BANGALORE: The Kannada film fraternity has threatened to call for a stoppage of all production work starting 28 February 2008 over the entertainment tax on remakes and subsidies issues. However, there are no plans to stop screening of films as yet.

Earlier, the industry withdrew its call for a statewide strike that was to be held on 14 February, after talks with government officials who assured them that the entertainment tax issue would be looked into during the state's budget. The industry is also demanding benefits for Kannada film remakes.

The Kannada film industry is much smaller than the film industries of neighbouring Andhra Pradesh and Tamil Nadu. The annual investments in Kannada films are about Rs 2 billion - about one fifth of the investment in the Telugu and Tamil film industry.

Last year, 98 Kannada films, including remakes, were made. To protect original Kannada films, since 1966, the state government has been granting entertainment tax exemptions, besides which original Kannada films are also eligible for subsidies and awards.

Annually, the state government spends around Rs 35 million towards subsidies. The subsidies are offered to 30 films, the maximum subsidy amount being Rs one million per movie, besides which two children's films per year are granted subsidies of Rs 2.5 million each.

At present, exhibitors in Karnataka have to pay entertainment tax (40 per cent of the cost of the tickets sold) for screening of remakes and non-Kannada films. According to reports, last year, the state government collected around Rs 560 million towards entertainment tax from exhibitors of remakes and non-Kannada films.

In the case of a Kannada hit film Krishna, in October 2007, the government had exempted it from the payment of entertainment tax, since the producer had declared it as an original movie.. Consequently, the exhibitors did not collect any tax while screening this film.

However, some time ago, a Tamil film producer approached the Tamil Film Chamber alleging that Krishna was a remake of his Tamil film Unnai Ninnathen. Hence, towards the end of December 2007, the Karnataka commissioner of information issued an order staying the entertainment tax exemption given to Krishna and seven other Kannada films. The officials of the commercial tax department have been pressing the exhibitors of these films to pay entertainment taxes that they have not collected – this amounts to between Rs 1 million to Rs 1.5 million, according to industry sources.

The Kannada film industry is undecided on whether offering of sops to remakes will be a positive or a retrograde step. Some industry pundits feel that all Kannada films should be exempt from entertainment tax, irrespective of the fact that a film is an original Kannada one or a remake. Others feel that only original Kannada films should be exempted from entertainment tax to help creative directors without resources take up filmmaking.