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“This sector will die” — ailing film industry up in arms at tax rise

VAT on movie tickets to go up 13 percentage points in September

Indignation spread like wildfire through the Spanish film industry at the news that VAT on movie tickets will rise a whopping 13 percentage points in September, from the current eight percent to 21 percent.

Just half an hour after the announcement by Finance Minister Cristóbal Montoro, there was talk of “total war” and “taking the cannons out on the streets” in an industry that is already struggling through the economic crisis. Cinema attendance has been dwindling for nearly five years, in which time 40 million moviegoers have been lost, according to industry data.

The decision came as a huge surprise because the industry had been led to believe that VAT would only rise to 10 percent, and FAPAE, the federation of film producers, had asked the sector to put up with that cost instead of passing it along to the consumer.

“[Prime Minister Mariano Rajoy’s] announcement 48 hours ago has been overruled by the finance minister, since the change multiplies the tax by three,” said FAPAE president Pedro Pérez. “This measure approved by the government means the burial of cinema in Spain. Mr Montoro must have his reasons for it.”

Industry sources said that neither José María Lassalle, the secretary of state for culture, nor Susana de la Sierra, director of the ICAA, the agency that oversees film subsidies, were aware of the measure and found out about it through the media.

The general feeling on Friday evening was that the decision torpedoes an industry that was already sinking, mainly because of widespread piracy.

“The previous [tax] rise was bad, but this jump from eight to 21 percent means shutting down the sector,” said Juan Ramón Gómez Fabra, president of FECE, the association of movie exhibitors. “If prices go up, 70 percent of movie theaters will close the next day. Nobody will go to the movies.”

Enrique González Macho, president of the Spanish Film Academy and one of the most powerful figures in the industry, said that “this sector will die.”