For a state whose three long-serving chief ministers—MG Ramachandran, M Karunanidhi and J Jayalalithaa—hailed from the Tamil film industry, it seems ironic that the present Tamil Nadu government is working to cripple Kollywood. The greed to fill the exchequer of the local bodies is at the heart of the decision to levy an additional 30 per cent tax on films released in Tamil Nadu. The result is all 950 theatres that translate to 1,060 screens are not showing Tamil Nadu the big picture from Monday.

The makers of Ivan Thanthiran must be rueing their fate. The Tamil-comedy flick stars Gautam Karthik, Shraddha Srinath and RJ Balaji received rave reviews when the film opened on Friday. The strike has made them realise that the joke is on them. The irony is that the Tamil title translates to ‘he is a strategist’. In hindsight, the makers of the movie got their release strategy completely wrong.

On the midnight of June 30, when Prime Minister Narendra Modi spoke of economic unity thanks to Goods and Services Tax (GST), theatre owners in Tamil Nadu pointed out that the state was the odd one out. That is because Tamil Nadu is the only Indian state that levies local body tax on films in addition to GST. For the Tamil film industry, already aggrieved because of high GST slabs, this is a double blow.

How does the Math work? After the film industry objected to a uniform 28 per cent tax rate, the GST council fixed the tax rate for movie tickets under two categories – 28 per cent for tickets costing over Rs 100 and 18 per cent for tickets below Rs 100. The additional 30 per cent local body tax takes the total tax component on every ticket to 48 per cent (for below Rs 100 tickets) and 58 per cent (for above Rs 100 tickets) respectively.

This means, if a ticket costs Rs 100, the theatre will end up paying Rs 58 as GST including local body tax. In addition, the theatres collect Rs 1 as maintenance charge. The profit ratio is calculated as 70 per cent to the distributor and 30 per cent to the exhibitor. This means of the remaining Rs 41, Rs 28.70 will go to the distributor and Rs 12.30 to the theatre owner. No theatre can survive on Rs 12.30 plus Rs 1, say exhibitors.

Before GST came into effect, theatres paid between 12 to 30 per cent entertainment tax for movies that came with a Tamil title and a U certificate, getting a tax waiver. Under GST, that tax waiver is a thing of the past.

Ticket prices in Tamil Nadu are capped at Rs 50 for single screen theatres and Rs 120 for multiplexes. The extra burden will obviously be passed on to the filmgoer which could result in fewer footfalls unless the movie is really good.

Before the rates were finalised, the new host for Tamil Bigg Boss, Kamal Hassan had taken on the Centre rebelling against the decision to impose 28 per cent tax under GST. His argument was that regional cinema will die if ticket prices are high. “If I cannot afford to pay tax, I will have to quit,” said Hassan. “I will not work for the government. What is this, is this East India Company?”

While Arun Jaitley made the concession to have two slabs of 18 and 28 per cent after Hassan’s melodramatic threat, now the fight has to be against Fort St George. The cash-strapped Tamil Nadu government, already in the red after over 3,000 of its liquor shops were shut down following the Supreme Court directive, clearly, does not want a dip in the film industry’s wallet.

But the strike has exposed the fault lines between the producers and the exhibitors. Close to 10 films released in the second fortnight of June; they will incur huge losses. Movies like R Madhavan’s Vikram Vedhathat is due to release this Friday will have to be put off, putting the financing cycle into a spin. The producers aren’t, therefore, happy with the unilateral decision by the theatre owners. Vishal, the Tamil Film Producers Council’s president, wanted the strike to be deferred by a week so that the June releases could at least recover its production cost.

Hassan has once again emerged as the lone voice of reason, emphasising the need to speak in one voice instead of focusing only on the individual interests of a producer, a distributor or an exhibitor. The exhibitor body’s appeal to the Tamil Nadu government to withdraw the 30 per cent tax has fallen on deaf ears so far. This even after pointing out that the same Rs 100 ticket post-GST will cost Rs 118 in neighbouring states of Andhra Pradesh, Karnataka, Kerala and Telangana but it would cost the Tamil cine-goer Rs 148.

The Tamil film industry that claims to, directly and indirectly, employ 10 lakh people feel all that big talk of the megabucks – Rs 500 crore, Rs 800 crore and even Rs 1000 crore earnings in a Baahubali era – has come to bite it. Filmmakers say the politicians are under the mistaken notion that each one of their movies is a Baahubali. Their only hope is that they will listen to Hassan who points out that “90 per cent of the movies flop”.

The author can be contacted on Twitter @Iamtssudhir.