Lots of VFX news today. I’ll wait for more details to come out and let the dust settle before I comment. In other news, it’s pretty rare to get international governments to provide oversight of their subsidy programs and disclose their costs. The UK has been a particular tough nut to crack.
Recently the UK House of Commons Committee of Public Accounts did a critical report on subsidies paid through tax expenditures. Interestingly, the costs of the film subsidy offered in the UK is singled out for it’s runaway costs which have been $USD $3.4 billion over a decade:
The data published by HMRC did not compare the actual costs of tax reliefs with
forecast costs. When a revised form of film tax relief was introduced in 1997, officials had
forecast it would cost £30 million in the first three years. However, its costs rose
significantly, and reached nearly £700 million by 2005–06. It took ten years, at a total cost
of over £2 billion, before HM Treasury and HMRC amended the relief to bring down the
costs. A significant proportion of the costs incurred in film tax relief had not fulfilled the
purpose of the relief, or the intention of Parliament. HMRC told us that it had taken a
series of steps, from 1997 to 2007, in which it had put in place various restrictions for the
relief, and that it had introduced each restriction after considering the policy perspective.
However, it had not been Parliament’s intention that the excessive cost of film tax relief
should have been allowed to continue for so long.
One of the things I’m often surprised about is how little oversight there is internationally on film subsidies. While states in the US engage in the subsidy race, there is usually better oversight which leads to volatile changes in the state subsidy being offered. We’ve seen this in New Mexico, Michigan, Florida, and currently in North Carolina. This is why I’ve reasoned that VFX often avoids state subsidies while physical production utilizes them. Film shoots usually last a few months and leave quickly. VFX projects usually take longer and involve trying to get huge teams to move with a big flow of work. Not a good strategy to bring it to a state that might lose its subsidy the next year.