A taxing exercise for Euro pic biz

LONDON — Last month in Utrecht, at the Netherlands Film Festival and Dutch Production Platform, I watched the Dutch film industry wrestle with government officials over how best to modify their tax-incentive scheme.

Earlier in the summer, at the Karlovy Vary Film Festival, I heard producers from the Czech Republic, Hollywood and London all agree that the current Prague production boom couldn’t be sustained without tax incentives and subsidies.

And last week, in the wake of local media drubbings of British films supported by public funds, I chatted with Carolyn Lambert, head of policy for the U.K.’s Film Council. She was bullish about the status of U.K. subsidy funds and tax measures.

“The American-backed, large-budget movies are absolutely vital here,” she observes. “But we don’t just want to be service providers. We want our own domestic industry. Almost all lower-budget films rely on subsidies of one kind or another.”

To American ears, this talk is harder to fathom than a room full of Carthaginians speaking Punic. Tax breaks? Subsidies? Those are all for sissies. Americans believe that Darwin is the patron saint of filmmakers. Or should be.

Europeans, however, believe that without government support to soften the blows of red ink and healthy tax breaks to wheedle the well-heeled into the film production gamble, America’s market share domination would extend closer to the 100% it already approaches in many territories. For proof, Lambert says, one need look no further than her neighbors to the West.

“The tax incentives they implemented years ago in Ireland were critical,” says Lambert. “They barely had an industry before them. Now, they do.”

Her view is in sync with that of Toine Berbers, managing director of the Dutch Film Fund, who says, “Three years ago the Dutch film industry was on the verge of collapse, and now it’s booming.”

So why were government officials like culture, health and education minister Rick Van de Ploeg grappling with the filmmakers in Utrecht over plans to cut the limits from 200 million guilders ($83 million) to 50 million ($21 million)? And why were the filmmakers leading the charge to downgrade the system responsible for the “booming” industry described by Berbers?

First, public spending on movies makes for a great media target. A couple of high-profile flops, perhaps an excruciatingly bad film or two and, voila, the whole system gets a loud public whacking. But this intense media scrutiny often comes at the expense of one piece of primary film business logic: Most films aren’t very good.

It’s always the exceptions that win awards and make lots of money. Why should subsidized films magically be excluded from these laws of artistic nature?

In Holland, a lot of negative noise was generated by the failure of “Ocean Warrior,” which went belly-up and took with it huge chunks of tax money. A lot of complaining was heard about the financing of “Enigma,” an English pic produced by Jagged Films, a company owned by the rather wealthy Mick Jagger.

Second, a lot of the negativity has to do with jealousy. There’s the “tall poppy” syndrome at work. Get too successful and you’ve “gone American.” Punic again, right?

In Utrecht, these troubling habits of the past were on full display. There was much talk in favor of keeping doors closed to outside producers who want to participate in tax schemes that drive huge increases in local production activity.

Indeed, local industryites were arguing against the kind of business that Lambert in the U.K. described as “absolutely vital.” There were even suggestions that only Dutch citizens could direct movies that benefitted from tax breaks.

To his credit, Van de Ploeg pretty much nixed that notion.

“How many months would they have to have lived here?” he asked, challenging this scenario.

“Twenty years!” shouted one wag in the audience. And he could have meant it.

Holland might not geographically be the center of Europe, but when it comes to confronting the future of government support for film production in Europe, they’re right in the middle of it.

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