The long battle for tax incentives

Marichu Maceda claims that even during the time of her grandparents – the Veras, who established Sampaguita Pictures in the late ’30s – movie people were already seeking tax relief from the government because taxes imposed on the local film industry are the highest in the world. Her father, the great star-builder and producer, Dr. Jose Perez, who later took over the reins of Sampaguita, also fought to lower taxes on local movies, but the government still wouldn’t listen.

In 1980, concerned members of the film community felt that the local movie industry was in bad shape (but still a hundred times better than today, I guess) and decided to sit down and talk about the problems affecting the film business. Hollywood films were trouncing on Tagalog pictures at the box-office all over the Philippines and the ratio was 60-40 in favor of foreign movies. The Onerous taxes imposed by the government, of course, made matters worse and this forced small producers to close shop. Something had to be done to save the industry.

The group that met to talk about giving the film business included directors Eddie Romero, Lino Brocka, Ishmael Bernal, Emmanuel Borlaza, Marilou Abaya (then very new in the business), screenwriter Pete Lacaba, Fernando Poe, Jr., Joseph Estrada, and producers Jesse Ejercito, Emilia Blas and Marichu Maceda, who was then still actively producing films.

This group was very well aware of the success of the Australian Film Commission, which had then just mounted Peter Weir’s Gallipoli, one of the best films about war. Brocka suggested during the meeting that they come up with research based on the existing films programs of other countries. The group eventually decided to focus on the Swedish film program, which provided tax incentives for well-made films.

The research was going to be made by Carlos Valdes & Associates for the then astronomical amount of P500,000, which was eventually paid for by Joseph Estrada’s Mowelfund. After several months of research and study – and with close consultation with the film industry leaders – the Valdes group later came up with the proposal to establish the FILMBOARD, which was short for Filipino Motion Picture Development Board. It was to have four modules:

• The Film Academy of the Philippines (FAP), patterned after the AMPAS in Hollywood, and which was to be the umbrella organization for all the guilds (directors’ guild, actors’ guild, production designers’ guild, etc.) involved in the production of local pictures.

• The Film Fund, which was going to provide soft loans to local producers using their films as collateral.

• The Board of Standards, which was going to set up a system to provide tax incentives for well made films.

• The Film Archives, which was going to take care the preservation and restoration of Filipino film classics.

The FILMBOARD proposal made by Carlos J. Valdes & Associates in consultation with key figures in the movie industry was eventually finalized and a copy was sent to President Ferdinand Marcos who signed it as Executive Order No. 640-A on Jan. 5, 1981. FILMBOARD was given the mandate "to administer and enforce a system of tax incentives structured on graduated scale in coordination with the Ministry of Finance." On June 14, 1981, Imelda Marcos inducted into office at the Malacañang Palace’s Heroes’ Hall industry members affiliated with the FILMBOARD — with almost a thousand representatives from the local movies. (Buses were dispatched to ferry them to the Palace.)

Six months after that mammoth induction, however, the FILMBOARD was abolished along with its functions – with the creation of the Experimental Cinema of the Philippines (Executive Order 770) to be headed by Imee Marcos. (Unofficial records, of course say that the ECP was created to place Imee after she was reportedly separated that time by her parents from now ex-husband, Tommy Manotoc.) Only the FAP – upon the initiative of Marichu – was saved and was given its autonomy to operate. Lawyer Manuel de Leon served as its first Director-General.

The ECP, however, retained some of the modules created under the FILMBOARD and added two new ones: the MIFF and the Alternative Cinema, which eventually produced Himala and Oro, Plata, Mata.

The Film Archives was given to Ernie de Pedro, while another module, originally called the Board of Standards under the FILMBOARD, was created as the Film Ratings Board (under Executive Order No. 811) with Marcos Roces as head. The FRB took effect on June 12, 1982 and it gave tax rebates according to a classification system based on artistic and technical merits. Films rated A were given a 100 percent tax rebate, while those that were given a B rating got a 50 percent tax rebate. Among the Rated A films that time were Batch ’81 and Moral.

Except for censorship, everything was going well for the local film industry at this point until the creation of the Manila Film Center Exhibitions, which showed local films uncut. Members of the film industry who were denouncing film censorship weren’t exactly happy with this setup because this was unfair competition. While films shown in regular Metro Manila theaters had to be submitted to the board of censors, those being shows at the Film Center – like Scorpio Nights and Isla – were not and were raking in all the profits.

With this protest coming from some members of the film community and the public outcry from the conservative sector, Marcos abolished the ECP and created the Film Development Foundation of the Philippines, Inc., which unfortunately was overtaken by events that led to EDSA I. (To be concluded)