Eady Levy

Last updated

The Eady Levy was a tax on box-office receipts in the United Kingdom, intended to support the British film industry. It was introduced in 1950 as a voluntary levy as part of the Eady plan, named after Sir Wilfred Eady, a Treasury official. The levy, paid into the British Film Production Fund, was made compulsory in 1957 and terminated in 1985.

Contents

Background

A levy was first proposed by Harold Wilson, then president of the Board of Trade, in 1949. The levy was intended to assist producers of British films. A direct governmental payment to British-based producers would have qualified as a subsidy under the terms of the General Agreement on Tariffs and Trade, and would have led to objections from American film producers. An indirect levy did not qualify as a subsidy, and so was a suitable way of providing additional funding for the UK film industry whilst avoiding criticism from abroad.

Establishment

The Eady Levy came into effect on 9 September 1950 on a voluntary basis to subsidize British film producers. [1] In 1953, the UK Government indicated it would legislate if the exhibitors did not agree to continue the voluntary agreement. [1] It was not established on a statutory basis until its incorporation in the Cinematograph Films Act 1957.

In the Eady Levy, a proportion of the ticket price was to be pooled – half to be retained by exhibitors (i.e. effectively a rebate on the tax) and half to be divided among qualifying 'British' films in proportion to UK box office revenue, with no obligation to invest in further production. The Finance Act 1950 had previously made the necessary changes in the entertainments tax. The levy was collected by HM Customs and Excise and administered by the British Film Fund Agency.

To qualify as a British film, a minimum of 85% of the film had to be shot in the United Kingdom or the Commonwealth, and only three non-British individual salaries could be excluded from the costs of the film, ensuring the employment of British actors, technicians and film crew. [2]

In the first year, the levy was one quarter of a penny (1⁄4d) per ticket sold and raised $3 million; [1] in the second year the levy was tripled for ticket prices over 12 pence (12d) to (3⁄4d) to raise £3 million ($8.4 million) per annum. [1]

Eady levy rate [3]
YearMin. ticket priceLevy
1950any1⁄4d.
19513d.1⁄4d.
12d.3⁄4d.
195710d.1⁄4d.
13d.½d
14½d.3⁄4d.
16d.1d.
17½d.11⁄4d.
19d.1½d
21½d.13⁄4d.
196011d.1⁄9 excess [n 1] )
196818d. (7½p [n 2] )
197712½p
197817½p
1979any1⁄12 full price
Note
  1. ↑ i.e. one-ninth of the portion of the ticket price above the minimum price.
  2. ↑ Decimal currency was introduced in 1971.

Impact

The levy had the effect of both assisting the film industry, and reducing the effect of entertainment tax on film exhibition, to which all the cinema industry was opposed.

The rise in British cinema (including the James Bond films) during the 1960s caused by an influx of American producers can be attributed to the Eady Levy – and also to the cheaper production facilities – making it cost far less in the UK to achieve the same quality of production. A number of American film makers worked in Britain in this period on a near-permanent basis, including Sidney Lumet, Stanley Donen, and John Huston. Stanley Kubrick moved to Britain in the early 1960s to make Lolita (1962), Dr. Strangelove (1964), 2001: A Space Odyssey (1968) and A Clockwork Orange (1971), among other films. Another expatriate American, Richard Lester, directed The Beatles' films A Hard Day's Night (1964) and Help! (1965).

It was not only American film makers who came; a number of distinguished European directors also made films in Britain. These included Roman Polanski, François Truffaut (who made Fahrenheit 451 at Pinewood Studios and on location in London and Berkshire) and Jean-Luc Godard.

The Eady Levy also provided funding for the National Film and Television School, which trained a number of directors and actors still in work today.

Termination

The Eady Levy was intended to support UK film production. However, in a White Paper in 1984, the British Government recognised that the levy was no longer fulfilling its original purpose, with much of the payment going directly to distributors rather than producers, and proving an unreasonable burden on the exhibition sector. [4] The year 1984 had seen the lowest cinema attendances in the UK of any year in recorded history - with only 54 million tickets sold, [5] fewer than one ticket per head of population – thanks largely to competition from TV and home video, so the tax had a significant effect on the cinema chains' dwindling profits. The Eady Levy was terminated in 1985. [6]

See also

Related Research Articles

Cinema of the United Kingdom Overview of the cinema of the United Kingdom

The United Kingdom has had a significant film industry for over a century. While film production reached an all-time high in 1936, the "golden age" of British cinema is usually thought to have occurred in the 1940s, during which the directors David Lean, Michael Powell, and Carol Reed produced their most critically acclaimed works. Many British actors have accrued critical success and worldwide recognition, such as Audrey Hepburn, Maggie Smith, Roger Moore, Michael Caine, Sean Connery, Joan Collins, Judi Dench, Julie Andrews, Daniel Day-Lewis, Gary Oldman, Emma Thompson, Hugh Grant and Kate Winslet. Some of the films with the largest ever box office returns have been made in the United Kingdom, including the third and sixth highest-grossing film franchises.

