What's all the tax fuss?
By Christa Valdez
With the special session of the state Legislature now adjourned and HB15 effectively dead on the House floor, New Mexico’s film tax credit is safe – at least until the regular legislative session that begins in January.
As much as many work to promote the ongoing opportunities and careers for locals in the industry, whether to maintain or reduce the tax credit seems to be an annual argument.
So what’s all the fuss about New Mexico film tax credits?
In simple terms, one side says, “Make Hollywood pay its fair share.” The other says, “If you tinker with our film industry, you destroy lives.” Each side makes valid points.
Yes, production companies receive a tax break in the form of a percentage off on qualifying expenditures, including money spent on production services, which can range from audiovisual equipment to physical location rental and related costs paid to in-state businesses.
This tax relief ranges from 5 percent to 30 percent, depending on an array of qualifiers, regulations, required application processes, checks and balances, and auditing, you know, taxation regulation.
On the other hand, thousands of New Mexicans are the beneficiaries of the incoming business such incentives lead to.
When a production chooses to make our state home to their project, the spending begins and continues through the duration of filming – be that on qualifying spends or otherwise. Albuquerque alone benefits on a weekly basis from film and television related tourism and peripheral spending by productions.
Countless celebs cite their shopping and restaurant habits in the Duke City, and film workers who make money spend money here. They buy homes, cars, goods and services.
According to the New Mexico Film Office, “New Mexico continues to offer one of the most competitive incentives packages in the industry, which includes a 25 or 30 percent Refundable Film Production Tax Credit and the Film Crew Advancement Program.”
Where’s the rub?
House Bill 15, introduced at the just-concluded special session of the Legislature by Republican Reps. Rod Montoya, David M. Gallegos, James R.J. Strickler and James G. Townsend, seeks to trim the existing film industry’s incentive cap, plunging available tax credits by as much as 50 percent.
Those in the Legislature who are pro-cuts believe the state will save money in the following year’s credits. In the meantime, Gov. Susana Martinez concedes even conservative studies show the film industry generated $387 million for the state economy and created at least 260,000 “worker days” over the past year.
So, what to do?
It’s likely just a matter of which side(s) communicates the most accurate information to the general public. Akin to the fate of a new film, it’s the response from the general public that decides the fate of the industry.
Will New Mexico continue the strides it has made as a global leader in filmmaking? Or will low (voter) turnout sink us?
In this case, voices matter as much as box office numbers in holding onto or in booting an industry for which New Mexico is world famous.
More information about the state’s tax incentives is available at nmfilm.com. Follow updates on the legislation related to the incentive cap debate at the Shoot New Mexico Facebook page.
New Mexico film expert Christa Valdez, of OneHeadlightInk.com and ChristaValdez.com, reports on movies industry news for ABQ Free Press.