The Hindu Business Line : Slab system in AP cinema theatres to go

Exhibitors would now have to pay entertainment tax on the basis of number of tickets sold. The decision puts a full stop to the 20-year-old regime (slab system) of collecting taxes on the basis of total number of seats in a theatre.

The film industry has long been demanding that the slab system, that broke the back of the industry, be removed. The fact that 400 of 2,800 cinemas were closed in the last few years shows the impact of the slab system.

After discussing the issue with representatives of the industry, the Chief Minister, Dr Y.S. Rajasekhara Reddy, announced on Saturday the decision to put an end to the slab system.

Cinemas, playing big budget movies (with over 35 prints), would have to pay 15 per cent of ticket collections as entertainment tax.

The Government also put a Rs 40-bar on ticket prices. This, however, would not apply to cinemas in multiplexes. For small budget films, cinemas would pay just seven per cent.

What does this actually mean to film producers? "Now producers can hope to show their movies for at least four to five weeks," Mr Dasari Narayana Rao, the veteran film producer-director and Union Minister of State for Coal and Mines, says.

The slab system was brought into force to put an end to practices of evading entertainment tax by way of understating the number of tickets sold. This, however, proved to be counterproductive with large number of small exhibitors finding it difficult to run the show, unable to pay huge slab rates.

In turn, this resulted in severe hardships to small producers who could hardly find theatres to screen movies. Only big budget movies with heavy star cast could withstand the regime.

This has got a direct bearing on cost of production.

"The system systematically excluded senior producers such as Arjun Rao, Devi Prasad and Jayakrishna from production. Some people who spent nothing from their pockets and raised money through distributors came into the scene," Mr Dasari Narayana Rao says.

Mr Tamma Reddy Bharadwaja, a senior producer, told Business Line that the new system would reduce the cost of production. "It will take some time before the new system evolves and takes roots. Once this is done, it will bear fruits," he feels.

Mr K.S. Rama Rao, President of Producer Council in AP Film Chamber of Commerce, says the Government decision would be a boon to the medium and small producers.

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