Vol. 572 No. 1
68 Mr. Cuffe asked the Minister for Arts, Sport and Tourism the main findings of the study by a company (details supplied) of the meaning of the discontinuation of the section 481 incentive to the sector and outside the sector. [22415/03]
The termination of section 481 relief with effect from the end of 2004 was announced by the Minister for Finance in his 2003 Budget Statement as part of a programme of tax base broadening measures. In view of the likely implications of this measure for the film sector, I commissioned PricewaterhouseCoopers to carry out an analysis of the economic significance of the section 481 scheme. I have recently received their report and will draw on its evaluation of the economic significance of the tax relief in my discussions with my colleague, the Minister for Finance, on future support for the film industry in Ireland. As these discussions must, of their nature, remain confidential, I do not propose to make any public statement for the present on the PWC analysis and conclusions.
Could the Minister publish certain findings of the PWC report indicating, in broad general terms, whether it favoured the Government's current plan to abolish section 481, recommended an alternative scheme or recommended no alternative? This might either relieve some of the industry's fears or give it an opportunity to put forward its own alternative proposals. Given that there are over 4,000 full-time and over 3,000 temporary employees in the film industry, does the Minister agree that the cost of approximately €12 million in relation to the implementation of section 481 – I refer to the real cost, not the €25 million overall cost which is reduced by certain benefits – provides advantages to the country to a far greater extent than that figure might suggest? Does he agree that, through employment and other off-shoots, the section 481 incentive is a positive revenue filter rather than a negative one?
I have received two reports, including one from Screen Producers Ireland which set out a very cogent case for the retention of section 481. I have also received the PricewaterhouseCoopers report, the contents of which I am not prepared to divulge at this stage as they are the subject of my ongoing discussion with the Minister for Finance. On a number of public occasions, the Minister for Finance has stated – and I agree with him – that the present section 481, as constituted, is open to abuse and has been abused in the past. There is more than anecdotal evidence of this. Any Minister for Finance must ensure, in the interests of Irish taxpayers, that a situation is not tolerated whereby a section can be abused by a minority. Accordingly, I considered it incumbent on me to bring forward concrete proposals to the Minister for Finance to show him that we could continue with section 481 and, at the same time, eliminate to the greatest possible degree the opportunity for abuse of the system.
Undoubtedly, section 481 has been of enormous benefit to the Irish film industry. It is true that when it was first introduced in this country it was a pioneer of its kind. Unfortunately, other countries followed suit and even improved on the incentive we were offering. It is true that some countries now offer a greater incentive than we do to attract film makers. The cap on the present section 481 seems to cause difficulty for the industry. The figure is approximately €10.5 million and the industry is of the view that it needs to be increased. It is also argued that the cap on the amount which an individual taxpayer can contribute should be increased from €38,000.
I believe the fact that the cap is at €38,000-odd illustrates section 481 relief is not a haven for the very wealthy – it is not a tax shelter in that sense. It is my fear that if section 481 goes, we will not be in a position to attract the type of films we have been able to attract in the past. That, in turn, has serious consequences not only for those involved in the industry but for the country's overall image. One of the best ways to sell the attractions of one's country is through film, as evidenced by several examples which I need not mention.
The current position is that the Minister for Finance and I are getting on with our discussions in relation to section 481 and other matters relevant to my Department. I will not divulge the contents of the PriceWaterhouseCooper report and it would be quite wrong to do so until the current discussions have been completed. I hope we can achieve a fair balance, on the one hand addressing the concerns of the Minister for Finance and, on the other hand, retaining a system which will attract film makers to Ireland, assisting the film industry and the country's general image into the future.
I fully support the Minister in his representations to the Minister for Finance on this matter. Many constituencies, including my own, have benefited enormously from film making, whether on a large or small scale. Many Deputies have had representations from organisations and individuals in relation to the film industry, all seeking to retain section 481. While no one wishes to tolerate tax evasion and related problems, it is the Labour Party's view that the section should be retained. We fully support the Minister's efforts in that regard.
Section 481 has been very beneficial to the film industry and rural development. I would be concerned that its removal would discourage film making in Ireland and result in the loss of spin-off benefits to many in rural areas. Ultimately, the loss would be to the country and the Exchequer.
Question No. 69 answered with Question No. 65.
