authorities to change to digital technology -- which will cost small companies many millions of dollars.

Rep. Jerry Weller, R-Ill., a member of the tax-writing House Ways and Means Committee, said that in Chicago-area film work alone, runaway production has impacted about 10,000 jobs. Weller said to convince members of Congress to support tax breaks for one industry and not others, the national impact of runaway production has to be shown -- the luring away of work from not only California, but also from New York, Illinois, North Carolina, Florida, Texas and other states.

"I believe that the wage credit proposal is on the right track," said Weller. He also said his committee is studying changes in the depreciation rules of the tax code to reflect needs of new technologies.

Richard Masur, former president of the Screen Actors Guild, said tax incentives need only be "small solutions that will add up" to combat an estimated 20 percent reduced cost of filming in Vancouver, Toronto or Ireland.

"It's about saving an industry," Masur said. "We don't have to match Canada, Ireland or the Isle of Man, but if small (tax break) contributions are made we can maintain our industry in this country."

The current situation is critical, Masur said: "Technicians have been transferred. Training of people in other countries has already been completed to make movies there like we make them here. ... All it would take is one major labor strike to see a major shift overseas in this industry, possibly never to return."

SAG and the Directors Guild of America commissioned a report last year which showed runaway production created a $2.8 billion direct loss and $10.3 billion in negative economic impact for the nation in 1998.

Filmmaker Roger Corman said he is in the process of selling his Los Angeles studio and has established a new one in Ireland because of direct aid of $1 million from the Irish government, plus a continuing Irish wage credit. "I think a saving of 10 percent would be enough to keep us in the U.S.," Corman said, agreeing that overall cost of film production in Ireland is about 20 percent less.

Four California congressmen, Democratic Reps. Howard Berman and Gary Condit and Republicans Howard McKeon and James Rogan, took part in the meeting along with Weller and Rep. Mark Foley, R-Fla.

Rogan said: "There has been a figure of $10 billion dollars lost. This is a significant loss in jobs, and capital, that we are surrendering to other nations."

"A lot of people who work in the industry live in my district, and they are expressing to me a real concern that they're losing their jobs," McKeon said, noting that in the Antelope Valley area he represents film production spending declined from $20 million in 1997 to $3 million last year.

"Runaway production is not caused by competitive forces in the marketplace, but by government subsidies," Berman said. "In the case of Canada, 35 cents on the dollar."

That was underscored by producer Leonard Hill, who said he recently filmed a television movie in Salt Lake City although he was offered "a $242,000 cash rebate from provincial and national programs" to film in Canada instead.

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