TAXING FILMS.

Hokitika Guardian, 8 January 1926, Page 3

TAXING FILMS.

MOVE IN N.S.W. •SYDNEY, Dec. 30. An amendment of the State Taxation Act to provide for the taxation of American film coinvanies exploiting the Australian market passed into law at the tail-end of the Legislative Assembly's session. Mr Lang introduced it suddenly, taking members of the film distributing industry completely by surprise. If is alleged that the American companies have been evading tho payment of adequate taxes. Air Lang's amendment will ensure that they will pay 25 per cent, of the proceeds of a lease or sale of n film into the State Taxation Department.

Briefly, the methods of tho filmmaniifaeturiug companies in the United States, which supply 95 per cent, of Australia’s needs, is to lease their films to subsidiary companies in Australia, which in turn hire them out to exhibitors. Each of the big manufacturing concerim own or control the subsidiaries. But so profitable are the films that had tho subsidiary companies lieen charged fair value, enormous profits would have come under liability of the companies’ taxation. To cut down this profit, the manufacturing companies of California and clsewher charged their subsidiary companies (really themselves) over-high rates for the leasing of films. Thus the nrelit* of the .subsidiary companies were cut out to a minimum, and either paid hut a small company income-tax, or none at all. But the profits had been sent nut of the country to tho parent companies by wav of exorbitant lease values. Air Lang, in explaining the measure in tlie Assembly, charged the subsidiary companies with paying as much as 75 per cent, of their gross takings to the American companies. amounting to hundreds of thousands of pounds yearly, without paving a penny in tax. ' All! LANG’S SCHEME.

Tho move to rope in this taxable income started in South Australia where the Labour Premier (Mr Gunn) actually moved similarly to ATr f ang, but, found that as the subsidiary companies’ headquarters were outside his State, principally in Svdney. his effort to make them pay tax would have been futile. Air hang’s amendment was: “To provide for the taxation of taxable income derived from the disposal to a person in the State, whether by sale, lease, or otherwise, by a per--nn whose principal place of business is outside the State, of any motion picture film not manufactured in Australia for exhibition, or advertising matter relating thereto, or the right or license to exhibit the film or advertising matter relating thereto, or the light or license to exhibit the film or advertising matter. or any other rights in connection with the use or exhibition in the Slate of any .such film or advertising matter, and which taxable itnome has been received during the twelve mouths ended June 30th. 1925, and in ca eh subsequent year at tlie rate of 5s in the £ of stub taxable income, nr at sileli less rate in the £ as mav for any year of income he fixed by tlie Governor and notified bv proclamation published in the Gazette.”

There was an immediate outcry by the film representatives in Sydney. They protested against their business being 'elected' for special taxation, but none of them touched upon the fact that extraordinary gross profits were being sent out. of the country. One and all agreed that the tax would lie passed on to the public. “Summed up.” said the secretary of the .Motion Picture Distributors’ Association of Australia, “the special tax which Mr Lang has succeeded in placing upon the film industry means that the 30.000.0fi0 people who paid admission to picture theatres Inst, year, will, during the coming year, have to pay more.” He added that- it was surprisng the people’s entertainment should he selected by Mr Lang tor purposes of recuring additional revenue. The motion picture industry in all its sections was willing to bear, and bad always borne a just proportion of taxation for the government of the country, hut thov resented the people’s entertainment being selected as a snccial medium for what must he regarded as plenary taxation. The film people intend to interview .Mr Lang on the matter, but they are likely to obtain hut little satisfaction. Air Lang had all sides of the House supporting him last week, and there was general public approval when the measure was nnmounoed. The film industry might be cutting off its nose to spite its face if it passes 011 the tax - in other words, Australian films might receive a much needed fillip.