Prague city council this week slashed location shooting fees in the Czech capital by 75%.

The reduction effectively reverses a controversial location fee increase introduced in June, when shooting costs in the city's historic centre were raised fivefold from $0.32 to $1.62 per square metre - working out as an increase from $3,000 to $15,000 for a day's filming.

However, according to the Prague Business Journal, the reversal of the price hike may have come too late to prevent Paramount Pictures' decision to relocate the shoot of Frank Coraci's Around The World In Eighty Days to Berlin instead of Prague.

Over the past few years, Prague has become an increasingly popular filming location, hosting productions including: From Hell, XXX, Blade II, Deathwatch, Shanghai Knights and the current shoot for The League Of Extraordinary Gentlemen.

Last year, international production companies spent $200m shooting films and commercials, mainly in Prague - a boost to the economy that was under serious threat when the new prices were introduced. Now, observers argue that there is still more to be done to encourage filming in the country, and in Prague in particular.

Matthew Stillman, managing director of Stillking Films in Prague, said in a statement: "The film and commercial industry generates approximately $200m each year in direct foreign investment into productions. When this is calculated in terms of its trickle down value and added to indirect expenditure and tax payments, the boost to the Czech economy is actually in the region of $800m.

"Around 10,000 people derive full-time employment from the production industry and countless other benefits are brought to the Czech Republic including increased tourism and an enhanced profile internationally. It is essential that the relevant authorities do not sacrifice the film industry to short-term financial gains and I am relieved to say that the Prague City Council has acted decisively to support the continued growth and international competitiveness of the film production industry in the Czech Republic. Hopefully other initiatives will follow soon."

The absence of local tax breaks or incentives for investment is in sharp contrast to countries like Romania and Hungary where state funds have significantly boosted film facilities and infrastructure.

The devastating floods during August which damaged parts of Prague and caused a drop in tourism are also thought to be behind the council's decision to lower local filming costs.