Reason Foundation

Reason Foundation

Watch Out Hollywood! Here Comesā?¦ Colorado?

Harris Kenny
February 8, 2011, 1:26pm

Last Friday Colorado Sen. Nancy Spence (R-Centennial) and Rep. Tom Massey (R-Poncha) introduced the Movie Ticket Fee for Film Incentives Bill.

The bill, HB 11-1207, would impose a 10-cent fee on every movie ticket sold in Colorado to incentivize film production in the state. The fee would go into place on July 1, 2011 and would be collected by movie ticket vendors in addition to the existing sales tax. Movie ticket fee revenue would be held in a "creative industries cash fund" managed by the Colorado Office of Film, Television and Media.

According to The Denver Post, the program would offer movie production companies a 10% cash rebate for costs on films produced in Colorado. In order to be eligible for the incentive:

Section 4 of the bill concludes:

"The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health and safety."

It is unlikely that HB 11-1207 would transform the Colorado film industry to the point where it could compete with Hollywood, Mumbai or even Toronto. And the argument that a moviegoer subsidized Colorado film industry is "necessary for the immediate preservation of the public peace, health and safety" is tenuous at best.

According to the nonpartisan Tax Foundation, movie production incentives (MPIs) and film tax credits are "lackluster policy." Specifically, a 2010 Tax Foundation study found:

Overall the study found:

"Based on fanciful estimates of economic activity and tax revenue, states are investing in movie production projects with small returns and taking unnecessary risks with taxpayer dollars... [And] it is unlikely that (MPIs) generate wealth in the long run. Most fail even in the short run."

Colorado lawmakers should instead focus their energy on streamlining government, reducing burdensome regulations and cutting spending to promote sustainable growth. For example, last month Sen. Ted Harvey (R-Highlands Ranch) introduced SB 11-065, which would deregulate the state's taxicab industry. (See my full write-up on SB 11-065 here.)

For more examples meaningful government reform, check out the recently released State Budget Reform Toolkit.

Harris Kenny is Policy Analyst

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