Motion Picture Herald (Jan-Feb 1944)

28 MOTION PICTURE HERALD February 5, 1944 Expect Ticket Tax to Be Effective March 1 Increase in Rate, to One Cent on Each Five, Gets Conference Approval Tax rates on theatre admissions probably will jump from the present 10 per cent levy to the new rate of almost 20 per cent March 1. Exhibitors were warned this week to prepare admission schedules covering the doubled tax rate by Washington observers who predicted quick enactment of the revenue bill now pending in Congress. If it is passed by Congress and signed by the President before February 19 theatres would be required to begin collection of the new rate March 1. Admission taxes for theatres will be at the rate of "one cent on each five cents or major fraction thereof" paid for admission. Congressional Conferees Agreed on Figure All doubts as to the rate of admission under the new revenue bill were set at rest late last week by the action of House and Senate conferees in agreeing to the provisions drafted by the Senate Finance Committee. Tuesday conferees of the Senate and House had completed work on other differences in their two versions of the revenue bill. Congress was expected to pass the law Wednesday or Thursday and to send it immediately to the White House for signature. It is effective on the first of the next following month, if signed 10 days before the end of the current month. Although he has expressed dissatisfaction with the extent of the present revenue bill President Roosevelt is expected to sign it, with a reprimand to Congress and a demand for supplemental tax legislation. Treasury officials have pointed out that further delay would cost the Government almost $200,000,000 a month in new revenues. Political observers in Washington, meanwhile, foresee scant chance of passing of another tax bill before the November election. Cabarets and Night Clubs Taxed 30 Per Cent Agreement by a conference committee on a provision such as the tax rate is tantamount to approval by Congress, since neither House nor Senate ordinarily upsets the arrangements made by their conferees. In obtaining abandonment by the House of its proposed tax of two cents on each 10 cents or fraction paid for admission, the conference committee served the theatres better than it did cabarets and night clubs. They will have to collect a tax of 30 per cent as provided by the House, the Senate representatives dropping their proposal for a 20 per cent levy. In the handling of the admission tax in Congress, the exhibitors won two important concessions, one the placing of the tax on a nickel basis and the other its application to the major fraction of a nickel. This HOW TO FIGURE • NEW TAX RATE The new revenue bill provides for a Federal collection of "one cent on each five cents or major fraction thereof" of adnnission price. A major fraction of a nickel is three cents or more. Tax must be collected on all tickets of 10 cents or more. For example, the tax on 10 cents is two cents. Similarly, a 1 2-cent admission would call for a two-cent tax. But a 13-cent admission, as it includes a "major fraction" of the third nickel, would call for a three-cent tax or total payment of 16 cents. The new tax generally will double the rate on basic admissions in a multiple of 10. Tax on a 20-cent ticket will be four cents instead of two; on 50 cents, 10 cents instead of five. For 25-cent tickets the new tax will be five cents, compared with three; on 35 cents, seven cents tax, compared with four. means that on any admission up to and including 12 cents the tax will be no greater than at present — two cents. Exemptions as they now stand in the revenue act will continue in effect. The new law merely amends the rate of collection, increasing it to approximately 20 per cent of the admission price. Children's tickets and other admissions of less than 10 cents will continue to receive the current exemptions. Calculation of the tax on admissions is based on the Senate provision for a levy at the rate of one cent on each five cents or major fraction thereof. Three cents is considered the dividing line for "major fractions." As in previous changes of tax rate the Bureau of Internal Revenue is expected to permit theatres to use up existing stocks of tickets with the old rate printed on them. Notice must be clearly posted at box offices showing the amounts paid for admission and for tax and noting that the tax is collected in accordance with the new law. Ticket Orders Held Up Pending Bill Action Ticket manufacturers in New York reported that they had not yet changed plates on their presses to print the new rates but several said that they had advised customers to hold off orders for several days until the President acts on the bill. Circuit executives in New York, and many independents, are now working out adjustments of admission prices which will enable them to retain admissions on the even nickel. In most instances the new rates are expected to move admission bases up several cents to achieve even change. Ruling on Talent Withholding Tax Expected Soon A definite ruling on application of the withholding tax to actors and musicians will be issued by the Internal Revenue Bureau in the near future, but officials this week admitted that they themselves did not know what direction it would take. Whether such persons are to be considered employees or independent contractors, they explained, will depend upon a decision of the Supreme Court, now being awaited, from which it is hoped a clearer definition of the term "wages" may be derived. In the meantime however, the major studios have been informed that "for the present" they may consider actors and musicjans independent contractors, not subiect to the withholding tax, with the exception of musicians employed under the Form B contract of the American Federation of Musicians,, in which the buyer of a band is considered the employer. This ruling will apply regardless of whether the actor makes his contract with the studio directly or through an agent. Bureau officials, emphasizing that the present interpretation is merely a temporarv one and not conclusive, disclosed that the definition of "wages" probably has been the most difficult of all the problems presented in the administration of the Social Security Act and the withholding tax provisions. They explained that there were so many varying arjangements between emnloyers and employees that a general definition of the term had been difficult to write, and it was indicated that no definition so far prepared had met acceptance by all attorneys. The question of the classification of actors and musicians, which also has been a problem with exhibitors who add vaudeville acts and bands to their picture programs, was brought before the bureau some time ago by a number of the Hollywood studios. It yvas pointed out that there was no uniformity in the treatment of these persons by either the studios or theatres and in some instances an actor or an orchestra may have the tax deducted by one employer and not by another. Bureau officials admitted that the situation was unsatisfactory and adopted the expedient of issuing an interim ruling, but emphasized that at this time it was impossible to give a conclusive interpretation. Soskin in United States To Film Backgrounds Paul Soskin, English producer who participated in the organization of the new British production company. Independent Producers, Ltd., arrived in the United States this week. Associated with him as an independent producer is Gabriel Pascal, who will produce a nurnber of George Bernard Shaw plays for the screen. J. Arthur Rank, film magnate, is chairman of the new company. Mr. Soskin's first production under the new setup will be the filming of the best-seller, "Signed With Their Honour," by James Aldridge. He will leave New York for Hollywood in about a week, where he pjans to film background material for the picture. The main body of the film will be made in England. Philadelphia Revenue Up Amusement tax collections in Philadelphia for 1943 exceeded the estimate in the city's budget. Estimated at $1,400,000, totaj receipts for 1943 amounted to $1,422,076.03, compared to $1,273,140.95 for the full year of 1942.