Theatres are caught in a VAT trap that Brian Cowen could - should - do something about, argues Tania Banotti
Nobody would argue with the proposition that Ireland benefits in all kinds of ways from visits by world-class performers - in whatever discipline. Yet there is an iniquitous provision in our tax code that puts not-for-profit arts organisations at a severe disadvantage when compared with sports promoters.
It's simply this: as of 2003, appearances by performing artists (musicians, dance artists, actors etc) have attracted a VAT charge of 21 per cent which must be paid to Revenue by the promoter. Appearances by sporting personalities (think Tiger Woods) do not. Hardly a level playing field. International festivals are the hardest hit - although any theatre that features music, theatre or contemporary dance from outside Ireland is affected, as are orchestras and theatre companies that bring in performers from overseas - including Irish artists living abroad.
The reason VAT acts as a levy on international cultural exchange is because theatre tickets are VAT-exempt, meaning we can't defray VAT outgoings against VAT revenues, as would be the case in most trading situations.
Putting prices up would make these events less accessible to a broad range of individuals and families. Paying less in artists' fees to reduce the VAT liability means, inevitably, fewer or less distinguished performers.
Audiences and artists alike will suffer. Last October, the Dublin Theatre Festival brought 14 international companies to Dublin from Germany, Siberia, Belgium, Hungary and elsewhere. Thirty thousand Dubliners came along to enjoy them. The festival spent €320,000 on international artists' fees and are looking at a potential VAT bill of €66,000. That's a big hit.
West Cork Music, a tiny group of people passionate about bringing the best Irish and international musicians together to perform chamber music in rural Cork, will probably bring in five fewer soloists next year. Fewer international performers in the future will put major constraints on the organisation, and limit the opportunities for young Irish musicians to meet and play with their international peers.
Sour grapes, I hear you say - more arts organisations asking for favourable treatment.
Why don't the artists pay the VAT themselves? Well, the VAT rules say the end user of the service pays and since promoters can't collect it from the audience, they have to stump up themselves. And by the way, we're not asking for special treatment here - arts organisations pay all their taxes and levies like any other employer - but we are looking for the Government to do what most other governments have done in Europe, and that is recognise the fundamentally peripatetic nature of artists' careers.
The fact that this VAT isn't levied on artists in the UK creates a particular anomaly for arts organisations in Border counties, such as Earagail Arts Festival and An Grianán Theatre in Donegal. Dublin is distant but Derry is in their back yard. They would like to foster more North/South exchange but to bring a group of actors 20 minutes down the road means incurring a crippling additional 21 per cent VAT bill (although the same is not true in the other direction). Reducing cultural exchange North/South is hardly in the spirit of the St Andrews agreement - a point that has been made by the Arts Council of Ireland and the Arts Council of Northern Ireland, Fáilte Ireland, Culture Ireland and the Oireachtas Arts Committee.
The EU VAT directive, which is the source of this new rule, contains within it a remedy, in the form of an exemption on cultural grounds.
That's what we have asked Minister for Finance Brian Cowen to introduce, based on the idea that subsidised and voluntary organisations (usually receiving grants from the Arts Council or local authorities or both) are in business for the public good, and not to make a profit, so helping them doesn't create unfair competition. Fixing this will help in no small measure to secure the future of some of our most valuable live cultural assets: our orchestras and dance companies, our theatres and arts centres, our festivals large and small.
Seldom has there been such unity in the cultural life of this country - from arts councils North and South, to tourism interests, to representative bodies and individual organisations the length and breadth of the country.
The cost to the Exchequer is marginal - certainly less than three quarters of a million euro - but highly important to the few dozen organisations concerned.
Brian Cowen has a unique opportunity to level the playing field. We sense there is a willingness to find a creative solution. We hope he will find a way to fix this.
• Tania Banotti is chief executive of Theatre Forum, a lobby group for the performing arts