For the first time in post-war history, the Italian government looks set to ratify a national tax shelter to help fund the entertainment industry.

Speaking during a talk held at the Venice Film Festival, Carmelo Rocca, the cultural department under-secretary, confirmed that Culture Minister Giuliano Urbani is fully backing the tax shelter initiative launched by the national Italian film body, Anica. Treasury Minister Giulio Tremonti is also understood to support the initiative.

Anica will officially present a proposal to the Silvio Berlusconi government before the end of October, with new tax shelter legislation expected to be included in the government's next financial bill at the end of the year.

"Italian cinema needs the European market. The national market is simply too small to support the local film industry," said Giampaolo Sodano, president of Unidim, the national distributors union which is one of the main components of Anica.

"We are currently discussing which [tax shelter] system to follow," Sodano said, adding that he is a supporter of the German tax shelter system.

Reflecting the local film industry's positive viewpoint on the subject, film producer and distributor Andrea De Liberato said: "The only way to relaunch the local industry is through tax shelters. While the government has been doing its bit, government money is simply not enough."

The Italian government currently allocates funds to a selected number of projects on the basis of a film's "national cultural interest" - a system which has often come under fire from the industry for supporting films that go on to flop badly at the box office rather than providing funding for commercially and internationally-viable fare.

In the past, and particularly in the 1970s, several attempts were made to introduce tax shelters in Italy, but Italian governments have always objected to such legislation being seen through.