LAHORE, July 1: The Punjab government has withdrawn the entertainment tax from cinema houses for two years by amending the Entertainment Duty Act. The amendment is part of the Punjab Finance Bill which was adopted by the provincial assembly on Monday.

A budget department officer told Dawn that a separate notification to allow the two-year relief to the cinema owners was also issued on Thursday. The film exhibitors had been paying 30 per cent of the entertainment tax on their cinema houses.

The total withdrawal of the tax has now been allowed to provide relief to exhibitors and the film industry as a whole and save in from an imminent collapse. The decision was taken by the Punjab finance ministry last week on a recommendation by the provincial excise department, which was sent after a meeting with the cinema owners.

Subsequently, an amendment to the Finance Bill was made for the assembly's approval. The government allowed 15 per cent reduction in entertainment tax (50 per cent relief) in the provincial budget for 2004-05 against the wishes of the Pakistan Film Exhibitors Association, which had been demanding a complete tax holiday.

When the budget was announced, the association made a fresh appeal for complete abolition of the entertainment tax. The decision will deprive the Punjab government exchequer of an annual revenue of about Rs40 million.

The promise for a complete abolition of the tax was held out by Chief Minister Pervaiz Elahi during a meeting with a delegation of the film industry's action committee, headed by Zoraiz Lashari, in May.

Leaders of the industry expressed their dismay over the decision of retaining 15 per cent of the tax when the budget was announced. However, a renewed effort by the action committee and the acquiescence by the chief minister paved the way for complete withdrawal of the tax.

The Punjab excise department has been charging entertainment tax of Rs500 to Rs2,500 every day for cinema houses distributed in six categories on the basis of their condition and amenities.

Action Committee chairperson Zoraiz Lasahri thanked the Punjab government, and said the decision would go a long way in improving the condition of the cinema houses and the industry.

In a message to the chief minister, he said the national cinema had been striving for its revival and the Punjab government had made a valuable contribution to its efforts.