Taxes and subsidies change the price of goods and, as a result, the quantity consumed. There is a difference between an Ad valorem tax and a specific tax or subsidy in the way it is applied to the price of the good. In the end levying a tax moves the market to a new equilibrium where the price of a good paid by buyers increases and the proportion of the price received by sellers decreases. The incidence of a tax does not depend on whether the buyers or sellers are taxed since taxes levied on sellers are likley to be met by raising the price charged to buyers. Most of the burden of a tax falls on the less elastic side of the market because of a lower ability to respond to the tax by changing the quantity sold or bought. Introduction of a subsidy, on the other hand, may either lowers the price of production which encourages firms to produce more, or lowers the price paid by buyers, encouraging higher sales volume. Such a policy is beneficial both to sellers and buyers.

A subsidy or government incentive is a form of financial aid or support extended to an economic sector generally with the aim of promoting economic and social policy. Although commonly extended from the government, the term subsidy can relate to any type of support – for example from NGOs or as implicit subsidies. Subsidies come in various forms including: direct and indirect.

The Rank Organisation British entertainment conglomerate

The Rank Organisation was a British entertainment conglomerate founded by industrialist J. Arthur Rank in April 1937. It quickly became the largest and most vertically integrated film company in the United Kingdom, owning production, distribution and exhibition facilities. It also diversified into the manufacture of radios, TVs and photocopiers. The company name lasted until February 1996, when the name and some of the remaining assets were absorbed into the newly structured Rank Group plc. The company itself became a wholly owned subsidiary of Xerox and was renamed XRO Limited in 1997.

National Film and Television School Film school in Buckinghamshire, England

The National Film and Television School (NFTS) is a film, television and games school established in 1971 and based at Beaconsfield Studios in Beaconsfield, Buckinghamshire, England. It is featured in the 2021 ranking by The Hollywood Reporter of the top 15 International film schools.

Film industry Industry comprising the technological and commercial institutions of filmmaking

The film industry or motion picture industry comprises the technological and commercial institutions of filmmaking, i.e., film production companies, film studios, cinematography, animation, film production, screenwriting, pre-production, post production, film festivals, distribution, and actors. Though the expense involved in making films almost immediately led film production to concentrate under the auspices of standing production companies, advances in affordable filmmaking equipment, as well as an expansion of opportunities to acquire investment capital from outside the film industry itself, have allowed independent film production to evolve.

Box office Office selling event tickets

A box office or ticket office is a place where tickets are sold to the public for admission to an event. Patrons may perform the transaction at a countertop, through a hole in a wall or window, or at a wicket. By extension, the term is frequently used, especially in the context of the film industry, as a synonym for the amount of business a particular production, such as a film or theatre show, receives. The term is also used to refer to a ticket office at an arena or a stadium.

The UK Film Council (UKFC) was a non-departmental public body set up in 2000 to develop and promote the film industry in the UK. It was constituted as a private company limited by guarantee, owned by the Secretary of State for Culture, Media and Sport, and governed by a board of 15 directors. It was funded from various sources including The National Lottery. John Woodward was the Chief Executive Officer of the UKFC. On 26 July 2010, the government announced that the council would be abolished; Although one of the parties elected into that government had, for some months, promised a bonfire of the Quangos, Woodward said that the decision had been taken with "no notice and no consultation". UKFC closed on 31 March 2011, with many of its functions passing to the British Film Institute.

Entertainment tax

Entertainment tax also sometimes referred to as "amusement tax" is any tax levied on any form of commercial entertainment, such as movie tickets, exhibitions, sport events and more. The specific rules such as the tax rate of entertainment tax and cases of tax exemption are subject to local authorities, as is their collection. The entertainment tax has in the most cases the form of indirect tax, which is levied on buyer. Nowadays, the most discussed subject of those taxes are their implementations to online services, especially the ones working on streaming basis such as Netflix, Spotify and others.

