Other European states compete with the Republic to secure film productions - all offer 100 per cent tax relief on investments and some do not operate a ceiling
Reign of Fire, the new movie from director Rob Bowman, had its European premier at the Savoy cinema in Dublin recently. The film, shot on location in Ireland, predominantly in Co Wicklow, employs state-of-the-art digital effects to present an original vision of a world decimated by dragons.
"With all the varying elements - from the casting to the locations to the production design to the CGI [computer generated images] to the practical effects - I can honestly say that this has been one of the biggest films I've ever worked on," says producer Gary Barber.
Reign of Fire is the biggest production ever undertaken in the Republic, with a budget of around $140 million (€139 million).
The US producer, Spyglass Entertainment, was attracted to the Republic not just for its locations but also for the tax incentives available under Section 481 of the Taxes Consolidation Act 1997. The Act affords investors relief on the sums they put into film productions. The benefits to the Irish film industry and economy far outweigh the cost to the Exchequer of providing tax relief.
"In this case, the Irish economy benefited through a spend of €40 million at a cost of only €3 million to the Exchequer," says Mr James Flynn of World 2000, an Irish company based at Ardmore Studios, which co-produced the film. "This highlights the benefits deriving from the Section 481 scheme," he says.
According to Mr Flynn, more than 700 jobs were created by the project, with 250 construction crew, 250 other crew jobs, including costumes, lighting, design, and 200 seasonal jobs associated with the making of the film. He says Irish workers accounted for between 85 to 90 per cent of the technical staff employed on the film.
While the majority of the postproduction on Reign of Fire took place in London, "significant sound post-production was done at Ardmore Sound in Bray", Mr Flynn said.
The Exchequer benefited through approximately $4.5 million idirect PRSI and PAYE payments, as well as from an estimated $5 million to $6 million in corporation tax.
The local economy also benefited. Mr Flynn said during the course of the production work, €33 million was spent on local goods and services in Dublin and Wicklow.
Major film productions - such as John Boorman's The Tailor of Panama, starring Pierce Brosnan; David Caffrey's On the Nose, with Dan Aykroyd; and the project in which 19 films based on Samuel Beckett's stage plays were made - have benefited from Section 481 and helped to make the Republic synonymous with high-quality film-making.
Spyglass, co-producers of Reign of Fire, availed of the scheme to produce the $40 million production The Count of Monte Cristo last year.
In 1998, the Minister for Finance, Mr McCreevy, extended Section 481 for just one year to the consternation of the industry, which voiced its concerns about the future of the Irish film sector. Then, in 1999, Mr McCreevy extended the scheme until 2005.
Speaking at the time, the then Minister for Arts, Heritage, Gaeltacht and the Islands, Ms De Valera, said the measure "will create an unprecedented period of stability and clearly illustrates the Government's commitment to the long-term strategic development of the industry".
However, other European states, including Britain, compete with the Republic to secure major film productions and all offer 100 per cent tax relief on investments, while Britain and Germany do not operate a ceiling on investments.
The Irish film industry, and the Audiovisual Federation of IBEC in particular, will be lobbying the Government to extend further the benefits available under Section 481. World 2000's Mr James Flynn, who is also a member of IBEC's Audiovisual Federation, will ask the Government to restore 100 per cent tax relief, to extend Section 481 until 2010 and to double the ceiling on investment from €10.5 million to €21 million.
"This is essential since there is no cap on investment in either Britain or Germany, which can now offer higher returns to incoming producers," he says. "This will attract more large-scale productions to Ireland at a negligible cost and with a substantial return to the Exchequer."
Over the past three years, the number of major projects being produced in the Republic has fallen. There was a total of 35 film and television productions in 1999, 28 the following year and just 23 last year. However, the overall production spend has increased from £146.9 million (€186.5 million) in 1999 to £275.5 million last year.
According to the Audiovisual Federation, for each year between 1996 and 2000, the return to the Exchequer through film investment has exceeded the tax foregone through Section 481 relief, rising from €8 million in 1996 to €16 million in 2000.
Reign of Fire goes on general release on August 23rd and will be followed by other major productions such as Neil Jordan's The Good Thief; Chasing the Dragon, the Veronica Guerin story starring Cate Blanchett; and Actors starring Michael Caine.
Further film production depends greatly on the improvement of Section 481 relief, and extending it not just to major productions but also smaller home-produced projects.
"Notwithstanding the benefits of Section 481, improvements are needed to enable Irish producers of small projects, of less than €250,000, to benefit from the scheme," said Mr Gerry Shirren, managing director of Irish animation company Terraglyph.
Generally, the benefits of Section 481 encourage huge investment in Irish employment and goods and services. "It also has a ripple effect on expenditure in the local economy," Mr Flynn told The Irish Times. "It has intangible benefits as well in terms of promoting Ireland as a country generally. There is a branding that helps the cultural awareness of Ireland, that brings the country to international profile and attention."
