A new dispensation for the industry?

Compulsory reading. On a quick overview it seems as if a lot of the spin around the tax break has been de-bunked, at last.

Economic Impact Assessment of Section 481 Film Relief
December 2012, Dept. of Finance.

"However maintaining Section 481 in its current format does not appear to be sustainable. The scheme as currently operated fails a cost benefit analysis, has a high level of inefficiency in terms of leakage and is inequitable due to its reliance on high income individuals which itself is inconsistent with Government commitments to ‘cap or abolish tax shelters which benefit very high income earners’."

And on the proposed introduction of a tax credit model (with a Revenue-policed early pay-out for producers)...

"If such a model were in place in 2011, it would have resulted in a 32% exchequer saving. Based on the same level of qualifying expenditure this would have reduced the exchequer cost from €46.5m to €32m as the rate of relief would have been at 28% (in line with the producer benefit) rather than 41% (at the investor’s marginal income tax rate). This saving would also have improved the outcome of the cost benefit analysis."

And here's the question floating like a pink elephant in the room - against what taxes will production companies be able to raise levels of funding in 2016 equivalent to those now pouring from the Section 481 tap?


PS - still no official word on the IFB's capital and current budget for 2013, despite press releases from the Minister and IFB Chair welcoming the moves on Section 481. The Department's budget for the total Arts, Culture & Film section is €107.24m (-5% on 2012) of which it has announced that €60.7m (-3% on 2012) is for the Arts Council. "This is the maximum possible funding that I can allocate to the Arts Council for next year, and is below the average reduction that I have had to apply across the board in my Department."

Tis the season...

...to be budgeting... and it seems Christmas may have come a little early for the, ahem, hard-pressed film and tv producers who depend 100% on Section 481. (a bit of irony here).
The relief is to be extended. More later on the detail.

From Minister Noonan's speech...
Film Industry
This year, my Department carried out an Economic Impact Assessment of the current Film Tax Relief Scheme widely known as Section 481. In light of the Report’s findings, which I have published today, and after consultation with Minister Deenihan, and the film and TV industry in Ireland, I propose to:
 - extend the Film Tax Relief Scheme to 2020;
 - reform the operation of the scheme, by moving to a tax credit model in 2016, so as to ensure better value for tax payers money and eliminate the need for high income investors to provide the funding for the scheme; and
- enhance the scheme so as to make Ireland even more attractive for foreign film and TV productions.
These changes will rectify the anomaly by which investors received a disproportionate amount of the tax relief as opposed to the funds going to production.
These measures are designed to create additional jobs in the film industry.

This change of direction is not before time. Not one of the responses to the consultation, including that of the IFB, recommended a switch to a tax credit scheme or a better return for the taxpayer or increased funds going on the screen.

No definitive word yet on the IFB's budget for 2013. That detail will be announced by Minister Deenihan whose Arts, Culture and Film budget is down 5%. This may hide a bigger cut in capital (c. 10%) which might impact the IFB's funding. The IFB brought in €370,000 in recouped (external) capital this year and a figure of €500,000 has been estimated for next year.

Irish titles at the London Film Festival

The 56^th BFI London Film Festival has sent me a release to say that this year’s programme includes 13 films from Ireland, part of a worldwide selection of 225 feature films and 111 shorts from more than 65 countries.

The Irish features being screened are - 

Pilgrim Hill, dir. Gerard Barrett

Silence, dir. Pat Collins

What Richard Did, dir. Lenny Abrahamson

Citadel, dir. Ciarán Foy (Co-production with UK)

Good Vibrations, dir. Lisa Barros D’Sa and Glenn Leyburn (Co-production with UK)

Kelly + Victor, dir. Kieran Evans (Co-production with UK)

Legends of Valahalla - Thor (HETJUR VALHALLAR - ÞÓR), dir. Óskar Jónasson (Co-production with Iceland and Germany)

Mea Maxima Culpa: Silence in the House of God, dir. Alex Gibney (Co-production with USA)

The Perverts Guide to Ideology, dir. Sophie Fiennes (Co-production with UK)

The Road: A Story of Life and Death, dir. Marc Isaacs (Co-production with UK)

The Summit, dir. Nick Ryan (Co-production with Switzerland)

The two Irish shorts being screened are - 

The Boy in the Bubble, dir. Kealan O'Rourke, and Foxes, dir. Lorcan Finnegan.

On film, journalism, and the order of things...