Film finance is an aspect of film production that occurs during the development stage prior to pre-production, and is concerned with determining the potential value of a proposed film.

AHDB Potatoes, previously known as the Potato Council, is a trade organisation that aims to develop and promote the potato industry in Great Britain. Previously an independent non-departmental public body, it has been a division of the Agriculture and Horticulture Development Board since 1 April 2008.

Co-production (media) Film and video terminology

A co-production is a joint venture between two or more different production companies for the purpose of film production, television production, video game development, and so on. In the case of an international co-production, production companies from different countries are working together.

Runaway production is a term used by the American Hollywood industry to describe filmmaking and television productions that are intended for initial release/exhibition or television broadcast in the U.S., but are actually filmed outside of the immediate Los Angeles area, whether in another country, another U.S. state, or in another part of California.

Tamil cinema India-based Tamil-language film industry

Tamil cinema, popularly known as Kollywood, is an Indian film industry of Tamil-language motion pictures. It is based in Chennai, Tamil Nadu, in the Kodambakkam neighbourhood, the word being a portmanteau of Kodambakkam and Hollywood. The first Tamil silent film, Keechaka Vadham, was made by R. Nataraja Mudaliar in 1918. The first talking motion picture, Kalidas, was a multilingual film directed by H M Reddy and was released on 31 October 1931, less than seven months after India's first talking motion picture Alam Ara. By the end of the 1930s, the legislature of the State of Madras passed the Entertainment Tax Act of 1939.

Warwick Films was a film company founded by film producers Irving Allen and Albert R. Broccoli in London in 1951. The name was taken from the Warwick Hotel in London. Their films were released by Columbia Pictures.

Energy subsidies are measures that keep prices for customers below market levels, or for suppliers above market levels, or reduce costs for customers and suppliers. Energy subsidies may be direct cash transfers to suppliers, customers, or related bodies, as well as indirect support mechanisms, such as tax exemptions and rebates, price controls, trade restrictions, and limits on market access.

The National Film Finance Corporation (NFFC) was a film funding agency in the United Kingdom in operation from 1949 until 1985. The NFFC was established by the Cinematograph Film Production Act 1949, and further enhanced by the Cinematograph Film Production Act 1952, which gave the NFFC the power to borrow from sources other than the Board of Trade. The NFFC was abolished by the Films Act 1985.

Sir Crawfurd Wilfred Griffin Eady was a British civil servant and diplomat.

Fossil fuel subsidies Financial support by governments for coal, oil, gas, and electricity generated from them

Fossil fuel subsidies are energy subsidies on fossil fuels. They may be tax breaks on consumption, such as a lower sales tax on natural gas for residential heating; or subsidies on production, such as tax breaks on exploration for oil. Or they may be free or cheap negative externalities; such as air pollution or climate change due to burning gasoline, diesel and jet fuel. Some fossil fuel subsidies are via electricity generation, such as subsidies for coal-fired power stations. One downside to subsidizing any industry is that competition and innovation are lessened or lost completely. Subsidizing can make a product be cheaper for buyers, but in the long run, innovation and lower prices come from a competitive free market.

Films Act 1980 United Kingdom law

The Films Act 1980 is an act of the Parliament of the United Kingdom. The act allowed the National Film Finance Corporation to exercise its powers in relation to financing the production of films for an extended period, gave further funding to the Corporation and amended the laws around the quotas of British films.

References

Sources

Citations

  1. 1 2 3 4 "British Pix Industry Given 1 Month To Decide on Voluntary Eady Plan". Variety . 23 September 1953. p. 14. Retrieved 13 October 2019– via Archive.org.
  2. ↑ Mirisch, Walter (27 February 2008). I Thought We Were Making Movies, Not History. University of Wisconsin Press. p. 202. ISBN   978-0-299-22640-4.
  3. ↑ Romer 1993 Table 12(a)
  4. ↑ Department of Trade and Industry (19 July 1984). Film policy. Command papers. Vol. Cmnd.9319. H.M.S.O. ISBN   9780101931908. OCLC   11661469.
  5. ↑ "UK cinema admissions 1935 to date". Launching Films. Film Distributors' Association Ltd. Retrieved 31 January 2018.
  6. ↑ "UK media laws: Cinema and films Films Act 1985". TerraMedia. Retrieved 2 September 2019.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.