Movie theaters will not close in protest at VAT hike

Movie exhibitors have agreed not to support the closure of theaters to protest the 13-percent VAT rise on the sector announced by the government last week. Such a protest, they concluded at an emergency meeting Tuesday, would only aggravate the situation and damage attendance figures.

 The board of the Federation of Spanish Cinemas, FECE, which represents 80 percent of movie theaters in Spain, is instead banking on direct dialogue with the Treasury to get across the extent of the malaise within the industry over moving cinema tickets to the higher VAT rate of 21 percent. Last week's across-the-board VAT hike - part of a 65-billion-euro package of tax rises and cuts announced by the government - surprised the industry, which had expected to remain in the reduced VAT bracket. That would have meant a rise from just eight to 10 percent, not the 13-percent increase entailed by the switch to the higher rate.

Theater owners said raising the costs of cinema, which is experiencing a major crisis caused by declining audiences and piracy, will further encourage illegal copying, "reducing legal consumption and opening the possibility that Spain might reenter the United States' government piracy black list." FECE said the rise would not lead to increased tax revenues, but rather the closure of businesses and job losses.

Exhibitors also regretted the fact that the move makes Spain the only country in the euro zone without a reduced VAT rate for movie tickets. According to FECE figures, the VAT rate on cinemas in other euro-zone nations are: Austria (10 percent); Belgium (six percent); Finland (nine percent); France (seven percent); Germany (seven percent); Greece (nine percent); Ireland (nine percent); Italy (10 percent); Luxembourg (three percent); the Netherlands (six percent); and Portugal (13 percent).

Minister for Education, Culture and Sport José Ignacio Wert has ruled out any possibility of revising the increase and instead advocated searching for the "balance point" between the interests of the industry and citizens. However, he stressed that bringing together the positions was in no way synonymous with a "revision of the measures" already passed.

The hike, which also affects ticket prices for theaters, music festivals, concerts and private museums, has been widely condemned by the film industry.

"This measure means the burial of cinema in Spain," said Pedro Pérez, president of the Federation of Audiovisual Producers of Spain, FAPAE.

Enrique González Macho, president of Spain's Cinema Academy and a powerful producer, distributor and exhibitor, offered a similarly bleak response. "It is completely out of place. This industry will die," he said.