With lavish tax breaks already in place for movies, why add a local tax incentive to the pile already available?
Easy, say members of Baton Rouge's Metro Council, arguing that their new subsidy is needed to keep up with such industry powerhouses as New Orleans, Jefferson Parish and Shreveport.
We don't see this as keeping up, but as local jurisdictions clawing at each others' tax base, in defiance of any economic sense except the narrowest parochialism.
East Baton Rouge Parish now has its own film tax incentive program, though it is far less expansive than the one operated by the state that has come under fire for fraud convictions and accusations of wastefulness — more than justified, in our opinion.
The Metro Council approved a new 2-cent tax rebate on every dollar of purchases related to movie production. Councilman Ryan Heck, who authored the ordinance, said it will cover things like lumber purchased in the parish to build sets but not things like payroll or lodgings.
Patrick Mulhearn, director of studio operations at Celtic Studios, said Baton Rouge is a "world class destination" for movie making, one that has been called the best small city for shooting a film. But the city needs "a fighting chance to compete" with localities like Shreveport, Lafayette and Jefferson Parish that have their own programs in place.
Last year, the state reined in the program and set a $180 million cap. Now, locals are trying to offer a little bit back to hometown movies.
We would argue that economists almost unanimously pan the subsidies for film, even without the scandals that marred the administration of the state program a few years ago. But even if the state program is an economic booster, what's the policy rationale for Louisiana to compete against itself?
East Baton Rouge is offering rebates only on its 2-cent sales tax, so it would not affect sales taxes collected by schools and other taxing agencies. The local limit would be $500,000 rebate per movie and a $2 million annual limit for the program. For perspective, crooked filmmakers have stolen more than half that in a single go from the state program.
But for greater perspective, what's the budget for a library, or fixing a road? These giveaways hurt, in ways that Metro Council members apparently do not grasp.
Beyond the economic rationale is the state's interest in curbing the avaricious instincts of local governments, cannabilizing the film business by bidding against each other. When local officials indulge in a "race to the bottom" for economic incentives of any kind, the taxpayers' money is deployed by local jurisdictions to rob from each other.
Perhaps the solution to parochialism is for the state to subtract local subsidies from the total amount paid to any particular film project. Then the still-lavish film subsidies from the state would not supplement a narrow competition that does nobody any good in the long term.