Some essential reading, every bit as true of the 'micro' level of governance as it is of the level of the macro geopolitical order.

http://www.guardian.co.uk/commentisfree/2012/aug/26/compliance-authority-failure

and

http://www.salon.com/2012/04/08/u_s_filmmaker_repeatedly_detained_at_border/

Whos, Whys and Wherefores

Looking at the origin of some recent traffic I discovered that someone nominated Irish Film Portal for the 2012 Blog Awards, in the 'Best Blog of a Journalist' category. When I say 'someone' you may take it from me that I didn't nominate the blog myself, nor do I know who did the nominating.

I have never tried to publicise Irish Film Portal, so whatever following it has generated over the last few years has come about organically, so to speak. I don't 'tag' or 'label' posts and I've not done the whole facebook viral thing, although it has been suggested to me. Nevertheless, the number of page views has passed the 60,000 mark and they're not all Ciarán Hinds or Gabriel Byrne stalkers fans looking for the latest news.

So what is Irish Film Portal about?

It's about the culture of Irish film culture. It asks why we - the Irish people - assign millions of Euros to film and TV drama production each year, what we expect to result from our generosity, and what the actual outcome is.

The only reason I'm doing the asking is because no one else is doing it. Instead there is a wall of PR called 'news' which is circulated and endlessly repeated until it calcifies in the archives. Hardly anyone asks any meaningful questions from an objective position, reflecting on the cultural outcomes of state policy.

Most of what is written about film in Ireland or elsewhere is concerned with profiling and reviewing the tide of films produced and released each year.  There is little space given for one of the most basic questions - why?

Why do we have funding policies for film? Why did those production companies go bankrupt? Why were those directors fired? Why was this project not funded? Why were these other productions funded? Why do we reduce the amount of money for the Film Board while the tax break can cost us any amount over €50 million each year? Why does the total public cost of the tax break not go into the films it funds? Why do Irish audiences not go to Irish films? Why are Irish film and TV production companies so dependent on public subsidy? Why do Irish producers earn very generous fees from production and hardly anything from sales? [Would the 'industry' not be more functional if producers had to earn their money at the 'back end'?] Why are industrial relations so appalling and work practices so outmoded.

Our Section 481 tax break allows high earners to save 41% of their tax liability on €50,000 of their income in any calendar year. So, they get to keep €20,500 that would otherwise have gone into the exchequer to pay for public services. TM Productions/VK Productions series The Vikings, for instance, has raised approximately €22,348,484 in Section 481 funding this year. The quid pro quo for the loss to the exchequer of approximately €9,162,878 in tax revenue is the spin off to the economy, although only €6,257,576 of the tax revenue foregone is likely to actually go into the production.

However, while The Vikings 'Irish' spend may be reckoned at €22,348,484, the official definition of 'Irish' spend includes payments to all EU-based cast and crew as well as spend on Irish employees, goods, and services. That said, there are ways around the required 'Irish' spend on goods and services. Does a service qualify as Irish spend if, for example, an Irish company contracted by the production gets some of the work done in the UK by a sub-contractor?

Here's a current example, from the film processors Deluxe Soho in London (my emphasis in bold) - Deluxe Soho are delighted to announce the launch of our newest film stock and processing package, Film First. Created exclusively for the Republic of Ireland, Film First is a new processed paid film stock delivery service run in conjunction with Fuji Motion Picture. Available as both 16mm and 35mm packages, Film First makes shooting on Film financially and logistically viable for all productions shooting in the Republic of Ireland. The price of the Film First package includes film stock, processing and return delivery with just one invoice, in Euros, issued through Fujifilm Ireland keeping the spend 100% Irish. All film originated projects are eligible for the deal and the turnaround times are swift, with an order of 2,000 feet or more being returned within 24 hours and smaller consignments of less than 2,000 feet taking just 48 hours.The price for 35mm stock is 50 Cents per foot (200 Euros per 400ft roll or 500 Euros per 1000ft roll), with 16mm film costing 40 Cents per foot (160 Euros per 400ft roll). Visit Film First for further information.

I have no doubt that these arrangements conform with the letter of the regulations, and will have been fully checked with the Revenue Commissioners by Screen Scene, Windmill Lane, Fuji and couriers Aerly Bird - the Irish parties to the scheme. And I have little doubt that they conform with moves at a European level to de-territorialise the spending requirements of national funding regimes for film.

But where is the public discussion about this movement of funds from the Irish exchequer to a business outside the jurisdiction. Are the business interests of the participant companies the same as the wider public interest? Why doesn't Deluxe set up a lab in Dublin if it wants our money? (Ok, that's rhetorical, I know film processing is fast becoming archaic). What has changed since the Revenue Commissioners came down hard on sub-contracting arrangements entered into by the Concorde Anois Studio on productions for which Merlin Films had raised millions in Section 481 funding?

Irish Film Portal poses these seemingly quixotic questions.  Occasionally there are also answers.