The State government’s proposal of imposing 10% local body tax on Tamil movies has put a big question mark over the future of Kollywood. The antagonistic stance of the State government may be surprising, given that the Tamil film industry has historically enjoyed an intimate relationship with it. However, many in the industry point out that this seemingly easy relationship is fraught with scattered minefields as those with power have always sought to put a leash on the industry. This is perhaps why important stakeholders feel that the tax is an attempt by the State to keep the industry ‘in check’.
State government officials said that in the last two months, around three meetings had taken place during which a representation given by the film fraternity on the local body tax issue was discussed.
What is interesting about the new tax structure is that the decision seems to have been taken without any obvious supporting data.
“The amount was ‘just fixed’. There is no explanation or logic I can give you,” said a senior government official, who was part of the decision-making committee that fixed the local body tax rates. A senior government official, who was in the commercial taxes department a few years ago, also said there was no rationale behind fixing the local body tax. This ‘random’ decision has threatened to affect not just the Tamil film industry, but the Indian film industry as a whole.
As per the current notification, Tamil films will attract a local body tax of 10%, while films in other languages will attract a tax of 20%, in addition to the GST of 18-28 %.
A distributor, who releases Hindi movies in Chennai, said that if the film industry does not protest the State government’s differential taxing for films of different languages, it could set off a chain reaction prompting other States to follow suit.
“What if West Bengal, Maharashtra, Kerala and others also levy an extra entertainment tax? This will bring down the business of films as a whole,” said the distributor.
Livelihood at risk
It’s not only producers, distributors, theatre owners and actors who will be affected but also thousands of workers and daily wage labourers, whose livelihood will be at risk.
“This is like making a car. If one process at the manufacturing plant is hit due to a small problem in the machine, the entire assembly line comes to a standstill. Similar is the case of the film industry – each process is dependent on the other,” said the CEO of a big production house in Chennai.
DMK MP Kanimozhi described the local body tax as ‘insensitive’. “Lakhs of people are dependent on the film industry for their livelihood. There are several associated industries that depend on the industry. Economically, the State’s performance has been poor. There are no investments and no jobs are being created. It clearly shows that this government does not care,” she said.
The Chief Executive Officer of a well-known film exhibition and distribution company in Chennai put it simply: “The additional tax is a ruse by the State government to restrict or control the power of movie stars by limiting their income. “By imposing taxes that they can control or waive under certain conditions, they can wield inordinate influence over the profitability of a project. While 10% tax on Tamil films doesn’t seem huge, it could sometimes even double the profits because movies operate on such a slender margin most of the time,” he said.
He added: “In the current scenario, other than runaway hits, which are of course hard to predict, the vast majority of movies don’t have decent margins and would desperately need concessions from the State government. “If you make the conditions for such concessions subjective, you get influence over every filmmaker and no one will dare step out of line and be seen to be anti-government,” the CEO added.
While various stakeholders of the industry continue to be politically correct publicly, several producers, actors and distributors privately admit that the double taxation that threatens to sink the industry could be a sort of warning sign to the superstars — Rajinikanth and Kamal Haasan — and others with political ambitions from the film industry.
A producer, who has been active in drafting various proposals and presenting various demands of the industry to the State government — such as getting rid of local body taxes and increasing the cap on ticket prices — believes that the two superstars being critical of the existing State government may have actually had a role to play.
“We have been consistently parleying with the State government for exemption from local body taxes for regional films and hike in ticket prices without any success. We all think that the decision is quite possibly because of recent comments made by Kamal Haasan and Rajinikanth in the press about the party ruling now. This is the only reason. We asked for ticket prices to be regulated, they haven’t done it. Instead, they have just levied a 10% tax on top of GST. This will blow a hole through revenues.”
While many in the film industry shied away from taking on the State government when former Chief Ministers M. Karunanidhi and Jayalalithaa were in power, the political vacuum created by the absence of the duo seems to have emboldened the film industry, something that is obvious from the open participation of several film personalities in protests against the jallikattu ban and NEET.
Though most actors supported the protest against the jallikattu ban, prominent actors such as Vijay Sethupathy, filmmakers such as Pa. Ranjith, Ameer and others came out strongly against the State government.
Government nervous?
This is also cited as the reason for the government being nervous about film stars filling the political vacuum in the State.
Many in the film industry feel these factors have led to the noose around their necks being tightened.
Around eight different producers in Tamil Nadu whom The Hindu contacted for this story said that they were hesitant to speak on record. One of them said, “If we make any comments on this issue, we are sure the industry will be penalised for it. We will get into trouble,” he added.
The fear of reprisal is not unfounded. In the last 10 years, the State government and the party in power (and those close to power) have tried to directly or indirectly control the film industry. When the DMK was in power between 2006 and 2011, Sun Pictures (the production house owned by Sun group), Red Giant Movies (owned by Udhayanidhi Stalin, son of the DMK working president M.K. Stalin) and Cloud Nine Pictures (run by Dhayanidhi Alagiri, M.K. Azhagiri’s son) distributed most of the popular movies.
After the AIADMK won the Assembly polls in 2011 with a thumping majority, comedian Vadivelu, who campaigned against the AIADMK-DMDK alliance during the elections, found himself without work. Relatives close to jailed leader Sasikala entered the film industry through Jazz Cinemas, which is also in the distribution and exhibition business. Kamal Haasan and Vijay faced severe opposition from the State government and extra-judicial organisations threatened to sabotage the release of their films — Vishwaroopam , Thalaivaa and Kaththi . In 2010, actor Ajith Kumar spoke up against the undue pressure exerted on the film industry to participate in protests and functions organised by the government in the presence of then Chief Minister Karunanidhi.
At the same time, the film industry also routinely tried to cosy up to both Mr. Karunanidhi and Jayalalithaa by organising grand felicitation functions every time they come to power.
Asked if the State government was trying to assert itself after actors Kamal Haasan and Rajinikanth criticised the political establishment, actor and Congress politician, Khusbu Sundar said, “If the government thinks that way, it shows how shaky and jittery they are feeling. It also shows that the ruling government has absolutely no chance of surviving.”
Room for everyone
Ms. Khusbu also criticised the political leaders and parties for their propaganda against film stars getting into politics. “Nobody can decide who can come to politics — it is up to the people to decide. I feel that there is room for everyone.”
S. Rajanayagam, author of ‘Popular cinema and politics in South India: Reimagining MGR and Rajinikanth’, said that the popularity a film star gains from cinema is often pushed to the background once the star enters politics. “Familiarity would help them at the entry point perhaps, but the glamour ceases to exert its influence afterwards. Other non-cinema factors such as relationships with fans and chemistry with the people will decide the future,” he said. He further said that the relationship between the State government and the film industry has always been on the edge.
“People in power are simultaneously attracted towards film stars as they can use this visibility to their advantage, but they are also afraid that if they overuse this glamour, it may go against them. So, they try to use it and control it,” he said.
Ms. Khusbu criticised the current ruling dispensation for leaving the film industry in the lurch despite the fact that the ruling party was built on the popularity of two film stars.
“They boast of leaders such as Jayalalithaa and M. G. Ramachandran but are unfriendly towards the film industry. They are levying more taxes without understanding that it is a business. In the past, when Chief Ministers came from the industry, they were friendly. They did not necessarily sanction every demand but they understood the industry,” she said.
