In looking for the total allocation for 2013 (capital + current funding) for the IFB I missed the table setting out the Department's capital provision for the year ahead.
The amount estimated for the IFB for next year is €11.898m, down from €13.150m this year. That's a reduction of approximately 10% in funding for development, production, short film schemes and training.
An additional €500,000 in capital is expected to come from recoupment but this is an educated guess rather than definitive. The same amount was expected in 2012 but the amount given as the outturn for the year is actually €370,000. This represents one year's recoupment on some €200m of funding.
The budget allocation for current spending in 2013 may not have been published yet but I believe that the agency's staffing changes and cuts will probably accommodate any reduction on the €2.54m made available in 2012. However, there is a danger that as the capital provision comes down the current budget may begin to appear disproportionate - a widespread issue across the public service as programmes are cut and administration begins to look top heavy.
There has been a 41% decrease in the IFB's capital funding since 2008:
2013 €11.89million
2012 €13.15million
2011 €16.00million
2010 €16.50million
2009 €18.81million
2008 €20.00million
Note: there may have been additonal supplementary capital made available in 2008 and 2009, possibly allocated under the 'International Production' heading.
Friday, December 7, 2012
Thursday, December 6, 2012
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."
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."
Wednesday, December 5, 2012
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.
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.
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