Czech filmmakers and politicians are again preparing a new proposal for a comprehensive film law which would help lure runaway productions to Prague and provide sustainable support for local filmmakers.

Among the proposal's reported features is a 20% tax rebate for film productions, foreign or domestic, shooting in the Czech Republic. An Olsberg SPI study conducted in 2005 suggested a 12.5% rebate would be sufficient to let the Czech Republic compete with Hungary's 20% rebate.

As elements of the proposal emerge in the Czech press, Culture Ministry officials stress that the plan might change significantly before the bill is presented to the cabinet in October.

Radomir Docekal, executive director of the Czech Audiovisual Producers Association, which has been key in developing the proposal, is optimistic that the new bill is better than a similar measure which was rejected last year. Czech President Vaclav Klaus last year vetoed a bill eight years in the making on the grounds that it supported business, not art.

The new proposal counts on multiple sources of financing to provide roughly $33m annually to the State Fund for the Support and Development of Czech Cinematography. Fifty-five percent the fund would come directly from the state budget. Fifteen percent would come from sales of the rights to Czechoslovak films produced before 1993. The remaining financing would come from exhibitors, broadcasters and home video sales and rental.

Television broadcasters objected to the old bill, which required them to contribute 3% of their advertising revenues to the state fund. The new proposal still requires the 3% contribution, but in a move calculated to win broadcasters' support, would allow them to earmark most of that for projects of their choosing.

Some filmmakers also would like to see a 25% tax levied on distributors of pornographic films, a tax which would add hundreds of millions of crowns to the state fund.

The Czech state fund provides 50% of the budget for 80% of Czech movies, but does not provide direct support to foreign productions shooting in the Czech Republic. Last week the fund announced $3m in support for 2007, including roughly $1.7m for new feature films.

Czech production and services are set to boom under the right combination of incentives. In the last year a record 120 projects applied to the state fund for a combined total of $15.4m in support. Among these are some of the most expensive Czech films ever made, including Juraj Jakubisko's Bathory. Since the beginning of the year, the box-office record for Czech films has been broken twice: first by Jiri Menzel's I Served The King Of England and again weeks later by Jan Sverak's Empties.

And although production costs in the Czech Republic are rising, and despite generous incentives offered in Hungary and elsewhere, Prague continues to draw runaway production at record levels.

Barrandov Studios announced recently that it had a successful 2006, raising its annual profit nearly 30% to $2m. In its busiest year since the fall of communism in 1989, the studio hosted such international projects as Casino Royale, Hannibal Rising, The Red Baron, Hostel II and Psych 9. The healthy results put Barrandov on track to refinance its new, $9.5m 4,000-square-meter soundstage in seven years as planned.

The Culture Ministry is still discussing aspects of the proposal with the Finance Ministry and other state bodies. The most optimistic scenario sees the proposal being approved by the Czech parliament and president in 2008 and going into effect in 2009.

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