Italian culture minister Giuliano Urbani has announced thatSilvio Berlusconi's government will introduce a tax shelter to help fund theentertainment industry before the end of its term in 2006.

While the local industryhas long supported a tax shelter, a succession of post-war governments havefailed to stand by their promises to see such legislation ratified.

Shortly after Silvio Berlusconi came to power in 2001, thecurrent government itself announced that it would imminently introduce a taxshelter.

Italy is one of the few remaining European territories notto offer tax incentives designed to encourage film production.

Meanwhile, Urbani promised to "find between Euros 25mand 30m for the national entertainment industry, so as to make up for excessiveand untimely cuts."

"We are working towards at least doubling current fundsfor entertainment," Urbani said. "We want to show that thisgovernment has reversed Italy's policy regarding culture. Until now, it hasbeen incapable of looking at the entertainment industry as a primary resourcefor the country and has failed to overcome a slightly lazy and fatalistic modusoperandi, that has often been cloaked in pessimism."

Urbani's words come in the midst of an ongoing heated debateamong the Italian film sector, which has long been up in arms about what itperceives as the failure of Silvio Berlusconi's government to sustain the localindustry.

According to data recently released by national film bodyAnica, state funding slumped to Euros 94.9m from 108.4m in 2003 with only 46films receiving government funds compared to 57 the previous year.

Film budgets also plummeted last year, with averageinvestments down from Euros 2.5m in 2003 to Euros 2.1m in 2004.

Leading Italian producers have long sustained that the onlyway to lift the industry from its current economic crisis is to introduce a taxshelter.

In the meantime, Italians who have been unable to findsufficient funds - either privately or from the state - have been looking foropportunities overseas and have been getting increasingly involved ininternational co-productions. Co-productions rose from 19 in 2003 to 38 in2004.

France currently ranks as one of Italy's top co-productionpartners. "The success of films such as Respiro by Emanuele Crialese and Marco Tullio Giordana's TheBest of Youth have once again opened up themarket. It is important to seize this opportunity," Marco Chimenz, aproducer and partner at Rome production outfit Cattleya said on Friday at aninternational film and literature forum in Monte Carlo.