RI spent $500K in movie tax credits in 2021, remains below pre-pandemic levels

THE RI DEPARTMENT OF REVENUE’s Division of Taxation reported that the state issued $521,377 in movie tax credit to six production companies in fiscal 2021. / PBN FILE PHOTO

PROVISION – Rhode Island spent more than $500,000 in movie tax credits in fiscal 2021, nearly double the amount spent in 2020, but still a long way from pre-COVID-19 pandemic numbers.

The state spent $521,377 on six manufacturing companies in the fiscal year ended June 20, 2021, according to a report released Monday by the RI Division of Taxation. That amount is nearly double what the state spent in 2020, when it distributed $361,796 to two manufacturing companies.

However, reports from previous years show that tax credit allocations used to be significantly higher: Movie tax credit allocations in 2017, 2018, and 2019 were $3,133,769, $1,961,524 and $3,174,038, respectively. But the dip in 2020 can be attributed to the effects of the COVID-19 pandemic, experts say.

“Due to the strictly enforced health regulations and unfamiliar circumstances of this once-in-a-generation assault on our population and economy, production companies were forced to limit the size and scope of their films to continue,” said Steven Feinberg, executive director of the RI Film & Television Office. “That’s why the number is lower than expected.”

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Feinberg said it could take the state up to three years after project completion to fully manage the tax credit. That means the $521,377 value listed in the 2021 report relates to productions that happened just before and during the pandemic, which explains why the number is relatively low.

The movie production tax credit gives eligible production companies an incentive to film in Rhode Island by offering tax breaks of up to 30% on their production costs. While proponents of the tax credit claim it makes Rhode Island more competitive and attractive to manufacturing companies, others have expressed concerns about its effectiveness.

Reports over the years have also highlighted various benefits and shortcomings of the tax credit, making it difficult to determine its true impact.

For example, a February 2022 report from the Office of Revenue that analyzed the financial impact of the tax credit program for tax years 2016 through 2018 showed how the majority of recipients failed to meet state data reporting requirements and concluded that the program failed. at “break-even” and generate sufficient income for the state.

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On the other hand, a March 2022 study conducted by The Greater Newport Chamber of Commerce and Connect Greater Newport with Industrial Economics Incorporated found that local production of the television series “NOS4A2”, which received $17 million in tax credit, was about $ 93 million in economic activity between 2018 and 2020. This means that for every dollar of tax credit invested in the production of “NOS4AS2”, it generated $5.44 in revenue.

But despite the conflicting opinions, state lawmakers have not hesitated to give the program a boost in recent years. Rhode Island has increased its annual movie tax credit limit annually since 2021, from $20 million to $30 million for fiscal 2022 and then back to $40 million for fiscal years 2023 and 2024.

Feinberg, a strong proponent of increasing the annual cap and eventually eliminating it altogether, said he remains optimistic about the program. He said the past two years have been “out of pressure,” to the point of having to turn down manufacturing companies, and that he expects future reports to show “larger amounts of tax credits” as companies recover from the pandemic.

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“A number of other major Rhode Island productions are also now pending with the Division of Taxation and awaiting the final issuance of their tax credits,” Feinberg said. “While studios and independent productions, and health departments and the public have learned to navigate the pandemic safely, productions have eventually normalized in size and scope with additional safeguards. As a result, in recent years we have maximized the total amount of tax credits that are allowed annually.”

In 2021, Ali Productions LLC was the production company to receive the largest allocation, with $177,150 in tax credits, followed by Jungle Room LLC with $147,030 and IndieWhip LLC with $130,839. Other recipients included A Second Wind LLC, Ask Athena LLC and Kellie Productions LLC.

Claudia Chiappa is a PBN staff writer. You can contact her at [email protected]

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This post RI spent $500K in movie tax credits in 2021, remains below pre-pandemic levels

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