Mr. John Arkins:

I am grateful for the opportunity to address the committee on section 481 of the Taxes Consolidation Act 1997, as amended. I have worked in the film industry for almost 29 years as a stagehand, supervising stagehand and standby stagehand since 1994. Since 1998 I have worked with the largest group of film producer companies in Ireland.

Central to my employment is section 481. Employment and training form one of only two key fundamental objectives of the Act. The current film regulations are covered by SI 119 of 2019. The objective of section 481, as amended, are set out in Part 2 of the regulations as follows:

(3) A certificate shall not be issued by the Minister under section 481(2)(a) of the Act of 1997 in relation to a film unless —

(a) the film is eligible for certification under Part 3, and

(b) the Minister is satisfied that the film will either or both -

(i) be of importance to the promotion, development and enhancement of the national culture including, where applicable, the Irish language (referred to as ‘the Culture test’), and

(ii) act as an effective stimulus to film making in the State through, among other things, the provision of quality employment, and training and skills development opportunities (referred to as ‘the Industry development test’).

The objectives as set out at subparagraph (i) are no longer met, as we understand it, despite the recent success of Irish language films. The objectives as set out in subparagraph (ii) are not capable of being met according to the employers and their representative body. It should be noted that film workers were fully aware that the objectives at this subparagraph of the regulations were not being met.

However, the fact that these objectives cannot be met only came to my attention by way of statements submitted to both the Workplace Relations Commission, WRC, and Labour Court of which I have direct knowledge.

The employer and the employer's representative body - Screen Producers Ireland - submitted to those statutory agencies that section 418 prevented the production sector from having an ongoing employment relationship with the crews. This they attributed to the structure of section 481 and the uncertainty associated with the production sector globally. They provided no rationale for this contention. If the facts submitted by the employers and their representative body are correct, then it begs the question as to why they and others consistently and aggressively lobby for the section's retention in its current form. Despite the forerunners of section 481 dating back to 1984, given the statements referred to above, the industry appears not to have benefited to any great extent from the legislation.

Until 2015, section 481 was a tax relief available to investors who had a corporation tax liability. It is now directly payable to film producer companies regardless of whether they have a corporation tax liability. Clearly, section 481 has become a handout, and a significant one, amounting to 32% of the budget up to a maximum of €70 million, plus a 5% regional uplift in many cases.

Given the employers' assertions and the fact that there are no companies of scale, no employees and no owned infrastructure despite almost €4 billion of taxpayer investment to date, it is clear that there are fundamental structural reforms relating to the relief that need to be debated and implemented. Film producer companies are the only beneficiaries of section 481, yet they are never directly heard. A number of outlier organisations run interference for them, which serves to muddy the waters and stifle debate. Given the requirement of the legislation that the relief be predicated on meeting the culture test and the industry development test, the only relevant voices are those of the producer company executives and the taxpayer. If those tests are not being met or are, for some inexplicable reason, incapable of being met by the beneficiaries, then the Minister is not doing her job and there are fundamental governance issues to be addressed.

One way to address the issues is by amending the order in which the relief is paid. Currently, 90% of section 481 is payable up front on certification of the film by the Minister. A fairer system for the taxpayer, and one that would afford significant protections for the workers, would see only 10% being paid up front. It should be noted that section 481 was not designed to be an operating subsidy or an investment buy-in for the producers. The remaining 90% would then be payable after six months when compliance had been determined by the relevant Departments. Compliance cannot be determined in advance. Although I am no expert, it would appear that corporation tax is a cumulative liability that cannot be determined in advance either.

What we are suggesting is not in any way an unreasonable request. Therefore, we urge Deputies of all parties to take the opportunity presented by the extension of section 481 and the impending amending film regulations to ensure that a fairer and more transparent system of stimulating film production is brought about.