Cinemas are a source of entertainment for the general public and they are a very popular destination even on weekdays. Punjab government recently slapped an Entertainment Tax of 65% on all ticket sales. Why would they do such a thing? Let’s take a look at what is actually happening behind the scenes.
A Brief History of Cinema as a Business
Cinemas used to do very well in Pakistan in the 70s, 80s and even 90s. Back then, cinemas weren’t taxed heavily and were a profitable business. But as the standard of movies went down, cinema numbers shrunk. Despite the poor returns and losses from most cinemas, a certain number of cinemas remained profitable across Punjab and Sindh and continued to operate.
Corrupt Politicians Use Cinemas to Launder Black Money
Sources claim that cinemas have been used to convert black money to white, i.e. money made off corruption can be shown as legal by faking profits.
Back in 2006, the government waved off all taxes from the cinema industry which had been on a decline ever since the 90s (A coincidence? Possibly). After Musharraf’s take over, cinemas declined and only a few remained – nearly 20 in Punjab.
The Effects of Tax-Free Cinema
When these taxes were waived off, it made the cinema industry the best investment to legalize black money. Immediately after the government change, films started to make a comeback and even the screening of Indian movies was unbanned. Both these decisions made cinemas an even better proposition for both money launderers and businessmen.
The cinema industry saw a sharp rise and public cinemas increased from nearly 20 to over 125 in Punjab alone. A similar scenario was witnessed in Sindh as well.
What Really Happened Behind the Scenes
While a politician has almost never been prosecuted successfully over corruption, it is a well-known fact that this menace exists in Pakistan’s leadership and governments. Sources claim that most of these new and old cinemas are owned by politicians, especially from Sindh.
Money Launderers Were Able to Fake Attendance & Launder 100% of the Black Money Tax-Free
These corrupt officials have been legalizing their black money by reporting very high attendances at their cinemas even when the occupancy was low. This allows them to show the black money as profits and legally attribute it to themselves.
And since there was no tax on cinemas up until now, it gave the owners a chance to legalize 100% of their black money.
The Importance of This Tax
Punjab’s implementation of this tax is a good move no matter the real intentions behind it. By implementing such a high tax of 65%, the Punjab government has sent a message to the owners that a big chunk of their money would be taxed if they intend to use this means as a money laundering setup.
The expected result is that the cinema owners who were using this business in Punjab to launder money will now sell off their assets and look for other ways. This could cleanse an industry from fake and illegal usage.
An Alternate
An alternate would have been to employ inspectors who would visit cinemas and check the attendances themselves while also applying a small tax on the cinema sales. This would have helped in preventing money laundering as well as brought justified tax to the national exchequer. In the government’s preferred method, customers are going to end up as the most affected party which is highly unfair.
Final Words
The tax will hurt the general public of Punjab as huge sums will be retrieved as tax. The general cinema visitor can expect to pay at least Rs. 325 above normal ticket prices summing up to Rs. 825.
The Entertainment Tax is here to stay for the time being even if it hurts the industry or the general public. The overall benefits of this step in halting money laundering operations can go a long way if the same strategy s employed by other provinces, especially Sindh, as well.
General Public should not suffer due to menace of Politicians. Instead check and balance should be levied and heavy punishments should be given to those cinema owners who indulge in such crimes.
Let me tell you inspector thing theory.
.
My University fellow is inspector in excise and taxation department, and his duty is to collect excise duty from a well reputed (not for a good reasons) theater hall of Faisalabad according to ticket sold for the show. Once he Take me with him and he didn’t even calculate or ask about ticket sale. He went there and sat in a room, exhibitor came and offered him tea, and after few minutes dirty talk about stage dancers he give 5 thousands to my friend.
And my friend told me while returning that from this 5000 he will only deposit 2000 in Govt account and 1500 is his share and 1500 belongs to his boss who place his duty their.
گیدڑ کماد کے رکھوالے ہیں
Zafar Saab, Maanain na manein aap marwaynge apne dost ko :p :D :) ;) B-) lol
Brother yahan aaway ka aawa bigrra hua hai. Neechay se rishwat lene wala ooper tak pohanchata hai. So kuch nahin ho sakta.
lakin apne dost ko to bacha lo aap, usay bi phansa dia apne :p
Main usay bas samjha hi sakta hun
My salaams to you dear!
We need more honest people like you Zafar. May Allah give you fortitude and strength to stand strong — it will be a very difficult road ahead, my dear young friend!
Many times life will appear desolate and lonely, and even your family will stand against you. But it is because of few men like you that the rest of the crooks and thieves are given respite from massive Qehr-e-Elahee. . .so don’t ever think you are alone, there are many like you fighting in many places for truth, integrity, honesty and sincerity.
Many people will say many things about Quaid-e-Azam. . .but one thing even his biggest detractors could not deny . . .he could not be bought and his integrity was beyond question — look what he achieved — my friend, have strength of conviction, you are not alone!
I have exposed many purely in public interest and feel proud of doing it, you should do the same writing to authorities at least.
Those I ever got a chance to write to authorities or over the internet I had all chance of benefiting from them.
lol
buwahahahaahahaha :D
Authorities made this system, they are not involved they are the leader :)
Shoour na karo, Aawaam so rahi he :p
I dont understand which and what kind of authorities are you talking about..:P Regarding public, what difference could a single sheep make by informing other sheeps..??? In the end they all are sheeps…
And you too my dear (same comment as above for Zafar).
bhai sub cinemas band krdo waisy bhi ab dobara cinema industry dobara khatry main hain or yahaan tu waisay bhi koi policy nhi hy family dobara cinema ki traf nikli thi ab dobara aana band kardia hy qu k kuch dekhnay ko hy hi nhi pakistani films ki tadaad itni hy hi nhi jo cinema ki requarment ko pura karsaky or is such say bhi aankh nhi chura saktay k cinema industry ki boom ki sub say bari wajha indian movies thi ab jo bhi kaha jaye yehi such hy hum torrent per sub kuch dekh latay hain koi single film nhi chortay but cinema per dekhnay say hum gaddar or pakistaniet k zumray say bahar aajatay hain yehi munafiqat lay dobi hy band krdo entertainment k sub darwazay politician hum sub ko baywaqoof bana kr apna ullu seedha krtay hain or hum dugdugi pr nach nach kr in ko apnay pr hakumat karnay ka moqa detay hain khud kuch nhi sochna bus yehi humara kaam hy
This is good step youth of Pakistan are wasting time on cinemas instead of studying.This will be for benefit of youth in long run. Bulk SMS packages should also be watched to see if they are used for time waste purpose by students.
Khud ko kya tees maar khan samjha hua hai
tpb ftw
jb most corrupt politicians sindh sy hain (as per article) to punjab k logo nay khoti ko hath lagay ha k 65% tax punjab k cinemas pr laga dia?
” By implementing such a high tax of 65%, the Punjab government has sent a message to the owners that a big chunk of their money would be taxed if they intend to use this means as a money laundering setup.”
Lollll…. Are you serious? Cinema owners are going to transfer the burden of this tax to consumers. So if you were paying Rs 500 for ticket before, now you will pay 825. Nothing will be cut from owner’s share