Thursday, July 11, 2013

Taxation Salvation

Soldier has the ball rolling.

... U.S. Could Tax Foreign Film Subsidies, Study Finds

... [T]here may be a legal avenue available to the beleaguered [L.A. visual effects] industry: tariffs. That's the conclusion of a new report by the D.C. law firm Picard, Kentz & Rowe that the visual-effect industry blog VFX Soldier commissioned with monies raised on social networking sites.

The firm determined that a legal challenge to foreign tax subsidies might be possible -- if daunting -- and recommended the visual effects industry form an organization to build a case.

The report flagged countervailing duties on films that have benefited from foreign subsidies as a potential recourse. These tariffs, intended to alleviate the damaging effects that foreign tax incentives can have on the domestic production of certain goods, have been imposed in the past on everything from steel to shrimp.

And Soldier himself says:

I originally approached law firms with the intention of challenging subsidies on the basis that they are banned by the World Trade Organization. The study recommends against this route for the same reasons the 2007 effort failed. While these subsidies probably do violate international trade agreements, it is the sole discretion of the US Trade Representative to pursue a WTO case. To this day, we still do not know the exact reason for the rejection of the 2007 effort even though that petition was solid. Many suspect it was because of backdoor lobbying by the US studios who benefit from these subsidies.

Instead of going through the WTO [World Trade Organization] and trying to get each country to stop subsidizing the US studio productions, many of you have mentioned the possibility of some mechanism that would coerce producers to repay the amount of subsidies they receive to offset the market distorting effect. UK-based VFX artist David Stripinis mentioned this in a post.

While his premise is correct, his conclusion that such a mechanism would require a law passed by Congress is incorrect. The law, which is called the countervailing duty (CVD) law, already exists, and PKR specializes in CVD issues. While using the CVD law would have its challenges, it is important to note that the application of CVDs are mandatory, meaning if the conditions are met, the US government cannot just decline to apply it. ...

VFX Soldier has made the community sit up and take notice, so good on him.

Imagine. An actual industrial policy. Like the one we had for two centuries, before all the international conglomerates decided they were a hindrance.


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