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Dáil Éireann díospóireacht -
Wednesday, 1 Oct 2003

Vol. 571 No. 2

Written Answers. - Film Industry Development.

Liz McManus

Ceist:

225 Ms McManus asked the Minister for Finance the way in which he can justify his decision to end tax relief on the Irish film industry funding while retaining similar funding for the bloodstock industry; and if he will make a statement on the matter. [21371/03]

Tax relief for the film industry was first introduced in 1984 under the business expansion scheme and has continued in various forms for the past 19 years. This makes it one of the longest running sector specific tax reliefs in the economy and has seen an Exchequer contribution in terms of tax foregone of the order of some €265 million in the last ten years alone. It should be noted that this relief has continued over time against a backdrop of the widening of the tax base and the reduction of rates generally. In budget 2003, I referred to the generally accepted principle that such reliefs narrow the tax base and that a widened tax base is the price that must be paid to retain the current low tax rates. Consequently, all tax reliefs must be subject to ongoing review. In that context I announced in the budget that a number of these reliefs across a range of sectors including film relief would not be extended beyond 31 December 2004.

The tax relief for investment in films was never open-ended as regards duration. Its aim was to develop an Irish film industry and was never intended as an annual subsidy. Consequently it has only applied for specific periods since its inception.

In contrast, the exemption for stallion stud fees which was introduced in 1969 never had a termination date. It was one of the few tax incentives or reliefs which the Commission on Taxation in its report of 1984 on the role of incentives did not recommend for abolition. An estimated 25,000 people are now employed in the wider bloodstock sector. Much of this employment is in rural areas where employment is badly needed. In the Finance Act 2003 I provided for the return of information of profits and losses from the activities relating to this incentive as well as from woodlands and greyhound stud fees. When this information is available it will allow for the costs and benefits of these reliefs to be reviewed. However, as things stand, the position with regard to the 31 December 2004 termination date for the film relief remains unchanged.

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