Hawaii’s film tax credit may not be helping the state as much as its film office claims, according to a 60-page state audit released Tuesday.
State Auditor Les Kondo says his office “cannot confirm that the film tax credit is resulting in a net benefit for the State because the information reported by the film office is incomplete, inflated, and insufficient.”
He called on the Department of Taxation and the state film office “to be more accountable for the administration and oversight” of the tax credit.
The tax credit was created to attract films and TV shows to Hawaii as a way to spur economic development.
The credit has been on the books since 1997, but was significantly increased in 2006 to 15 percent of eligible Oahu production expenditures and 20 percent for neighbor islands. The Legislature upped those another 5 percent in 2013 after heavy lobbying from film industry execs, such as Ryan Kavanaugh of Relativity Media.
The company paid an $8,500 fine for violating state ethics laws in part due to passing out DVDs to Hawaii lawmakers.
Nonetheless, the tax credit continues to exist but is set to sunset in 2018, so the Legislature will have to take the issue up again before then if the state intends to keep it going.
One of the primary reasons for the tax credit was the creation of high-paying jobs, but it doesn’t look like Hawaii residents are benefitting from that.
The audit found that for major motion pictures shot in 2014, “above-the-line talent” — those in starring roles, such as Johnny Depp in “Pirates of the Caribbean” — earned $3.36 million while filming in Hawaii. No Hawaii residents were hired for any of these jobs though, according to the audit.
And the chief state economist says it’s very unlikely that much of their Hawaii-earned income flows into the local economy, the audit says.
The audit makes a number of recommendations on how to improve the current tax credit, specifically citing ways the Department of Taxation and Hawaii Film Office should make changes.
Read the complete audit below.
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