Filmmakers Still Finding Better Deals Outside U.S.

California State Assembly, Oct 16, 2007

More than two years after being signed into law, special tax breaks designed as incentives to keep movie-making in the United States have not kicked in.

Southland lawmakers and industry analysts blame the delay on a mix of slow-moving Treasury Department bureaucracy and an indifference among administration officials toward the $60 billion entertainment industry.But Hollywood leaders said the holdup might have cost the country millions of dollars in film production lost to countries such as Canada that are eagerly offering generous incentive packages. "Treasury has dragged its feet for two years,' said Taylor Hackford, director of "Ray' and vice president of the Directors Guild of America. And many producers also have a lingering sense of uncertainty about whether their projects will qualify for the tax breaks.

Rep. Howard Berman, D-Van Nuys, who helped spearhead the incentives, called the delay ridiculous and charged that the United States has lost films because of it. "Apparently the administration doesn't think that protecting the jobs associated with one of the strongest export industries in the country should be rushed through,' Berman said.

The Internal Revenue Service is expected as early as today to issue rules allowing the incentives to move forward. Still, Berman and others said, it could be months before any decisions are finalized. And by that time, the law could expire. It is set to sunset in 2008. "Half the time of this provision's life we've lost already,' Berman said. U.S. Treasury Department officials did not return calls for comment Wednesday. The Hollywood provisions are part of the American Jobs Creation Act, a sweeping piece of corporate tax legislation that President George W. Bush signed into law in October 2004. The bill allows film and television producers with budgets of less than $15 million to immediately write off costs in a single year.