Georgia lawmakers have set their sights on the lucrative film industry in the Peach State, proposing changes to the film tax credit program to ensure a better return on investment for taxpayers. The proposed legislation would require movie productions to meet specific criteria in order to receive the top 30% credit on Georgia income taxes, including shooting in rural areas, hiring more Georgia workers, and supporting local production studios.
The announcement, made by House Ways and Means Committee Chairman Shaw Blackmon during a news conference, comes after a thorough review of all tax breaks offered by the state. Lawmakers are looking to make adjustments to various tax incentives to improve tax revenue, with the ultimate goal of further reducing income tax rates for residents and businesses.
In addition to changes in the film tax credit program, lawmakers also announced plans to temporarily suspend a sales tax exemption on equipment used by data centers. The rapid expansion of data centers in the state has led to increased electricity demand, prompting Georgia Power Co. to seek new electrical generation capacity to meet the growing needs.
Lt. Gov. Burt Jones emphasized the importance of assessing and adjusting existing tax credits to ensure the financial sustainability of the state. The ongoing review process aims to eliminate ineffective incentives and optimize the use of taxpayer dollars. Despite discussions about imposing a cap on film tax credits, industry groups have defended the benefits of these breaks, citing their role in driving economic activity in Georgia.
While the film tax credit has significantly boosted the film and television industry in Georgia, state evaluations have shown that the cost of the credit outweighs its economic benefits. A recent study by Georgia State University indicated that the state sees less than a 20% return on each dollar spent on the credit. Lawmakers are proposing changes to the threshold for receiving the 30% credit, raising it from $500,000 to $1 million in production spending.
The transferability of film tax credits has also raised concerns among legislators, with fears of a potential spike in redemptions that could impact state revenue. To address this issue, lawmakers are considering limitations on the redemption of transferred credits, capping it at 2.5% of the previous year’s state revenue.
House Speaker Jon Burns explained the decision to suspend the sales tax exemption on data center equipment as a response to escalating electricity usage by these facilities. With a significant portion of the state’s energy consumption attributed to data centers, policymakers are seeking to balance the energy demand while ensuring adequate resources are available.
While the data centers tax credit is projected to cost the state $44 million in foregone sales tax revenue, studies have shown that data centers contribute positively to Georgia’s economy. As part of the proposed changes, lawmakers are also considering raising the wage requirement for data center employees to double the state’s average wage, up from the current 110%.
The proposed reforms to Georgia’s tax credit programs reflect a broader effort by state officials to optimize taxpayer dollars and foster sustainable economic growth. By making strategic adjustments to incentives and credits, lawmakers are aiming to enhance the state’s financial stability and support key industries while ensuring a fair return on investment for Georgia taxpayers.
It seems that there is a news article about Georgia film tax credits benefiting data centers in the state. The article can be found on apnews.com.