The third season of “The White Lotus” was filmed at the Four Seasons in Koh Samui, Thailand, a luxury resort more than 6,000 miles from the Hawaiian Islands. 

But Hawai‘i taxpayers are set to pay out more than $550,000 to support the show’s production, which airs its season finale Sunday on Max. 

“The White Lotus” post-production team edited the show from a timeshare on Kaua‘i, entitling it to a 27% refund of roughly $2 million in Hawai‘i-based filmmaking costs. It’s all part of the state’s $50 million film tax credit program aimed at supporting the film and television industry.

Most of the tax credit’s recipients do film in Hawai‘i, broadcasting the islands’ picturesque landscape to viewers across the world and thereby marketing the state as a destination. That was the case with the first season of “The White Lotus,” which was filmed at the Four Seasons on Maui during the pandemic and became a tourism draw.

But shooting on location is not a requirement to receive the benefit, according to Georja Skinner, who heads the creative industries division of the state economic development department. And her agency would like to see more post-production work done in the Aloha State.

“I feel it alerts the rest of these creatives at a certain level, you know, the Martin Scorseses of the world, that – granted, it’s not New York – but it is possible here,” Skinner said.

Even if a project isn’t hiring local actors or promoting tourism, having the video editing, sound design or visual effects done here provides numerous benefits to island communities, Skinner said. Tax credit recipients are required to donate at least 0.1% of their production cost to local workforce development efforts, such as public school digital media programs or internships.

“White Lotus” is expected to pay an estimated $2,000 to a workforce development effort, although the amount hasn’t been finalized yet. And two members of the show’s eight-person post production team were local, according to the Hawai‘i Film Office.

“That’s a big part of our focus,” Skinner said. “We want more people to edit here, with our editors.”

Plus, post-production team members spend money while they’re in Hawai‘i, said Bryan Persichetti, a production finance representative for “The White Lotus.”

“They eat all over, use a lot of local vendors … to stimulate the economy,” he said.

Hawai‘i started offering tax incentives in 1997 for motion picture and television productions to gain a competitive edge against other states and countries. It started modestly, with a 4% income tax credit and 6% credit for transient accommodations. Since then, lawmakers have sweetened the pot.

Today, productions valued at more than $100,000 can get a credit of 22% on O‘ahu and 27% on the neighbor islands, up to $17 million per project. And it’s a refundable tax credit – perhaps better described as a rebate or refund – meaning the shows get the full amount even if it exceeds their actual tax liability. 

Many well-known productions have filed claims in recent years, a state report shows.

Jason Momoa’s upcoming miniseries “Chief of War” spent $45.5 million filming in 2022 and laid claim to a $4.7 million refund.

And “Renovation Aloha,” the home-flipping reality show that has drawn scrutiny for sidestepping the construction permitting process, has a pending claim for $232,790 for its second season. However, Skinner said officials may be reconsidering that award. Tax credit awardees have to certify they will obey the law during filming, she said, and the “Renovation Aloha” hosts have been hit with series of violation notices for building without proper permits. 

The state’s report only estimates the tax credit amounts. Hawai‘i’s Department of Taxation has final say over who receives a check from taxpayers through the program, and its data is confidential by law.

Questions have been raised over the years, in Hawai‘i and on the mainland, as to whether taxpayers are getting enough bang for their buck when it comes to film incentives. Economists have noted these programs can create a so-called winner’s curse in which tax breaks attract business but trigger more losses than gains.

The state auditor in 2016 was unable to determine if Hawai‘i’s program was a net benefit because of a lack of information. In some cases, the audit found taxpayers were subsidizing the hiring of A-list talent, such as Johnny Depp in “Pirates of the Caribbean,” while productions failed to hire any local talent. As of 2023, projects are required to make reasonable efforts to hire local for their cast and crew.

A 2023 cost-benefit analysis by the Hawai‘i Department of Business, Economic Development and Tourism shows a mixed bag. Every dollar spent on the film tax credit that year generated only 50 cents in state tax revenue, resulting in a net revenue loss of $19 million.

However, productions that year also put people to work, resulting in $94 million in earnings. Film productions that year created more than 9,000 jobs, 85% of which were filled by locals. About half of those jobs were part-time gigs as production extras, the report said. Production spending and hiring has since dropped dramatically.

State officials argue the tax credit is necessary.

“When you talk to producers, they follow the tax credits,” DBEDT Director James Tokioka told lawmakers at a hearing Wednesday. “They follow the things that can help them make their shows profitable.”

And there’s stiff competition. Illinois, for example, offers a 30% credit on qualified expenditures. And other countries can appeal to Hollywood with favorable exchange rates and non-union labor, Skinner said.

That’s one reason Hawai‘i’s film and TV business has been in a lull, Skinner said. Covid and the writer’s strike also took a toll.

With “NCIS: Hawai‘i” and “Magnum P.I.” canceled in the last two years, few projects are filming at the moment, and both of Hawai‘i’s major film studios are sitting vacant. With the exception of FOX’s “Rescue HI-Surf,” which does hire a lot of locals, Tokioka said there is “nothing going on right now.”

On Wednesday, Tokioka spoke in support of Senate Bill 732, which would expand Hawai‘i’s film-related tax incentives, creating a media production investment fund and offering an additional 5% credit to productions that hire at least 80% locally. Lawmakers are also considering increasing the $50 million cap. Skinner would like to increase it to $60 million.

The measure has the backing of film industry members, some of whom have been demonstrating at the Hawai‘i Capitol this month. Tuia’ana Scanlan — a trustee of IATSE, a union representing film and stage craftspeople — testified on Wednesday that the industry needs support to bring in high-wage jobs.

“In the face of a bleak national economic forecast,” he said, “this can be a driver for Hawai‘i’s economy.”

“Hawaiʻi’s Changing Economy” is supported by a grant from the Hawaiʻi Community Foundation as part of its work to build equity for all through the CHANGE Framework.”