NZ film industry wants tax change

Peter Jackson

The film industry is pressing for changes to the new taxation bill, saying it will diminish local incentives at a time it is being starved of international investment.

Richard Fletcher, the president of the film producers' body the Screen Production and Development Association (Spada), said the bill changed tax treatment for projects that received taxpayer incentives.

The changes would reduce New Zealand's advantages over similar incentives in Australia, and the industry wanted them amended, Fletcher said.

Maintaining the value of Government incentives was particularly important in the present financing environment, he said.

The film sector was badly hit by the credit crisis and economic turmoil.

Film finance was always at the riskier end of investment - and frequently difficult - but the problem was more acute now.

There was a contraction in international funding for films, some of which was used for investment in New Zealand movies, he said.

"A lot of the money that financed film at a global level was from hedge funds who have been hit in the global downturn," he said.

"The other source of funding for films are from distributors."

Distributors often invest in films and sometimes pay money in advance so they get made.

"They are feeling the pinch because banks are tightening their lines of credit," Fletcher said.

Spada submissions were presented last Thursday to the finance expenditure select committee.

The handling of those submissions may be a test of the new Government and its approach to the film and television industry.

Under Labour, the screen industries were treated as special cases. Buoyed by Peter Jackson and the chance for another project like Lord of the Rings, the Government promoted the industry's benefit to the New Zealand economy.

The Government backed demands for improvement aimed at attracting Hollywood film projects to New Zealand, and boosting the local industry.

New Zealand matched similar bids in Australia so that our industry did not fall behind. But because our incentives were based on cash rebates rather than tax-based incentives, they were seen as simpler.

The Large Budget Screen Production Grant Scheme offered a 15 per cent rebate of production spent in New Zealand and was aimed at big budget movies.

The biggest recipient of large budget funds has been the business interests of Jackson.

More recently, the Screen Production Investment Fund has provided a 40 per cent rebate for money spent by New Zealand production companies.