| |  Print This Article

Godzilla invades Waikiki, devours tax credits

TAX-EATING MONSTER: Producers of the newest version of Godzilla are getting some hefty tax credits from Hawaii taxpayers.

BY MALIA ZIMMERMAN - WAIKIKI – Godzilla stomped last night through the streets of Waikiki, Hawaii’s prime tourist hub, as Legendary Pictures and Warner Bros. put the final touches on the American-made reboot of the classic daikaiju eiga, set to be released in May 2014.

The oversized, fire-breathing “King of the monsters” may be a little less cranky when he learns that Hawaii lawmakers passed legislation, approved by Gov. Neil Abercrombie, which ups the percentage of tax credits motion picture productions can claim when filming here.

As of July 1,  Hawaii has a new, expanded production tax credit, which grants motion pictures, digital media and film productions, an income tax credit of 20-25 percent.

Productions that qualify can claim tax credits equal to 20 percent of production costs from the island of Oahu, and 25 percent on neighbor islands including Hawaii Island, Kauai, Lanai, Maui and Molokai. That is an increase over last year of 5 percent for each category.

Act 88 and Act 89 also boost the credit cap from $8 million to $15 million per production and qualify productions with Internet-only distribution. In addition, state and county location and facilities fees are now qualified expenditures.

Hollywood producers have been aggressively lobbying lawmakers for the increase to the film tax credits for at least the past four years. The industry brought $400 million into the economy in 2012, with $245 million in direct spending and creating 2,500 jobs, state film office officials say.

The economic impact is likely to increase with the television production of Hawaii 5-0 in its fourth season, and films like Jurassic Park 4Deep TikiPirates of the Caribbean (part 5) and Angelina Jolie’s film, Unbroken, being filmed here.

Donovan Dela Cruz, chairman of the Hawaii State Senate’s Economic Development Committee, said he isn’t a fan of giving away “free money”, but agreed to the legislation because he said he wants to see the industry develop and not “move backward.”

Dela Cruz said Hawaii needs a long-term strategy to develop the industry by syncing the education system at the high school and college level with the industry base.

He said he’d like to see the students go through the award-winning Sea Rider Film Production program atWaianae High School be able to attend a film production program at the University of Hawaii and secure a job in the film industry here.

But, he has another idea. He said he would like to see a public-private partnership where the state invests in building a film school at the university’s West Oahu campus and a larger film studio for the industry on Oahu, as well as housing for the workforce — all within a 1-mile radius.

The privately-owned Maui Film Studios LLC in Kahului, Maui, already opened its 21,000-square-foot facility in March. Hawaii Island also will open Lokahi Studios, a sound stage and production house that includes a 30,000-square-foot center, concert hall and cinema. Oahu’s Diamond Head facility is too cramped, Dela Cruz said.

Dela Cruz is critical of the Hawaii Film Office, a state agency charged with helping film and television productions get the permits and locations they need to film in the state.

The film office also should be developing a long-term plan that helps diversify Hawaii’s economy, reverse the brain-drain and create jobs, Dela Cruz said.

The Democrat said like to see Hawaii be the “Hollywood of the Pacific.”

However, if there isn’t a long-term plan put in place soon, Dela Cruz said the film credit should be revoked until one can be developed with the industry. The credits will sunset in 2018 unless lawmakers renew them at that time

‘Godzilla of a film credit’

 

Rep. Tom Brower at the staging area for the Godziila production being filmed in Waikiki, the district he represents

State Rep. Tom Brower, D-Waikiki, hasn’t seen Godzilla in his district yet, even though the monster is filming nearby, and some would say, hard to miss.

But he said he is in favor of the monster stomping through his district and getting tax credits to boot.

Brower, who serves on the House Tourism and Economic Development committees, said people in the film industry have told him that while Hawaii now has a movie or two and a television show filming here at any given time, the state could become much busier with the new tax credit incentives.

The credit will make Hawaii more competitive with other states, he said, and help build the industry.

Brower said his only disappointment in the legislation is that it offered productions that film on neighbor islands a 5 percent higher tax credit than on Oahu. He said he would have like to see the credit evenly distributed at 20 percent.

He’d also like to see a better way to track the benefits that the credit brings to the state.

Lawmakers wowed by celebrity, critic says

While House Speaker Joe Souki touts the film credit legislation as a top accomplishment during the 2013 legislative session, not everyone says the film tax credits are good for Hawaii or the taxpayers.

Lowell Kalapa, president of the Tax Foundation of Hawaii, has been an outspoken critic of the tax credit, and said he’s watched lawmakers be wooed by Hollywood celebrities into giving taxpayer money away.

