Last March I posted on how the UK film subsidies are scheduled to end next year. It should be no surprise the the EU will be reviewing film subsidy policy with the following question in mind:
does a subsidy race to attract major US productions undermine the effectiveness of aid to support smaller European films?
Absolutely. You can look no further than the recent best picture winner The Kings Speech. Here is a legitimately British film that was heavily funded by small London studios and government money by the UK Film Council.
As the UK government engaged in austerity cuts, it chose to axe the film council and not the tax rebate program that is heavily used by US studios.
Last year I pointed out a bogus report by the UK Film Council supported by many Soho vfx facilities that tried to claim how “UK Films” were making huge money. If you look at the films listed, the vast majority of them are films by US Studios like The Dark Knight which was able to pass vague cultural tests like having a British butler that make it a “British Film”.
Will independent European filmmakers be able to make the case to the EU? I doubt it. If anything, the US studios and UK subcontractors will heavily lobby to continue the status quo.
However, the EU might be concerned about subsidies because of the recent brawl between US and European aircraft makers Boeing and Airbus. Airbus was able to lure US defense contracts with artificially cheaper bids that were indirectly subsidized by European governments. Boeing took their case to the WTO and forced the EU to comply with international trade law.
This very same dynamic is the cause of the recent volatility in the VFX industry. US studios are lured to take VFX work to locales where foreign governments offer lucrative free money in the form of taxpayer rebates. I’ve argued that this is a violation of WTO trade rules.
The EU might also be interested in the review many US states and economists have taken on the issue of subsidies for films.
All this is silly. First, as Joseph Henchman at the Tax Foundation, a non-partisan think-tank, puts it, even when a state succeeds in luring film crews, they rarely boost the economy or tax revenues enough to justify the costs of the incentives. Film companies usually import their staff (stars, stuntmen, etc) and export them again when the shoot is over. The local jobs they create (hairdressers, sound technicians, pizza deliverers) are mostly temporary.
The Tax Foundation also notes that state subsidies are starting to decline:
[W]hile film incentive programs were once universally applauded as great economic development tools and tourism boosters, their merits are now being rigorously debated. At a minimum, film incentive programs should be required to report how many dollars in incentives were provided per each Full-Time Equivalent (FTE) job created by qualified productions. Programs should be reviewed periodically for their effectiveness by legislative oversight or a third party.