Feb 10
ADDENDUM TO MMFF AMUSEMENT TAX ISSUE by fapweb  |  Posted in Articles  |  on Wed, Feb 10, 2016

In the hearing last January 13, 2016 by the Committee on Metro Manila Development of the Philippine Congress on the Metro Manila Film Festival, extensive discussions were held on the erroneous processes followed by the MMFF in the management of the amusement tax, particularly in its treatment and computations vis-à-vis the shares for the beneficiaries.

In relation to the beneficiaries’ shares, the following issue submitted by Director General Leo G. Martinez in his opening statement at this hearing could have been factored in in the discussions except that the hearing ran out of physical time. The issue in question states:

3. The MMFF-P has two income sources: the Amusement Tax from Metro Manila theaters and the Price Increase or Non-tax Revenues from theaters outside of Metro Manila. This translates to 50% from Metro Manila and 50% from the rest of the Philippines. FAP and the other beneficiaries have not received any share in the Price Increase or Non-Tax Revenues since 2006.

Facts:
- A table of MMFF’s incomes from year 1986 to 2005 published in the MMFF souvenir program showed that during these years, the Price Increase or Non-Tax Revenues was added to the Amusement Tax for the benefit of the beneficiaries. This practice stopped in 2006. ExeCom Member Dominic Du explained to the FAP Board that the income from the Price Increase is really for the producers and that the shares given to the beneficiaries in the years before were voluntary on their part. It was also the producers’ decision to withhold the donation in 2006. FAP tried to verify the said explanation with MMFF but it would always be referred back to Mr. Du.

- In 2010, FAP finally sought an official MMFF explanation to the non-inclusion of the Price Increase or Non-Tax Revenues in the computation of the beneficiaries’ shares, eliciting a faxed response from Mr. Edenison F. Fainsan, Chairman of the MMFF Finance Committee in November, 2010.

- Mr. Fainsan explains that the Price Increase (or Non-Tax Revenues) was actually stopped in 2001 due to complaints from the moviegoers. Because of this, producers and theater owners stopped supporting this add-on scheme. Instead, they donated a certain amount based on net ticket sales as a gesture of support to the MMFF and its beneficiaries.

- However, in 2006, Fainsan explains, the film industry suffered setbacks because of such factors as film piracy, economic downtrend, competition from alternative entertainment, etc. that the producers decided to stop the donations altogether.

- Mr. Du’s and Mr. Fainsan’s explanations however are being disputed by actual moviegoers and theater owners and operators even at this current time. Moviegoers in Mindanao and the Visayas would report that they still pay Price Increase on tickets during MMFF showings. In Metro Manila, even theater goers with free MMFF passes pay additional P5 – P10 on the mandated P5 pass fee (copy of theater ticket attached). Meanwhile, theater owners also contend that they do collect and most importantly, remit to MMFF the Price Increase on ticket sales.

Recommendation:

Therefore, FAP is asking that MMFF pay the beneficiaries their share of the Price Increase from 2006 to 2015.

In a study made on the report of MMFF’s incomes from year 1986 to 2005 as published in the MMFF souvenir program, it was observed that the amounts of the Price Increase which in theory should make for 50% of the gross income, the other 50% being the Amusement Tax, was less than its whole. Only partial amounts from the Price Increase collections were contributed yearly for the beneficiaries. It is assumed that the rest may have been used for other festival expenses. This is understandable and acceptable.

Further computations showed that the partial amounts from the Price Increase collections that were contributed for the beneficiaries from the year 1986 to 2005 ranged in average between 12% to 15% of the whole.

Based on facts cited, Price Increase continued to be collected after 2005 and up to present , and MMFF therefore still owes its beneficiaries their share of the Price Increase from the years 2006 to 2015.

In the absence of definitive MMFF financial reports of incomes for these said years, the FAP computes the arrears to be, if computed at 15% should total PhP495,690,575, or at 12% should total PhP396,552,460.

(This addendum was submitted by DG Leo G. Martinez to the members of the Committee on Metro Manila Development of the House of Representatves during a committee hearing on January 13, 2016)

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