Game of Tax Credits

I think that if we’re discussing making US corporations pay all their taxes, we (and Canada and Australia) need to rethink how we support our respective film and TV industries. The following has been taken from the end credits of Game of Thrones season six.

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This article from Empire Magazine probably best explains WHY tax credits exist.  But I don’t believe it’s sustainable.  The film & TV industries – especially in the States – have become far too reliant on these schemes – it’s like a crutch: they’re being propped up by taxpayer money to offset risk.  When you’re a government trying to reduce a substantial deficit in the annual budget – this sort of thing just ain’t going to help anybody but corporate fatcats and NOT up and coming independent filmmakers.  When another country comes up with better terms (think of a pound shop, then think of another one offering all items for 99p), all those jobs are now suddenly at risk unless that offer can be matched or improved.  Wonderful!

Plus we can’t be seen to say to one industry, “oh – you owe us more corporation tax: pay up”, then give away something like $240 million in tax revenue to a US multinational in another (industry).  I don’t think that’s fair.  And what’s even more unfair is when Hollywood constantly moans at us Brits about not giving them enough tax credits.  We can’t let them them threaten our economy and our industries.  Which is why this article that quotes BECTU wanting previous, looser UK tax credit terms to stay in full force rather surprised me.

The deplacement factor in tax credits is yet another concern.  If I were still working in the film industry today, I could quite easily move to Canada to work (and come back to the UK if things don’t ultimately work out).  This is a lot harder if I were still married, and even more difficult if I had kids.  And what happens if the finance minister of the relevant Canadian province decided that they can no longer afford to absorb Hollywood’s tax bill (which is roughly some $500 million a year) and everybody shuts up shop – what happens then?

We definitely need to encourage new and upcoming filmmakers, and tax credits seem, initially, to be a good way of doing this.  But then again, the UK government shouldn’t be taking all the risk for US (or even UK) corporations.. As Matthew Vaughn, the highly successful film producer and director (who has financed many of his films himself) has suggested, how about providing the money as a bond/loan that’s ultimately repayable?

As for HBO, one hopes they enjoy the free money from the UK taxpayer – many of those taxpayers that probably don’t subscribe to Sky Atlantic.  Perhaps HBO could offer the taxpayer some White Walker toenail clippings by way of thanks?