PESHAWAR, Jan 31: The NWFP government is reducing entertainment tax on cinema houses in a bid to help the dying industry overcome its financial woes.A proposal in this regard has been prepared by the Excise and Taxation Department, which will be taken up in the coming provincial cabinet meeting, scheduled for February 3, an official told Dawn here on Saturday.

The decision to cut the entertainment tax on cinema had been taken by the federal government some time ago mainly to help the cinema industry, which the official said “was currently under severe financial crisis.”

Lack of production of quality movies and worsening law and order situation in the province were stated to be the major factors for the current financial crisis being faced by the cinema industry, said the official, adding, “Unabated taxes and duties aggravate the problem.”

Since running cinema was no more a profitable business, cinema houses were closing down one by one, as in the provincial capital alone at least four cinema houses have been demolished during the last couple of years and now multi-storey plazas were being constructed on the sites.

A manager of the local cinema told Dawn that a sense of insecurity and growing financial problems of the common man were the reasons keeping the cinegoers away from the cinemas.

In line with the federal government’s decision, the Punjab government had brought down the entertainment tax on cinemas up to zero level, while the Sindh government had fixed it on yearly flat rates, the official explained.

The NWFP government is cutting down the same duty by 50 per cent, said the official and added “It will reduce burden, to some extent, on the cinemas of the province.”

Following the cabinet’s approval, the official explained the Excise and Taxation Department will move a bill to the Frontier Assembly for amending the law relating to the collection of entertainment tax from cinemas. The tax cut is expected to be part of the next year budget.

Entertainment tax is one of the indirect taxes collected by the NWFP government, as in financial year 2007-08 it generated Rs15 million from the same source, whereas similar recovery target has been set for the current financial year.

Official said that the incentive would not have any major financial implication on the province’s own revenue collection, but it would give a relief to the cinema owners, who were unable to generate sufficient resources to keep their businesses running.