The prominent UK Culture, Media & Sport Committee (CMSC) has formally suggested imposing a 5% tax on streaming services to the government and stated that this measure should be incorporated into legislation if the sector does not adopt it within twelve months.
Commonly known as the 'Kosminsky Levy' due to its primary supporter, Wolf Hall Director Peter Kosminsky saw significant momentum build around his concept during the latest CMSC investigation into the British film and HETV sector. This morning, the group released their highly anticipated 126-page comprehensive analysis of the industry's prospects moving forward. The report asserts that implementing these suggestions should assist the industry in navigating potential challenges ahead. It also urges both governmental bodies and industry leaders not to take for granted the UK’s position as "Europe's Hollywood."
The standout proposal in the comprehensive list of recommendations within the report is the suggestion that all SVOD services operating in the UK should contribute a 5% tax on their local subscriber revenue towards a cultural fund managed by the British Film Institute. This fund would be specifically aimed at boosting homegrown high-end television productions.
The fund aims to "bolster the budgets for premium dramas tailored specifically to UK viewers but may not necessarily attract an international audience," as stated in the CMSC’s report.
Additionally, the committee stated that if the industry does not implement the levy voluntarily within a year, the UK government should step in and establish it as a statutory requirement.
“The moment has come for streamers to back up their words with actions,” stated the report. “While they praise the UK’s hybrid production ecosystem, which centers around both public service broadcasters and independent creators, their commercial strategies could be jeopardizing this model.”
The BFI will decide if streamers can directly access the fund for their individual British productions, as stated by the CMSC. This announcement follows closely after news about Netflix. Adolescence, A uniquely British tale produced in the UK, climbing to the top of the global rankings .
A spokesperson for the UK government responded by saying, “We recognize the difficulties confronting our exceptional film and television sector. As part of our Industrial Strategy, we are collaborating with this industry to assess further actions required to stimulate expansion and cultivate a robust talent pool. We appreciate the committee’s report and will provide a detailed response at an appropriate time.”
The concept of a levy, which is already implemented in various European countries such as France, has been making waves following Kosminsky’s presentation to the committee. This comes at a time when the UK television sector faced a minor crisis due to insufficient coproduction funds from American studios and streaming platforms, putting locally produced British scripted content at risk. In response, the BBC has been involved in these discussions. disclosed at a CMSC hearing with Black Doves producer Jane Featherstone has been affected more severely than most during the collaboration drought, stated it is "open-minded" regarding the levy .
Lack of consensus
The issue of whether the tax will be imposed remains to be seen. Chris Bryant, who serves as the minister for creative industries, told lawmakers in January "We currently have no intentions" to implement the levy, and imposing extra financial burdens on American companies following Donald Trump’s tariffs might be viewed as too much to request as the UK government aims to maintain amicable ties with the U.S.
Unlike calls for the Independent Film Tax Credit from last year The CMSC observed that "there isn't an industry-wide agreement on imposing a tax on subscription video-on-demand services."
Not surprisingly, Netflix, Amazon, and Paramount each "questioned what issue a levy would aim to address" during their appearance before the committee, as stated. The Association for Commercial Broadcasters and On-Demand Services, representing major US companies' interests in the UK, contended that "paradoxically, such a levy might harm public service broadcaster dramas by cutting back on co-production funds available to streaming platforms."
The committee added: "Given the various elements that draw foreign investors to produce content in the UK, it is challenging to understand how imposing a charge on subscribers would affect production volumes. Additionally, such a levy might not alter the strategic business goals of SVoD platforms, which still aim to expand their customer base."
Interestingly, the CMSC report also suggested potentially expanding the UK’s groundbreaking terms of trade legislation – which grant creators authority over the intellectual property rights of their productions – to include streaming platforms as well.
Although there isn't unanimous agreement on this topic—the likes of Featherstone firmly dismissed such an idea—the committee stated that the government ought to fund studies exploring ways to apply mechanisms like terms of trade to streaming platforms. This move aims to guarantee that British independent production firms maintaining intellectual property still hold at least some basic ownership stakes. Over the past few years, these streaming services assert that their contractual agreements have grown significantly more adaptable compared to the rigid "cost-plus" models from times gone by.
There was greater agreement regarding the necessity of revising the HETV tax incentive, an initiative primarily supported by Doctor Who Producer Jane Tranter suggested increasing the approximately 25% tax credit to about 40% as part of the updated independent film subsidy program. This adjustment aims particularly at supporting lower-budget productions with costs ranging from £1 million ($1.3 million) to £3 million ($3.8 million) per episode.
The idea behind this suggestion is that streamers have driven up costs for premium content, making it more difficult for local broadcasters to fund less expensive productions. These low-cost shows are crucial for the industry and play a key role in nurturing new talent.
The CMSC has once more handed this task over to the BFI, requesting the institution to "promptly carry out an assessment of the possible design and return on investment for a focused enhancement" to the tax credit. Should the outcome be favorable, the government ought to pledge to implement the provision as soon as the following year, according to the report.
Significantly, the committee stated that the government ought to "evaluate the worth and set the eligibility requirements" for different tax credits every six months by comparing them with incentives offered in other countries.
“Unconditional” commitment to CIISA
With former TV host Russell Brand is facing allegations of rape and sexual assault. (which he denies), bad behavior in the industry has been under a spotlight of late.
The CMSC allocated a section of its report to this issue and added its voice to the increasing number calling for the UK’s new anti- bullying CIISA should be provided with the necessary resources for effective reporting.
With Massima revealing recently that the The government is contemplating mandating UK broadcasters To consistently finance CIISA, the CMSC stated that "every sector of the creative industries" ought to pledge "unwavering, long-term financial support within half a year." Similar to the proposed streaming levy, they indicated that the government should employ "any available methods" to accelerate resolving issues and launching CIISA.
The report stated that for CIISA to function properly, the sector needs to view backing it both financially and ideologically as an essential aspect of doing business in the UK,
CIISA head Jen Smith stated: "There is a critical requirement for a secure, autonomous, and private space where issues can be reported and professionals offering unbiased guidance can be consulted. We are deeply appreciative of the ongoing backing and dedication from the CMS Select Committee towards CIISA."
The CMSC also stated that "systemic problems regarding work environments must be tackled," while simultaneously critiquing the training organization ScreenSkills for not being able to "implement significant measures concerning skill development and education."
The committee also addressed the complex issue of artificial intelligence. arriving just a few weeks following the actors guild wrote to entertainment executives informing them that it would escalate to the "courts if needed" if members' rights keep being violated during the training of AI models.
The CMSC stated that "incorrectly balancing AI development with copyright issues could hinder the progress of our film and high-end TV production industries."
"Guidelines aimed at safeguarding human creativity when using generative AI are appreciated; however, both the film and television industries are seeking assistance to harness the development opportunities presented by generative AI in an equitable, accountable, and lawful manner," stated the committee.
Again, it identified the BFI as a possible aid in this situation, urging the government to support the BFI’s creation of an AI "observatory and technology demonstration center."
The CMSC investigation, which came before today’s report, lasted for 18 months and was carried out during two distinct UK administrations. Participants comprised figures such as Jay Hunt, who heads up Apple TV+ operations in Europe. Bend it Like Beckham director Gurinder Chadha, Slow Horses helmets James Hawes, Featherstone, and Tranter.
- Legislators Resubmit Legislation to Oversee AI-Generated Avatars and Restrict Deepfakes
- Fremantle Unveils AI-Powered Label Called Imaginae Studios