Leaders in Minnesotas filmmaking community recently met with state representatives and senators to urge passage of a bill rescinding a 6.5% sales tax for creative services that go into commercialmaking.
The film community believes the elimination of this tax will put Minnesota on a more level playing field with other markets, and would encourage Minnesota ad agencies not to leave the state for production. The film community pointed out that other major production hubs, including New York, California, Florida, Texas, Toronto and Vancouver, B.C., have already alleviated such taxes.
Specificially, the bill calls for a tax exemption on the gross receipts from the sale of and the storage, use, or other consumption of tangible personal property used or consumed in producing any television commercial-and a television commercial and the tangible medium of expression in which it is fixed.
AICP/Minnesota chapter pres-ident Kirk Hokanson, president of Minneapolis-based Voodoo Films, called the current tax on these items a disincentive to use Minnesota-based production companies. He added that this proposed bill is probably the most important issue affecting our [Minnesota-based commercial] industry in the next decade in terms of being able to develop and maintain a healthy community.
Randy Adamsick, director of the Minneosta Film Board, said commercials are by far the most important segment of our [production] industry. He explained that commercial production billings currently represent $50 million annually, although the top 10 agencies leave town for 90% of their production. If we recoup a mere 10 percent [of that production] that would double our production business, from $50 million to $100 million, he said, adding that with the tax credit that seems to be a realistic goal.
The recent meeting with government officials brought together roughly 30 representatives of different entities including AICP, the 4As, the Advertising Federation of Minnesota, the Minnesota Film Board, the City of Minneapolis Office of Film, Video and Recording, the City of St. Paul Film Liaison Office, and the Upper Minnesota Film Office, as well as individuals from ad agencies, the post community and equipment rental houses.
Janet Zahn, director of the Minneapolis Office of Film, Video and Recording and an AICP/ Minnesota board member, praised the film communitys team effort in generating support for the bill.
The bill was defeated a year ago, but Zahn and Adamsick are optimistic that the bill will pass this time. In fact, Adamsick reported that the tax credit is reflected in Minnesota Governor Jesse Venturas recently unveiled annual budget.
I want to live in a state that has a strong film community, said Kathy DiToro, senior VP/ director of broadcast production at Minneapolis-based agency Campbell Mithun Esty. I dont want to see crew people … and producers move out of the city. We [CME] make an effort to shoot in town when it is right for the [job].
There have been times we wanted to shoot in Minnesota, it made sense to shoot in Minnesota, [but] the sales tax made it more expensive than the costs of travel to another film center. DiToro added that if production is strong in Minnesota, so too would be post. Id like to keep more post in town, she commented.
AICP/National is also taking an active role in the effort, and AICP president Matt Miller attended the recent meeting. Its important to keep as many places within our country competitive, he said.
Sales tax takes them out of the running, Miller said of Minnesota, explaining that a commercial bid of $200,000 would be upped $13,000 because of the tax.
Its important that city, state and national government support production efforts, he explained. Especially right now with Canada being so aggressive with tax incentives and [its favorable] exchange rate, it becomes even more important for the government to step up to the plate and support the business here in the U.S.
Miller added that he hopes more efforts like this will occur in other states, as well as at the federal level of government. Entertainment is an important business here. In order to keep American business competitive, there have to be [incentives] to lure business to the U.S.
The AICP/Minnesota chapter is producing a video for distribution to state representatives to drum up additional support for the proposed bill. Zahn expects the vote on the proposed bill to occur this spring, and if passed, to become law in July.
