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Louisiana aims to repeal $150 million film tax credit
A seismic shift in the state’s tax landscape
The Louisiana House of Representatives made headlines on Tuesday by voting to eliminate the state’s substantial $150 million tax incentive for film and TV production. This repeal is part of a broader legislative package designed to reduce state income taxes, potentially reshaping the state’s economic landscape.
The historical context
Louisiana was a trailblazer in offering film production incentives, first adopting its program in 1992. However, it wasn’t until a decade later, with significant amendments, that the program began attracting substantial film projects. The current setup offers a 25% rebate on production costs, which can increase to as much as 40% in certain cases, making it a significant draw for filmmakers.
Legislative changes ahead
On Tuesday, the House voted 87-12 in favor of the bill. If it passes through the Senate and gains gubernatorial approval, the film incentive will officially sunset on June 30. This move comes on the heels of Governor Jeff Landry’s special legislative session, initiated to address various tax reforms, including personal and corporate income taxes, and several exemptions and credits.
Governor Landry’s vision
Governor Jeff Landry, a prominent Republican who took office in January, spearheaded this initiative by calling a special session to tackle multiple tax issues. According to Landry, the aim is to eliminate special treatment for select groups while ensuring that the burden is more equitably distributed.
“Our proposal starts the process of eliminating special treatment for the chosen few, while restoring equity to the others who now carry the heavy tax burden,” Landry remarked to the Legislature.
The industry’s pushback
Understandably, film industry representatives have raised concerns. They argue that the incentive program has been instrumental in generating thousands of high-paying jobs and attracting approximately $350 million in investments for studio infrastructure.
Jason Waggenspack, President of Film Louisiana, emphasized, “The culture, environment, and the skill are unprecedented here in Louisiana. We want to see that grow and prosper.”
Economic implications
Economic perspectives vary widely. Rep. Mandie Landry, a Democrat from New Orleans, cautioned that the repeal could force local film professionals to leave the state. “The people I know in New Orleans are either going to have to leave, or they’re going to have to go back to the service industry,” she stated. On the other side, Rep. Chance Keith Henry, a Republican, decried the current system as one that picks “winners and losers,” arguing that only those who can afford lobbyists benefit from the existing tax breaks.
Many states, meanwhile, are expanding their film incentives. States like California, New York, Arizona, and Nevada have all either increased their existing incentives or are in the process of establishing new ones, hoping to attract more film productions. For example, California’s new initiative aims to boost its incentive from $330 million to $750 million, while New York has recently elevated its program to $700 million annually.
The broader tax reforms
The bill passed in Louisiana aims to eliminate three personal income tax brackets and replace them with a flat 3% income tax. Additionally, it plans to end other state incentives, including those for digital media production, the rehabilitation of historic buildings, and angel investments. The goal is to stimulate economic growth by lowering rates, making Louisiana more competitive with neighboring Southern states like Texas, Tennessee, and Florida, which do not charge income tax.
Susan Bourgeois, Secretary of the state’s economic development department, pointed out that the state might consider introducing more narrowly tailored incentives in the future, targeting businesses that offer wages significantly above the local median.
“We want quality projects. To define what sectors those are, in statute, is very dangerous,” she stated.
The future of film production
Jason Waggenspack remains optimistic, suggesting that the special legislative session could result in new benefits for the film sector. “For over 20 years, our film program has been instrumental in creating and sustaining our vibrant industry. Our infrastructure and skilled workforce make Louisiana ideal for production,” he said. Louisiana’s film tax credit program, which peaked in the early 2010s and earned the state its “Hollywood South” moniker, has indeed been a significant force—so significant that it was capped at $150 million annually to manage the growth.
Recent film projects
Despite these looming changes, Louisiana continues to attract high-profile projects. Recent productions include the Netflix films “Hit Man” and “Rebel Ridge”, as well as exterior scenes for Disney’s “Haunted Mansion”. The potential repeal of the tax incentive poses critical questions about the future of such projects in Louisiana.
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