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House rejects bill to cut film tax credits

By ANDREA LANNOM

The Register-Herald

CHARLESTON, W.Va.  — A bill that would have eliminated the state’s new film tax credits and would increase the beer tax failed in the West Virginia House Tuesday.

Delegate Eric Nelson, R-Kanawha, explained that House Bill 2816 was Gov. Jim Justice’s original tax omnibus bill.

The original bill eliminated the film tax credit, increased the sales tax from 6 percent to 6.5 percent, added professional services to the sales tax, increased the beer barrel tax from $5.50 to $8 a barrel, added a Commercial Activities Tax and called for a personal income tax study commission.

The House Finance Committee introduced a committee substitute that grandfathered the tax credit, currently $5 million, to the film industry. Nelson said it would have no effect in 2018 but would not have a film credit going forward.

The bill also called for an $11.7 million transfer from the general revenue fund to the road fund to stay put. The new version also kept in the beer tax.

“In total, this would be generating $14.5 million for the fiscal year ‘18 budget,” Nelson said.

Nelson said the film credit was implemented in 2012. Production companies use it to produce films and can get a 1-1 credit for many expenses used for producing the film, he said.

He said eliminating the film credit is a trend happening in many other states. He also said in no single year has half of the credit in West Virginia been used.

“The idea of what it would do in business development has not materialized,” Nelson said.

Delegate Jason Barrett, D-Berkeley, said he opposed the bill not because of the beer tax but because of the film credit.

He said he has seen a lot of positive economic effects in the Eastern Panhandle from films shot in his region.

“We talk so much about bringing jobs in. This is anti jobs,” Barrett said. “Jobs will leave the Eastern Panhandle.”

“They don’t just film a few days and leave. They rent warehouses. … They have contracts to build sets, hire people to be actors and extras. This $5 million tax credit brings in $17 million in economic activity. If we are serious about jobs, we will not pass this legislation and throw jobs out of the state,” Barrett said.

Delegate Mark Zatezalo, R-Hancock said the bill is painful but the state needs to tighten its belt.

“I can tell you,” he said. “I look forward to when the oil and gas industry kicks into gear bringing some jobs here. The first thing I’ll ask you to do is return the film tax credit and lower the tax on beer.”

Delegate Ed Evans, D-McDowell, said he has seen benefits in McDowell County, saying a result of the tax credits is that one of the production companies made a large donation to a local high school to buy football uniforms.

The bill was rejected in a 39-60 vote.

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