In a bid to boost local production and keep jobs at home, the Los Angeles City Council moved a step closer to cutting production taxes paid by companies shooting in the city.
On Tuesday the council requested that the city attorney’s office draft an ordinance that would lower the entertainment production tax on projects budgeted between $2.5 million-$5 million. The reduction would apply to films, TV shows and commercials.
The city of Los Angeles taxes production according to a tiered system. At present it imposes a flat fee of $145 on productions costing up to $2.5 million, then adds $1.30 for each additional $1,000 of production budget.
If implemented, the proposed changes would double the $2.5 million threshold to $5 million. The new formula would significantly cut taxes for productions budgeted between those two numbers, and the total savings could amount to as much as $3,250 per project, said Paul Audley, prexy of FilmL.A., the nonprofit group that coordinates permits for location shooting.
In addition, the proposed change would lower the cap on any taxes a production company would pay from $12,495 to $9,245.
Audley noted that these numbers are significant for productions with modest budgets and that the savings would fall straight to the bottom line.The City Council’s action followed a motion introduced by Councilman Richard Alarcon. It unanimously directed the city attorney to draft the ordinance and return it to the council for approval.
“We’re looking to turn it around as soon as possible,” said Becca Doten, Alarcon’s communications director. The soonest voting could take place would be Nov. 9, she added. It could be approved outright if 12 of the 15 council members vote for it with no opposition. If that doesn’t happen, it could pass if it gets 10 yes votes, which would have to be followed by 10 yes votes in another session a week later.
Doten believes the chances for approval are good as there was no debate or questions surrounding Tuesday’s action. “The City Council has been a strong supporter of making it easy to film in L.A.,” she said.
Producers would welcome the changes. California’s relatively new film tax credit, passed by the state Legislature in mid-2009, has already been exhausted for this year. Moreover, producers of TV commercials, who would most benefit from the L.A. City Council initiative, don’t qualify for the state incentive.
“It’s encouraging that the Los Angeles City Council has been actively looking at ways to make L.A. a more cost-effective city for film production,” said California film commissioner Amy Lemisch.