Treasury Dreams of Luring Hollywood Back to Israel

The Knesset Finance Committee yesterday approved new regulations that expand and simplify tax breaks for investors in the Israeli film industry. The changes will cut bureaucratic red tape and allow unlimited tax deductions for investments in the field. Broadcasters such as Channel 2, Channel 10, Yes and HOT, which are required to invest in local productions, will also be able to claim the deductions.

The latest move is one of a series intended to encourage the growth of Israel's film industry. Another is a law passed last year to encourage foreign investment in this industry.

Finance Ministry Director General Yoram Ariav is now studying the issue of production insurance, which can be an obstacle to producing movies in Israel. Ariav told Haaretz yesterday that the film industry "has economic potential, like research, and creates jobs and exports."

In the 1980s, several movies were made in Israel, including "Delta Force," "Not Without My Daughter" and "Rambo 3." But the wave died down after the outbreak of the first intifada in 1987, and the high costs of filming in Israel sent productions to Eastern Europe and Morocco.

Ariav, who went to the west coast of the United States two years ago to meet with people in the film business, would like to see Israel once again become a desirable production location.

"The American film industry is controlled by quite a few people with feelings for Israel," he said. "That would seem to be a relative advantage for the Israeli industry. Major producers told me that if conditions with respect to costs were the same as in other sites, Israel would have preference."