“Lawmakers fail to mention that in order to give away these goodies, Hawaii remains in the top 10 percent of states with the heaviest per-capita tax burden, with one of the most onerous sales tax among those states that impose a sales tax, albeit at a misleading low rate of 4 percent,” Kalapa said.

“Hawaii also has the distinct honor of having one of the highest personal income tax rates, surpassed only by California,” Kalapa said.

Because Hawaii is such a small state highly reliant on capital from the outside through tourism and federal defense dollars, Kalapa said the state’s heavy tax burden makes it difficult for families to survive and for new business activity to develop.

“The advocates of those tax incentives argue that is the goal that they are trying to achieve — creating jobs. But then again, one has to ask, at what price?” Kalapa said.

“There is no doubt that lawmakers need to take a close look at how they are using their constituents’ hard-earned tax dollars,” he said. “And they are using those tax dollars when they hand out tax credits to favored groups as tax credits are just another way of spending tax dollars.”

Contact Malia Zimmerman at malia@hawaiireporter.com

Short URL: http://www.hawaiireporter.com/?p=394932

6 Comments for “Godzilla invades Waikiki, devours tax credits”

  1. Dela Cruz supports his "friends." Brower is right to look for means to track the benefits the credit is supposed to bring the state. The benefits could disappear like KoOlina's aquarium and Haseko's marina. When Dela Cruz was a city councilman, he did not support TVU/B&B permits where visitor expenditures on lodgings and other goods and services on Oahu while visiting generated the following.

    •Sales (output) ranging from $752.3 million to $1.1 billion
    •Labor income (earnings) ranging from $240.0 million to $339.2 million
    •Job numbers ranging from 7,566 to 9,993
    •Hawaii State taxes ranging from $52.4 million to $77.5 million
    •Oahu taxes ranging from $5.5 million to $9.4 million.

  2. the best way to get economic prosperity in Hawaii is to eliminate or at least sharply reduce taxes for ALL businesses here.targeted tax credits is cronyism.the film industry may benefit at the expense of everyone else.I say maybe because anytime there is a " partnership " between the state gov't. and a targeted industry,things always go wrong.and there may also be a concern about MONEY LAUNDERING.by that I mean that some of the money made due to tax subsidies may end up back to the democratic party of Hawaii as campaign donations,gifts,bribes and kick-backs to the party.

  3. I agree Hawaii's economy would only improve if taxes decreased for all businesses. Are our current elected representatives up for it? The vast majority probably aren't. Hawaii ranks as one of the worst states to run your own business. That doesn't help anyone.

    • Blue Eyed Devil

      You're so right. I remember reading a 1997 Forbes magazine article on that very subject of Hawaii being the worst.
      The article concluded by saying lowering taxes would be one antidote, but sadly they said, "it looks as though they are going to raise them."
      Nothing has changed.

      • MUFI thinks business is GREAT! Read his Midweek story? "Waikiki Improvement Association (WIA) convened the Waikiki 20/20 Conference, drawing the participation of government, residents, businesses and others in our community. . During my terms as councilman and mayor, the city collaborated on the Waikiki Special District designation that paved the way for the redevelopment of Beach Walk and ongoing revitalization of aging hotel properties elsewhere
        Now, looking back on the past two decades and the remarkable transformation of Waikiki, the association again is embarking on an assessment of its accomplishments and charting a course to sustain and bolster Waikiki’s role as the cornerstone of Hawaii’s economy..."
        Go to; http://www.midweek.com/waikiki-then-now-and-futur...

  4. SO WHERE"S THE HOMELESS DURING THIS TIME? How did the hotels clear them out for this?

    Yet Hawaii Lodging and Tourism Association president and CEO George Szigeti said many hotels have increased security to deal with the homeless coming onto hotel property.
    “The Hyatt has been inundated. The Marriott has been inundated. The Pacific Beach Hotel has been inundated. The Westin Moana-Surfrider,” Szigeti said. Complaints range from homeless people taking a shower in hotel bathrooms, to them sleeping in hotel lobbies, and trespassing at private hotel functions.

    “We’re finding them in using all the restrooms where the hotels are now having to lock up their restrooms. We’re finding them in banquet lines up on the third floor of the hotel. They find where the food is.”

    Go to: http://www.khon2.com/2013/06/23/hotels-partner-wi...

You must be logged in to post a comment Login

News Cycle on The Rick Hamada Show








Recently Commented

  • mariana: I can't believe this. How can it be ok for them to listen to our phone calls? What about our privacy?
  • mariana: Detroit's decline is a very sad story, but I think things are starting to look up for them. From what I...
  • mariana: This is very good. Children need our help and attention and we should lend a helping hand ….especially...
  • mariana: Sounds very interesting. I would have liked to take part in this. Is there a review of the event anywhere?
  • mariana: well of course he will claim anything to get away with this. greed is such a horrible human trade. it makes...