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Introducing film incentives pays off in more ways than one

James Bond in LondonFrom 1 April 2014 New Zealand will introduce new tax incentives – a move that should lead to a stronger local mid-budget film market and more international business. We felt this offered the perfect opportunity to look at the advantages of film incentives for a nation’s economy.

The extra international business has been taken care of already for New Zealand – ahead of the incentive changes coming into force director James Cameron announced he will use the country as the production hub for his next three Avatar movies.

New Zealand has an array of amazing locations seen in films such as Peter Jackson’s Lord of the Rings and The Hobbit trilogies, and Steven Spielberg’s The Adventures of Tintin. With the tax rebate going up from 15% to 20% for international film and television productions, the New Zealand production scene instantly becomes a lot more attractive to foreign productions.

A few years ago, The Hobbit films alone spent half a billion dollars during their shoot in New Zealand, and at the time of filming incentives worth nearly $59m were paid to the production.

Cameron’s three upcoming Avatar films will spend at least $412m in the country in return for a tax rebate of 25% but these expenditure figures are not all the local economy will receive from the films. As a result of the success of these movies and the stories about their production, tourism spend also increases.

New Zealand’s government ensures they make the most of this possibility and last December they even launched an extensive tourism campaign promoting the filming locations used in The Hobbit: The Desolation of Smaug. Air New Zealand then got on board (literally) and developed a new way to get their passengers excited mid-air: with a Hobbit-inspired Middle Earth in-flight safety video.

The country isn’t the only one to recognise the long term, wider benefits of investing in film, and more initiatives to capture the film related dollars off-screen are appearing around the globe.

There are specific tours for the fans, tourism boards working together with film studios and destination marketeers hired by the batch.

This isn’t a new phenomenon, though the term ‘film tourism’ only now seems to make its firm mark. When a young Leonardo DiCaprio starred in the screen version of The Beach he helped create the image of a ‘cool’ Thailand. As a result the film was said to be responsible for a 22% increase in young people visiting the country in the year after the film’s release. That is 14 years ago now.

Mel Gibson’s Braveheart caused a similar spike in visitors to Scotland in the years following its release in 1995.

And in Florida the film commission can quote a recent study which says the state’s production incentive has an estimated return of between $5.60 and $20.50 in state taxes for every $1 of incentive issued. In addition, the survey found that 19.5% of all visitors to Florida said viewing a film or TV series filmed in the sunshine state influenced their decision to visit.

Film London and the British Film Commission too say films depicting London and the UK are responsible for no fewer than 1 in 10 overseas tourists visiting. This comes down to an extra income of around £1.8bn a year.

The James Bond and Harry Potter brands have become a big screen billboard ad for the UK, just like The Hobbit is working hard for New Zealand. Film London sums it up perfectly when it states films like these are “sparking a boom in tourism and generating an amount of screen time that no tourist board could afford to purchase in terms of advertising its brand and destination”.

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