The state government uses tax credits as currency to entice private sector development. So, not surprisingly, some private-sector entities also use them as currency.

Tax credits are controversial because they are not universal. Governors and the General Assembly award them to some favored projects, often citing optimistic economic development projections to the exclusion of everything else.

Perhaps the prime example is the new Shell petrochemical refinery in Beaver County. The state authorized $1.7 billion in tax credits for the $6 billion project. The state Department of Environmental Protection has cited it for multiple air pollution violations in less than a year.

The film production tax credit also is controversial. The current state budget includes a $30 million increase over the previous year, to $100 million.

It’s controversial in that many conservative lawmakers disdain the film industry as an organ of the political opposition. Likewise, most productions in Pennsylvania are shot in Democratic Pittsburgh and Philadelphia. And the credit’s benefits to the broader economy are temporary.

Within the industry, small producers complain that the majority of credits go to the biggest productions. Philadelphia-based director M. Night Shyamalan’s most recent film, “Knock at the Cabin,” received $5 million in credits, for example, and the HBO hit series “Mare of Easttown” received $26.5 million.

Using tax credits to grow the film industry is as legitimate as any other purpose. But the amount of the credit often exceeds the production company’s actual tax liability. State law, like those in most states, allows companies to sell tax credits that they don’t use, converting them to cash.

That can lead to fraud. In a scam that could lend itself to a movie plot, a Bucks County couple is on the lam in Hong Kong after allegedly defrauding the state of $11 million form the Keystone Innovation Zone and Research & Development tax credit programs.

Republican state Rep. Dawn Keefer of York County has introduced a bill that would preclude companies from selling tax credits, requiring them to use them for the designated purpose or lose them.

That’s reasonable. It might even result in more film production by making more credits available to more producers. The Legislature should adopt it.

— The Citizens’ Voice, Wilkes-Barre via TNS