Italy to Eliminate Production Tax Credits; Industry Groups Plan Protests

Italian Prime Minister Enrico Letta

The incentives, funded through the end of 2014, are axed as part of a wide-ranging round of belt-tightening by the debt-ridden Italian government.

ROME – Italy’s leading film industry associations on Thursday announced plans to protest the government’s decision not to renew production tax credits as speculation swirled that a general strike aimed at halting cinema and television productions could be called.

The tax credit is currently funded through the end of 2014, but in a wide-ranging plan to reduce government debt, Italian prime minister Enrico Letta said government cutbacks would include the elimination of the tax incentives.

In its current form, the tax incentives provide up to $6.6 million (€5 million) per qualifying film to help offset production costs incurred in Italy and up to $4.6 million (€3.5 million) for Italian co-productions shot in Italy. It also includes benefits for distributors and exhibitors.
The government is looking to reduce debt to stave off fears the country could fall victim to the continuing European debt crisis. At the end of last year, Italy’s debt totaled 127 percent of the country’s gross domestic product, the second highest debt-to-GDP ratio in Europe, behind only Greece.

There had been speculation before Thursday's surprise announcement that the tax incentives might be reduced – perhaps even dramatically -- but few believed they would be eliminated entirely.
In May, after the appointment of Massimo Bray as minister of culture in the new Letta government, industry players told  that a renewal of the tax credit should be a top priority for the new government. And in a parliamentary address four weeks later, Bray outlined an ambitious set of priorities for his ministry that included a renewal of the tax credit.
The latest development sparked an immediate reaction from more than three-dozen industry groups, including the country's audiovisual association, best known as ANICA; the cinema exhibitor’s association, or ANEC; the entertainment industry association AGIS; the 100autori writers’ organization; plus various regional film boards and several trade unions. The groups called on Letta, Bray, minister of economic development Flavio Zanon and finance minister Fabrizio Saccamanni to rethink the government's position and to reinstate at least minimal funding, which they defined as $118 million (€90 million) per year.
The elimination of the tax credit “condemns the sector to be ineffective at attracting international productions that would consider shooting in Italy but would in the end go to other European locations,” a joint statement from the organizations said.
Officials from some of the groups spoke about a possible general strike, though not yet in specific terms. But the groups said they would protest at Saturday’s Nastri d’Argento cinema awards and the Venice Film Festival’s press conference announcing its lineup later this month.