Vol. 505 No. 4
12 Mr. Deenihan asked the Minister for Finance when he will make a decision on the question of the renewal of section 481 relief after 1999 in view of the uncertainty in the film industry; and if he will make a statement on the matter. [13782/99]
In section 61 of the 1999 Finance Act, I extended the tax relief for investment in films provided by section 481 of the Taxes Consolidation Act, 1997, for a further year to 5 April 2000. While concern has been expressed by the film sector regarding the proposed one year extension to the relief in question, speculation that this extension puts the future continuation of the relief into question is not justified. This extension will enable the Government to fully consider the contents of a number of reports on the film sector that are to be published shortly. Rolling the reliefs forward does not mean the end of the film relief. It is a valuable incentive to film making here and is recognised as such by the Government. It is intended that the relief will continue to work to secure the Government's aims for the industry and the publication of the special reports on the industry by the Government and their subsequent detailed consideration is the best way to address the appropriate policies for State support in this area.
Is the Minister aware that because of the uncertainty he has created by not making a clear and unambiguous statement, film production has decreased? There were reports at the Cannes film festival that we are no longer serious players in this area. Film producers are now looking at other countries for locations.
I do not accept there is any more uncertainty relating to this taxation measure now than there was some years ago. I said during the budget that on foot of a report I received I was prepared to extend this tax relief for another year, which I did in the Finance Bill. The report commissioned referred to a number of other measures which could be taken to the benefit of film making, other than a tax incentive. I do not know whether other Members are involved in these tax breaks but the report showed this is the best one. One must take into account equity among various sectors of taxpayers. The tax break given to those who invest in what was known as section 35 film relief is the best available. As a former chartered accountant, that is my free advice.
What about nursing homes?
Equity between all taxpayers must be taken into account. I extended this relief for another year and I will consider the matter further. The report pointed this out and put forward a range of other measures which might be undertaken by the film industry. I will give the matter further consideration as regards that report and others which the film industry has undertaken. We will finalise our deliberations on these issues before next year's budget.
That is the type of statement which is causing confusion. The lack of clarity in the Minister's reply will send a shiver throughout the industry. Is the Minister aware that 2,000 people are employed by the film industry full-time and 4,000 part-time? The tax the Exchequer is losing because of section 481 is more than made up by the revenue generated by the film industry. For example, the Isle of Man has increased its incentives by 25 per cent and even California, the home of the film industry, is now introducing tax incentives to keep film production at home. The Minister is destroying the film industry. He may not be aware of that but it is the perception. Will he clearly state the Government's commitment to the industry?
The Government is committed to the industry but is also committed to equity between taxpayers. I accept this has been an outstanding relief for investors. It is the best relief at present, by a long way. We must take into account the benefit to the economy and individual taxpayers. No-one disputes the benefit to investors in this scheme. However, whether the benefit to the economy as a whole is as good as the benefit to investors is a different question.
I do not accept there is a lack of clarity in this matter. I said what I am saying now quite clearly during the debate on the Finance Bill and on previous occasions. I have a clear view of this matter in any event. It is a case of whether we are prepared to give a large tax break to a small number of taxpayers and whether the cost of doing that is equivalent to the benefits which accrue to the economy as a whole. That question was deliberated on by the consultants and is also being considered by other sectors of the film industry.
That concludes Priority Questions.
