Written Answers. - Tax Incentives for Film Industry.

Seamus Brennan

Question:

301 Mr. S. Brennan asked the Minister for Arts, Culture and the Gaeltacht his views on the effects on the film industry of the reduction in tax incentives for film making; his views on whether various film proposals and film personnel have been lost to Ireland as a result of the reduction; his views on the loss of promotional benefits for Ireland as a direct result of the tax incentives being reduced: and if he will make a statement on the matter. [16693/96]

I am very pleased that, notwithstanding the fact that section 35 was due to expire this year, the revised section 35 package which was provided for under the Finance Act. 1996, ensures that a system of tax incentives for film-making in Ireland is now assured up to 1999. The Deputy will appreciate that this positive outcome of the review of section 35 will facilitate producers to exploit the incentives over the next three years with the security of knowing that they will remain in place over that period.

Films locate in different countries for a wide variety of reasons, both objective and subjective. Accordingly, it is inevitable that some projects for which Ireland may have been shortlisted, will not end up being made here. Factors such as location, personal preference of the director, local and national incentives being offered in the contending countries, and the availability of key creative personnel, all contribute to the outcome. For this reason it is not possible to assign a single cause for decisions as to whether or not to locate a film in Ireland, nor can I comment as to whether film personnel have been lost to Ireland as a result of the revised package.

I believe that the revision of the section 35 scheme has had a number of effects. In line with the December 1995, analysis of the economic consultants INDECON, the new scheme involves less costs to the Exchequer; it places a particular and welcome emphasis on indigenous production; it has increased the potential investor pool in the State; it still provides a substantial incentive for bigger budget films; and it includes an incentive for production in off-peak periods during the months of October to February inclusive.

While a shift towards indigenous production will result in reductions in gross budgets, the ratio of Irish spend — including, critically, Irish labour content — to total spend can be expected to improve, as will the economic benefits relative to the Exchequer costs of section 35. We are now moving to a situation where expressly Irish stories involving Irish creative input are attracting substantial international investment covering the non-section 35 elements of film budgets. It is films such as these that will play the greatest promotional role for Ireland because they are not merely using Ireland for tax reasons or because of Ireland's film-friendly approach but, rather, they are telling Irish stories to national and international audiences in an increasingly skilful and attractive way.
I am happy to assure the Deputy that Irish indigenous film production is in a very healthy condition, with many promising projects at various stages of development and production. This fact is perhaps illustrated most forcefully by the fact that, for the first time ever, Irish films are being selected for exhibition and competition at prestigious film festivals, including Cannes, Berlin, Venice, Edinburgh and Toronto. In many cases. Irish films have secured major awards at such festivals. This is the best testimony of the success of the Government's strategy to develop a soundly based indigenous industry and I am happy to assure the Deputy that I am confident that the revised section 35 package will continue to facilitate this process.