Hungary plans to tax multiplex to help arthouses

Magyar Cinema likely to take a hit

BUDAPEST — Hungarian lawmakers are considering a 3% tax on multiplex revenues to support Hungary’s ailing arthouse exhibition industry.

The tax, reportedly based on a similar French law could generate up to HUF300 million ($1.4 million) annually.

If passed, it will have the greatest impact on the Cinema City chain, operated by Israeli-owned IT Magyar Cinema, which controls 80% of the commercial multiplex screens. Cinema City did not return calls for comment on the proposed tax.

Zoltan Korosvolgyi, CEO of City of Budapest-owned exhib Budapest Film, which operates 16 screens, said the law could provide badly needed support for Hungary’s arthouse sector, which he calls one of the largest and richest in Europe.

Budapest has some 18 arthouse venues, which Korosvolgyi says is larger than the number in neighboring Vienna.

“If there is a chance of getting funding to help arthouses, from my side this is a great [opportunity],” said Korosvolgyi, who pointed out that the last 18 months have seen significant arthouse closures across Hungary.

Arthouse exhibition has been particularly vulnerable during Europe’s economic crisis. But Korosvolgyi said that subsidies will always be essential to the health of the sector.

“In arthouses you can’t charge the same ticket prices as in multiplexes,” Korosvolgyi said, “because the ticket buyers are mainly students and senior citizens.”

In normal times, he said, arthouses generate one-third of their operating revenue, with federal and municipal governments making up the deficit. But the City of Budapest is the only municipality supporting its arthouses in the current economic crisis.

Korosvolgyi is reserving judgment on the current tax proposal, saying it remains to be seen whether the tax will target traditional multiplexes only or will apply to legally defined “commercial” cinemas, which many university and small-town art cinemas have been designated due to strict government guidelines on the definition of an arthouse.

Pols have also lent thier support to a proposed tax on Hungary’s profitable porn industry to raise money for the domestic movie biz, which is suffering from the same budget cuts that are hitting the arthouse sector.

Porn is Hungary’s only film production sector that continues to boom, reportedly generating in excess of $876 million annually.