The State budget according permission to local self-governing (LSG) bodies to levy 10% entertainment tax on cinema tickets has drawn both bouquets and brickbats.

The proposal has come as a relief for several local bodies that have been facing an acute resource crunch, but film industry representatives fear that this would affect the collections and have a direct impact on the industry that is gradually recovering from a crisis.

Following the imposition of the Goods and Services Tax, the government decided against double taxation and directed local bodies against collecting entertainment tax. However, certain States such as Tamil Nadu continued to levy it.

Following the recommendation of the GST Council, the rate on cinema tickets was lowered from 28% to 18%.

Finance Minister T.M. Thomas Isaac, however, in his budget speech for 2019-20, announced the decision to permit local bodies to revive the collection.

Third major source

Entertainment tax being the third own major revenue source of local governments, the step is seen as a relief for a number of panchayats and municipalities that are striving hard to mop up resources to fund even their routine needs. The proposal is expected to shore up their revenue.

Heads of local bodies cutting across political lines have welcomed the proposal.

But the cinema industry is crying foul and considers it a debilitating move that would directly impact the entire industry.

Against agreement

Kerala Film Producers Association president G. Suresh Kumar alleged that the Finance Minister had retracted from the agreement forged with the industry personnel following the implementation of GST.

“A majority of the 620 theatres in the State are not in the pink of their health. About 30 new cinema houses are coming up at different places. This proposal would have a serious impact on their functioning and survival. Dr. Isaac has gone back from the promise he had given us. This needs to be reviewed,” Mr. Suresh said.

The increase in collection in theatres is attributed to the hike in ticket rates. Rate hike, in any manner, would drive away viewers, leading to the closure of theatres, he said.