Government killing film industry with tax burdens

Tony Hotland, The Jakarta Post, Jakarta

Horror movie actress Suzanna was perhaps one of the few reasons why the Indonesian film industry stayed in business in the 1990s after producers and film activists turned their eyes to television soap operas.

In her films, Suzanna often took on role of a devilish long- haired woman with a bleeding hole on her back and snakes on her head, who always triumphed in her revenge against evildoers at by end of the movie.

While some people considered her movies tasteless, the fact is that they cost little to make, but paid off quickly and well.

It is an overused lamentation that it costs a lot to produce a quality film. Still, the budget remains the biggest factor for producers, even with a wittily penned screenplay and everybody's favorite actors.

Yes, you can shoot a movie using cheaper digital equipment that flares flat pictures inside a garage furnished with a few different backgrounds. Throw in a couple of smooches and artificial conflicts, and you get a movie you may brag about.

Or spend a few billion rupiah more to shoot on the celluloid and produce real life pictures, pick a few compatible locations and have a bit of serious brainstorming to come up with playful plots and thoughtful dialogs.

Success is not guaranteed though in either case.

Analysts mostly blame the low productivity of the nation's film industry on the scarcity of fine scripts and visionary directors. However, the costly raw materials and the numerous taxes imposed on the industry are also factors behind the situation.

There are around nine steps in making a film that are taxed, starting from a 5 percent import duty and another 10 percent of value added taxes for the celluloid, which the government considers a luxury item and taxes accordingly.

The next steps include editing, dubbing, optical transfer, copying and distribution, all of which are taxed from 5 percent to as high as 30 percent.

In total, a standard film usually takes between Rp 4 billion (US$421,052) to Rp 5 billion out of a producer's pocket.

Producers have insisted that since film-making is a creative thing, the industry needs support from the government, rather than the heavy tax burden.

The taxes are so burdensome considering the fact that equipment rental fees are already high and that producers have to carry out the post-production process abroad because Indonesia does not have adequate facilities.

A request to cut down or abolish the taxes will not be welcome by the cash-strapped government, but there are indeed some things that the government can do to assist the resurrection of the industry.

Disappointed producers have lashed out at the government for failing to return even a small portion of the revenues generated from the industry to turn it into a leading, rather than a supporting, actor in the country.

Blockbuster Ada Apa Dengan Cinta? (What's Up With Cinta?) reportedly grossed Rp 25 billion. While only a small portion went back to the producers, the majority was spent on production and payments to theater owners and the government.

Producer Mira Lesmana said she ended up paying over Rp 5 billion in taxes to the government.

That was just one film! There have been over 50 movies released since 2000 -- the so-termed year of the resurrection of Indonesian film.

Meanwhile, the government allotted, in the 2004 state budget, Rp 504 billion for the Office of the State Minister of Culture and Tourism.

The office's deputy for arts and film, Sri Hastanto, said he did not know how much was set aside to support the film industry, but in the past it was about 30 percent of the total.

For what? Almost for nothing, according to film activists and producers.

Worse, film organizations have also failed to live up to the expectations of the nation's new film idealists because the organizations did not even try to take breakthrough measures to revive the films during the industry slump, but switched directions and went to the television industry instead.

The situation, Mira said, should be reciprocal given the enormous amount of revenue that the film industry contributes to the government.

Among good things that the government could give back to the industry are, the establishment of educational facilities to boost film-making activities, provision of film technologies that can reduce post-production costs and the promotion of Indonesian films internationally.

This way, while the taxes paid by producers remain irritatingly high, at least there would be more incentive.

And by these incentives, the industry might discover the solution to such issues as the shortage of bright screenplay writers and directors who are capable of thinking outside the box and bringing the local film industry to a new, respected level.