Actress Kasthuri has been in the news for the past few months for various reasons. The Amaidhi Padai actress who was last seen as a police officer in Simbu’s AAA took to her Facebook page to lash out at TN government’s tax burden in addition to the GST implemented by the centre.
”The TN govt has introduced a 30% municipal tax plus 6% multiplex tax on movie revenue. This is a death knell for Our already beleaguered Tamil movie industry. This should be done away with right away, as it eats heavily into producers pockets. GST already puts a crippling 18% tax liability on producers. Coupled with another 36% ,makes it 54%, more than half of the GROSS revenue.
Not nett, Gross. So profit after Tax will become a pipedream for 99 percent of movies. This will result in a stagnating industry with less output, resulting in overall less revenue and hence significantly lesstaxes. It is a classic case of killing the golden goose. Lets not forget that an oppressive tax regime will only foster Evasion and corruption.
Movies are not a traditional form of business orservice . Most of our Tamil producers are independent entities and not corporate production houses with an ongoing business timeline. This means if a producer falls on difficult times, they will be dealt a double blow- first by the high tax rate and second by the unrecoverable input tax credits.
India has the highest tax rate in the world for GST- a whopping 28% . In comparison, most economies levy something around 10% with very few countries levying upto20%on selected categories of goods.No country levies anything more than 15% GST on service sector. Interestingly, in almost every country that follows GST system The movie industry is either exempt or heavily subsidised.
People are asking me what income streams do states have through movies under the new tax structure.14% GST onsale of tickets. 9% + 3% on other multiplex revenues .9% from single screens and lower priced ticket sales. 9% of all production expenditure and all salaries paid. 6% of copyright transfers.
Then there’s the monetisation through television and digital platforms which also will be paying up their share of taxes to the state. This is huge. More importantly though, are the indirect boosts to the economy resulting from the steady stream of jobs, equipment rentals, studio and on location activity, impact on tourism and local businesses. World over, even in the biggest movie industries ( hollywood , UK, Australia) Movies are given Tax breaks and tax credits for these same reasons. Tax sops for movies will create more new movies, more local jobs, more income.
It is surprising and ironical that when states across the nation are trying to mitigate the effects of a national GST on movie watching by giving up theirshare , TN is going the other way and introducing a loophole tax. This tax wont affect the end consumer, as ticket prices are capped. It will only deplete the theater and producer’s revenue.
Previously, till June 30th, most movies in TN were enjoying entertainment tax exemption, with only a few movies being denied tax free status ( usually for debatable reasons). However, the tax free benefit was never passed on to the end consumer.
When a movie is tax exempt, tickets should cost lower than for regular movies. This never was put into practice in TN. neither was the average producer benefiting,because he was allegedly having to bribe censor officials, ministers and bureaucrats and their ilk. Now this scam has been forcibly ended . The only reason I can think of for TN lawmakers to continue to insist on taxing Movies is so they may hold on to an easy and established source of personal enrichment.”