Let’s Talk Tax Credits

OK, taxes, boring I know, but it’s a pressing matter for animators in the UK. It’s also a topic that’s come up from time to time over here in the States, as places like next door neighbour Canada create incentives to get studios to move up north.

So the reason for this latest round of noise-making is that the British government is considering a tax break for “drama productions” that cost a certain minimum per hour of screen time. The thinking goes that with such a break, more productions will begin shooting in the UK thus contributing to the economy.

Animators contend that their industry would be more effective at keeping jobs in the country and, according to the Guardian article, would keep content on a more local level.

There’s nothing wrong with this, except that the reasoning is a bit flawed.

Basically, Ireland, the UK’s neighbour, offers tax incentives for animation production. The reasoning is is simple for this one: Ireland didn’t have an animation industry, so in order to get one jump-started, the government offered companies a tax break in return for taking the risk of setting up in a relatively unknown country (animation-wise).

The UK already has an established animation industry. It doesn’t need to effectively subsidies companies’ risk in setting up production there.

So what’s the real issue here?

Well, why set up shop in the UK, when you can go next door to Ireland, write off some taxes and get you series done for less. Right?

Will tax incentives in the UK change this scenario?

The answer is maybe.

Tax incentives will bring the cost of production in the UK down, but that is not a guarantee that productions will move there. It also creates another problem in that it hides the real issue: costs.

Naturally with their tax incentive, Ireland can operate on a lower cost basis, but, can you continue to operate on an incentive-based structure forever?

NO!

Incentives are meant to be temporary, or rather, short term. Long term reliance on tax-breaks and incentives can defeat the purpose. For example, let’s say you introduce a tax break for animation. After a while, another country introduces a tax break that brings their costs below yours. Now what do you do? Another tax break? Suffer the consequences? Give up?

Tax incentives mask the real cost of doing business. Yes, taxes may be higher here or there, but at the end of the day, they should be factored into the cost of doing business in the first place. Exchange rates will also factor into the equation, and depending on where you go, they may have a bigger bearing on costs than taxes.

If costs are your problem, then perhaps it is wiser to try and bring them down first, no? By doing so you will increase your competitiveness and not have to worry about it running out.

Besides, if you operate as a low-cost producer, you will always have to be the low-cost producer. Ireland has shown that they can move beyond low-cost with through their superb, home-grown content. Britain has a great track record in creating content. Perhaps they need to rediscover that talent.

What do you think? IS the UK really in need of a tax credit, or should it try other things first?

 

Why The Tangled DVD Is A Waste Of Your Money

Via: Amazon.com

It’s not secret I like Tangled. It’s fun and although the story and characters are slightly less than mirror-polished, it’s an engaging film that manages to astound with it’s visuals, as Jim Hull managed to put it on twitter:

[blackbirdpie url=”https://twitter.com/jameshull/status/54014060982841344″]

It’s true, the visuals are stunning and its the main reason I like the film. However, I am one of those folks that has an old-style TV. You know the ones, with a square screen and that take up as much space in the living room as an elephant. Am I behind the times? Yes, I am and I realise it. However for me, if it came down to it, I would rather spend the couple of hundred dollars on a flight to Ireland than a new TV. It’s not that I don’t like watching the boob tube [snicker], it’s just how I prioritize things.

Despite the fact that I like the movie, I was disappointed by the Tangled DVD. The only extras included on the disc are some original “storybook” version of the film’s opening and a countdown of films that makes Tangled the (supposed) 50th feature released by Disney.

Here’s my problem, and it’s likely to be your problem too. Why the heck would you pay $14.99 for a DVD with basically just the film on it? If you’re a truly insane or disadvantaged in who supplies your DVDs, you would have to pay the $29.99 that Disney recommends!

First of all, $14.99 is expensive, even for a DVD (when stores can sell CDs profitably for half the price, you know there’s something up). The extras included were and are available online so you do not gain anything by having the DVD. The ultimate insult is that for an extra fiver on Amazon.com, you can get the Blu-Ray/DVD combo pack but that is a matter of economics and I’m sure most people plumped for that version despite the fact that it offers only a few more extras and even then only on the Blu-Ray disc, the DVD is exactly the same as the stand-alone version.

So ask yourself: “why should I pay money for a plastic disc with just the movie on it? Why not save my money and download it from the internet? It’s not like there’s a lack of choice there”:

Snapshot of just some of the torrents available out there.

I do not advocate downloading films from the internet. The practice is quote/unquote “illegal” and if the MPAA thinks they’ve caught you, it can be a legal nightmare trying to get it sorted out. If you have ethical feels about it, there are always plenty of free (as in speech) and public domain films out there just gagging for your attention.

The point is, why on earth would I fork over a pile of money for something I can just download from the internet (legality aside)? It doesn’t make any sense to sell films like that any more because there is absolutely no incentive to the public to buy the film. If it came with some kind of extra that I could not download form the internet (read: a physical item) than there is a chance that people would be much more likely to purchase it.

I think that’s something that content producers cannot get their heads around. People no longer consider content a physical good whose reproduction can be controlled. People today (myself included) generally assume that if we can get it from the internet, then it probably should be free (there’s an economics background to this that can wait for another day, but trust me in the meantime).

Just to add insult in injury, there was a time when DVDs came stuffed to the gills with extra features. Since the introduction of Blu-Ray, we’ve seen those features gradually get pulled as the studios have attempted to incite use to get Blu-Rays instead. Unfortunately a new HD TV is a heck of a lot of money to spend and a few extras that I used to be able to get aren’t going to be the deal-breaker for me.

With less features on the DVD and with a nominal difference in price, why the heck would I buy the single DVD? If I just want to see the film, there is a heck of a lot of reasons why I should just go and download it or watch it through other means and I’m pretty sure that’s what plenty of folks are doing to the detriment of the studio and the artist who work in the industry.