Film industry opposes tax policy

The Chief Minister has also appointed a committee under the chairmanship of Finance Minister Jayant Patil to find a solution and also other ways to generate revenue for the government. The first meeting of the Jayant Patil committee is on June 11 and its outcome will decide the future course to be taken by the industry.

The industry sources, however, say the government is bent upon taxing the “living dead”. Another back-breaking tax would cripple the Mumbai entertainment industry, which is already reeling under the worst-ever resource crunch in history, they say. Some call it a cold, pre-meditated ploy to milk the industry dry, a draconian levy that can best be fought collectively.

Through an amendment to the Maharashtra Sales Tax Act, the state government plans to implement a four per cent tax on all kinds of transfer of rights or use of copyright in film, television software, music and video. A similar enactment 15 years ago was annulled after the industry struck work for a month. The government had appointed then finance secretary Madhav Godbole to study whether the tax was justified and his suggestion was in the negative.

Industry sources point out that Godbole had noted: “Films are not sold, only the exhibition rights are transferred under the Bombay Sales Tax Act, 1959. Hence, there should be no sales tax on the transfer of copyright by film producers.”

The film industry action committee members say things have become worse for the show business since 1985. The ratio of hits to flops has changed drastically. Now, for every release that manages to break even, there are 30 that don’t.

Pahlaj Nihalani, the Indian Motion Pictures Producers’ Association President; Shakti Samanta; Surinder Kapoor; Theatre Owners’ President U.A. Thadani; Yash Chopra; and Indian Motion Pictures Distributors’ Association President Ramesh Sippy are among the members of the action committee.

Most producers feel that for all the fanfare with which the industry status was granted to filmdom, the benefits to go with it are yet to trickle down. Electricity and water are yet to be provided at industrialised rates, studio and set rentals still cost the producers a tidy packet and even the state-owned Film City charges a premium for the meagre services it provides. Film shootings on roads, beaches and port property don’t come cheap either, and permission to shoot at public places never comes easy.

In the absence of a single window system that is being tried out in some states, Mumbai’s filmmakers also have to run from pillar to post, getting sanctions on time. They also lament that while other states levy as little as 15 to 30 per cent by way of entertainment tax, Maharashtra charges 60 per cent.

“When collections from theatres have hit an all-time low, the entertainment tax comes like insult to injury,” they say, pointing out that television, cable TV and video parlours don’t have to pay entertainment tax. There are hardly 1,100 cinemas in Maharashtra as against more than 2,500 each in Andhra Pradesh and Tamil Nadu.

The All India Film Producers’ Council and Indian Motion Picture Producers’ Association have also written to the Chief Minister, protesting against the tax. They argue that the tax goes against his assurances that the government would provide the industry with an atmosphere conducive to growth. Coming at a time when a majority of the films have not been doing well at the box office, the levy shows the government is interested only in revenues and not in the industry’s welfare, they say.