Where I live, a local TV station, which had some shows shot locally, went out of business because the tax credit was cut. Some movies, which were planned on being shot in my city, where also moved to a different area, with different tax credits, once ours was cut. So it seems some credits, have a deep impact on business.
Similarly, the New Zealand feature film industry, which in my point of view didn't really start until 1977 when Sleeping Dogs was made (it was the first NZ feature since the 50s, with the only other features being made my ex-brits and ex-australians in the 20s). The industry was kickstarted by the introduction of a national film commission, due to Sleeping Dogs' success. Then to support this boom, accountants discovered a tax loop hole, and suddenly there was a huge influx in feature filmmaking in New Zealand. The loop hole was shut in the early 80s, and films already in production were given 18 months (until 1984) to complete under the old tax laws. After it was shut there was a huge tailing off in the number of films being made, and there are far more "classic" NZ films in the early 80s than there are late 80s. During the loop hold, NZ film was starting to gain a
small international reputation, but progress was slowed and set back severely when the loop hole was shut.
The New Zealand feature film industry, still a struggling, barely surviving with little financial resources, and even small financial return, would probably be in an even worse position if it had not been for the jumpstart the tax loop hole provided. And it was severely damaged when that loophole was closed.
Presently, the government does offer tax breaks to runaway productions, and for a while this was pretty effective (especially shortly after Lord of the Rings), but recently other countries have provided more competitive tax breaks, and we're seeing less international filmmaking here (though James Cameron has relocated here).
It's been the cause of some controversy, particularly when Peter Jackson threatened to move The Hobbit away from New Zealand. Actors had incredibly unfair contracts (e.g. they could be fired without notice - it's pretty hard to pay the bills as a local actor) and were being paid minimum wage, and so they striked. So the government gave them a $20m tax credit
and made suppressed the actors rights to protest. And they call Peter Jackson a patriot, and paint New Zealand as a democratic paradise
First thing PJ did was give him and his wife a 7 figure producer fee pay increase. Actors didn't get better conditions. The tax credit just went to the producers and studios (and probably back into the film).
