Alarcón Proposes Entertainment Tax Cap

Los Angeles Councilman Richard Alarcón is proposing a motion that would reduce taxes for hundreds of small and medium-sized production companies. Alarcón, who serves as chair of the Jobs and Business Development Committee, introduced a motion that would increase the entertainment business tax cap from $2.5 million to $5 million. The councilman proposed the measure to help retain and attract the production industry in the city. “The film, TV and commercial production industry employs tens of thousands of people in the City of Los Angeles, yet our workers are in constant jeopardy as production chase tax incentives across the globe, leaving Los Angeles to take the economic hit and our workers to lose their jobs,” Alarcón said. City staff was directed to report to the Jobs and Businesses Development Committee on the economic impact such an ordinance would have on Los Angeles. The city currently assesses tax liability on film production companies through a flat fee of $145 on production costs up to $2.5 million, with $1.30 assessed for each additional $1,000 in production costs. The Business Tax Advisory Committee Incentives Subcommittee has recommended changing the tax liability flat fee cap at $5 million instead of $2.5 million. The change would lead to a reduction in taxes for at least 535 of the city’s production companies, including post-production companies, boutique production houses and commercial production companies. Initial reports show that the adjustment could lead to a projected direct loss in city revenues of $382,889, though consistent revenue growth under the existing tax structure could offset the loss, the city said. Jessica Selva