- Wednesday, Jul. 28, 2010
- 0 Comments
- LOS ANGELES
The Los Angeles City Council Jobs & Business Development Committee, chaired by Councilmember Richard Alarcón, unanimously passed on Tuesday (7/27) an Association of Independent Commercial Producers (AICP)-backed effort to increase the entertainment production tax cap, which will reduce taxes for hundreds of production companies doing business in Los Angeles. Matt Miller, president and CEO of the AICP, testified in support of the motion introduced by Councilmember Alarcón earlier this month.
"This tax cap adjustment will greatly benefit the entire industry in Los Angeles as well as all of our member production companies that produce work there," said Miller. "It sends a strong message that the City is serious about keeping commercial production in L.A. in addition to bringing back recently displaced production, even if the state has not acted to combat national and international competition."
Currently, the city assesses tax liability on film production companies through a flat fee of $145 on production activity up to $2.5 million. This represents the minimum threshold to which $1.30 is assessed for each additional $1,000 in production costs incurred in excess of $2.5 million. This rate-per-thousand system taxes all production costs up to a maximum of $12 million or $12,495 in direct city taxes. The tax reduction measure proposes adjusting the minimum tax threshold from the current $2.5 million to a new minimum of $5 million for all production companies.
According to the AICP's 2010 Annual Member Survey, the median sales per company in 2009 was $2.79 million. Raising the minimum threshold to $5 million would provide significant tax savings to small and medium-sized production businesses, affecting a large majority of all commercial production companies as well as other boutique firms and postproduction houses in the industry.
The unanimous vote calls on the city's chief legislative analyst and city administrative officer to draft ordinance language and report back to the Jobs and Business Development Committee in 30 days on the economic impact of the measure, at which time the committee may vote to send it before the full Council for final approval.