Debt-ridden govt throws away Rs 1,200-cr revenue from films

While the state government is struggling to scrape together funds to pay off debt and honour its commitments, the cabinet has dried up a catchment area of considerable revenue for six years.

In a cabinet meeting last week during the state legislature's four-day session, the Democratic Front government decided to waive tax on copyright sales and lease of motion pictures from April 2005 to April 2011. If levied, the tax would add Rs 200 crore for every one of these years to the state kitty.

"The amount is substantial, as today the government is finding it tough to meet financial demands for various schemes, and is enforcing a 20 per cent cut on its annual development plan," said a senior government functionary. The state will move a separate legislation to effect the decision during the legislature's next session in June, sources said.

"Here, what surprised most is the government's intention," said sources. "The 4 per cent tax was introduced in 2002 to mop up revenue. Mumbai being a filmmaking hub with a huge presence of distributors engaged in the exhibiti-on of movies produced in Hollywood, tax collections were expected to grow every year."

A state official not authorised to speak with the press argued that the government felt that provisions of the act were complex and weren't being implemented in other states, either. "Besides, it is yet another tax on films in a state already levying entertainment tax on sale of movie tickets," he said.