Closed cinemas, cancelled concerts hurt LGUs

Published February 22, 2021, 6:30 AM

by Chino S. Leyco

Local government units (LGU), particularly cities in Metro Manila, incurred a considerable revenue loss last year due to cancellation of various entertainment events and activities amid the community quarantine, the National Tax Research Center (NTRC) said.

Based on the latest journal by the state-run think tank, NTRC estimated that around P386.2 million in amusement taxes for LGUs were lost after malls, theaters, and concert halls were cancelled and closed due to the lockdowns.

While revenues from amusement tax are insignificant as percentage of total tax collection of the government, NTRC noted that it is still a reliable income source for various social and economic programs.

NTRC estimated the tax losses from the six cancelled scheduled concerts at Mall of Asia and Araneta Coliseum from March 14 to May 20 last year reached about P9.81 million, assuming that only 50 percent of the seating capacity is sold at the lowest ticket price.

In the case of amusement tax from movie theaters, NTRC estimated that foregone revenue is about P270,625 per screening or P1.08 million for four movie screening per theater, per day. 

The estimate is based on 433 theaters and supposing that 50 percent of the assumed 50 seating capacity is sold at P250 per movie ticket.

During the initial enhanced community quarantine from March 17 to May 31, NTRC estimated that foregone revenue from local amusement tax is about P83.74 million based on four screenings per day of 433 cinemas.

Based on the SM Prime Holdings financial reports, the showing of several blockbuster films in 2019 such as “Avengers: Endgame”, “Frozen 2”, and “Hello Love, Goodbye”, as well as other events, increased ticket sales in its cinemas by six percent.

But due to the suspension of cinema operations from the first quarter of 2020, cinema and event ticket sales of SM dropped by 74.62 percent from P4.14 billion in the third quarter of 2019 to P0.61 billion in the third quarter last year.

Based on the data, the estimated revenue loss of LGUs with SM cinemas reached P376.39 million at end-September 2020.