Recently Hollywood and the Irish government have come to blows over taxation. The debate is over the section 481 tax allowance, otherwise known as the film-tax incentive that has bolstered the film industry in Ireland by 18 percent over the last 10 years. The incentive is due to expire at the end of 2004, and though the film industry is placing pressure on the Department of Finance, it looks as though section 481 may soon be a relic of the past.
According to a recent report produced by Screen Producers Ireland (SPI), the Irish film and TV drama industry employs 4,300 people a year. SPI predicts that an end to the tax incentives that have helped build the industry would result in an 80 percent decrease in film production in Ireland.
But the Department of Finance claims that the these tax breaks have been abused by many of the wealthier class, who despite having little involvement in Irish arts and culture, use section 481 to garner huge breaks on their personal taxes.
Perhaps the Irish economy would suffer a greater loss by the absence of such incentives. The Irish film industry contributes Euro 107 million a year to GDP and attracts 136 million through inward investment.
In addition to acting as an economic incentive, many argue that the film tax-breaks have also made substantial contributions to Irish culture as a whole. Already there has been an increase in Irish-themed movies hitting Hollywood including Veronica Guerin. The tax-breaks are an opportunity for Ireland to export its culture to the rest of the world. According to Jim Sheridan, “The industry has made great achievements in the last decade and cannot be underestimated in relation to its contribution to Ireland both economically and culturally. Ireland now ranks in the top six preferred locations for film production in the world and this has been achieved by the industry positioning itself, building its experience and knowledge at every level and through the consistent support of various Irish governments.” ♦