Senate Committee OKs New Tax Breaks for Film and Video Production

Sen. Clifford Graham talks about his bill during Thursday's hearing. (Photro provided by V.I. Senate)A new set of tax breaks and direct cash payments in the form of "rebates" from the V.I. treasury will be available for filmmaking and video production if a bill approved in committee Thursday becomes law.

The bill (31-0009) sponsored by Sen. Clifford Graham, was heard in February, but held for amendment. As initially written, it would have repealed and replaced the STARS Act, which was enacted in 2011 and gave large tax breaks to encourage video and film production. (See Related Links below) It was nearly identical to Bill 30-0417 Graham proposed and deJongh vetoed last year.

Graham said film industry representatives had expressed a desire to have benefits that were more comparable to those offered by a number of states. His bill also ties some benefit levels directly to the employment and spending on the project, so that larger productions get more generous benefits.

In February testimony, St. Croix music producer Laurent "Tippy" Alfred testified, said the bill would take away existing tax breaks for local audio production. He asked for amendment to help both music and audio production and to help locally based productions that are not large enough to take full advantage of the bill’s benefits. He did not oppose the bill overall.

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Thursday, Graham introduced a substitute version of the bill that did not repeal and replace the existing law, but simply created a new chapter in the law, creating the new film and video tax credits and rebates, but leaving existing STARS Act benefits for music and audio production unchanged.

"The parties asked for a separation of music and film and that is what this bill attempts to do," said St. Thomas attorney David Bornn, who helped draft the proposed legislation.

Graham’s bill gives tax credits of 10 to 17 percent of the wages and salaries of Virgin Islands residents employed on the project, which the company can then sell to any other V.I. taxpaying business, if they owe less than the credit.

It also would give a break on the territory’s hotel occupancy tax, based on the number of rooms booked and for how many nights. The bill would create a new division within the Economic Development Authority to handle the film and video industry. And it would give cash "rebates" based on the amount of spending in the territory.

The committee voted unanimously to send the bill on for further consideration. Present and voting yes were Graham, Sens. Novelle Francis, Myron Jackson, Neville James, Almando "Rocky" Liburd, Nereida "Nellie" Rivera-O’Reilly, Tregenza Roach, Kurt Vialet and Janette Millin Young.

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