LONDON (Reuters Life!) - The British film industry warned Monday that cuts to a government tax relief system designed to make producing movies in the country financially attractive, would be devastating for the sector.
The UK Film Council has commissioned a report on the film sector and its importance to the British economy and presented it to the government in a bid to fend off cuts that could be made as part of a wider drive to bring down national debt.
The new coalition government plans an emergency budget on June 22 aimed at bringing down a deficit running at 11 percent of national output, and sectors from health to education to filmmaking are bracing themselves for bad news.
“All of the different fiscal mechanisms are in the pot for consideration,” said John Woodward of the UK Film Council. “This report is timely.”
He added, however, that there was no indication from the government that it planned to cut tax credits.
“I don’t think anyone in the British film industry is paranoid that tax relief is under threat, but these are clearly difficult times,” he told reporters. The authors of the report warned that the removal of the UK Film Tax Relief would lead to a 75 percent drop in the scale of film production in the country, as other countries aggressively target movie dollars with their own incentive schemes.
That would cost the country around 1.4 billion pounds overall and about 400 million pounds in direct revenues to state coffers.
“The report concludes that the UK’s film tax relief is vital to sustaining current levels of global competitiveness and job creation,” said the report, carried out by Oxford Economics.
“Without the UK film tax relief in place, UK GDP would be reduced by around 1.4 billion pounds a year.
“That compares with a current cost of the film tax relief of around 110 million pounds a year, meaning that an extra 13 pounds in GDP is generated for every one pound invested.”
Overall, the report estimated that the movie business contributed 4.6 billion pounds to the economy last year, compared with around 4.3 billion in 2007.
The figure includes knock-on revenues such as film’s contribution to tourism, trade and merchandising.
Reporting by Mike Collett-White, editing by Paul Casciato