Hugh Linehan asks whether the film industry's campaign strategy to defend its special tax position may be ultimately self-defeating
In a few weeks' time Irish film-makers will finally discover if they have succeeded in their campaign to preserve the Section 481 tax incentive for film production.
The campaign has been in full swing for some months, intensifying in recent weeks, with the big guns of Irish film, internationally successful names such as Jim Sheridan, Neil Jordan and Roddy Doyle coming out strongly against the ending of the scheme.
But things are not going well. Last week's ESRI review of the National Development Plan proposed that the tax shelter be discontinued.
And this week a senior official at the Revenue Commissioners told the Oireachtas Joint Committee on Finance and the Public Service that an audit of Section 481 had uncovered 30 cases which did not comply with the law, involving €17 million in uncollected taxes.
Ms Muriel Hinch also told the committee that the Revenue had other concerns about whether specific levels of expenditure on Irish goods and services required under the scheme were being met.
"It's very hard to track down the level of expenditure and to find out exactly what is Irish expenditure," she said. "A large proportion of Irish expenditure ended up in tax havens."
The Minister for Arts, Sport and Tourism, Mr O'Donoghue, has declared his support for retaining Section 481, but has also previously mentioned abuses and loopholes in the scheme which needed to be addressed. Until this week, it was thought he was referring to dubious practices associated with certain film projects in the mid-1990s. But, in response to a question from Ms Joan Burton of the Labour Party, Ms Hinch said unequivocally that these problems were still occurring. This does not put Section 481 in a good light for the average tax-compliant Irish citizen.
It's no secret that the Department of Finance and the Revenue Commissioners have always been unenthusiastic about Section 481, but this is the most concrete and public expression to date of that antipathy, and of the reasons behind it. Taken together with the ESRI report, it's a double blow to the film-makers' campaign and raises some serious questions about how it has been conducted so far.
Film-making is often described as a "cultural industry", an awkward verbal construct in itself. Film is a marketable commodity and a high-skills, high-cost activity. It is also a vital forum for creative and cultural expression. Much of the debate so far, though, has centred on the commercial arguments over the cultural. This is not only intellectually flawed, but may prove to have been a strategic error.
A slim volume called Irish Film/Irish Culture, published this week by the Irish Film Board, redresses the balance somewhat.
One of its more interesting contributions comes from academic and documentary-maker Desmond Bell, who criticises the "statistical tables, sectoral diagrams, consultants' arguments summarised in crisp language and policy recommendations incorporated in precise bullet points in a torrent of strategic papers and reports".
Although Bell does not mention it by name, one of those documents is the report produced by the film industry group Screen Producers Ireland (SPI) this summer which forms the basis for the campaign against Section 481's abolition.
According to Bell, "All of these \ point to a film community that has actively colluded in reducing our notion of the public interest at stake in Government support for film to a plethora of pseudo-economic arguments (pseudo because no economist to date has shown if cultural spending is the independent variable that propels post-industrial economic growth). In pragmatic terms this industrial rhetoric was fine when the film industry was in rapid growth here, and when the Celtic Tiger roared loudly.
"In a period of more sober economic forecasts and deep trouble in our industry, reliance on this economistic strategy for justifying arts expenditures leaves the entire cultural sector looking particularly vulnerable."
The point is well made; the campaign led by SPI has emphasised the economic and job-creation arguments for Section 481 over the cultural arguments.
As its name implies, SPI represents the interests of producers, who put together the financial and creative packages which enable a film to be made. Clearly, they have direct financial interest in its continuation. They have been supported by several trade unions, guilds and representative organisations which see their members' livelihoods endangered by the change.
These are legitimate concerns, but they are no different from the concerns of any other special interest group which sees its privileged position threatened. They cut little ice with those who see tax shelters as both outdated and socially inequitable.
Section 481, like other tax breaks, has its roots in a very different era, when marginal tax rates were much higher and employment was much lower. It's worth noting that the SPI report makes no mention of the difficulties with Section 481 raised by the Revenue Commissioners this week - difficulties of which, as a producers' organisation, it should have been aware. And, perhaps not surprisingly, the report found little necessity for change in a tax system which has benefited producers enormously over the past 10 years.
The pity is that the argument is being conducted almost exclusively on the economic grounds to which Bell refers. Far better, perhaps, to have brought the argument for the cultural benefits of Irish film-making to the fore from the start, to have supported them with figures which clearly show that the State stands to lose more than it would gain from abolishing Section 481, and to put forward clear proposals for reform and improvement of the scheme.
In a society flooded by globalised, homogenised mass media, the value to this society of hearing Irish voices on our screens should not be underestimated. The State has accepted this in a number of ways, in the form of an increased television licence fee, measures to develop the independent television production sector, an expanded Irish Film Board and investment in education and training for the audiovisual industry.
The State now threatens to undermine this by whipping the rug out from under Irish film-making at a moment when it is actually beginning to achieve a greater level of maturity and diversity. If it does so, that decision will be seen in years to come as an act of folly. But questions should also be asked of the film industry itself, and whether its own strategy has contributed to that folly.