Changing or ending the artists tax exemption scheme could lead to artists leaving the State, writes Mary Cloake
The merits of the artists tax exemption scheme have been hotly debated since the Minister for Finance announced his intention to review this, along with other tax reliefs, late last year. The scheme allows income arising from the creation of a work of art to be earned free of tax. The exemption is limited only to creative work. This means that writers, composers and visual artists benefit but performing artists - actors, choreographers and musicians - do not.
Introduced in 1969, the artists tax exemption has been widely recognised throughout Europe and the rest of the world as an enlightened act by what was - at the time - a relatively poor country, at the edge of Europe, to cherish its artists and their creative output. To remove or alter the scheme, now that we have a thriving economy and a vibrant cultural life, would be to curtail our artists' creative work, devalue the fundamental contribution that artists have made to our new confident Ireland and send our next generation of artists abroad.
Despite economic growth, most artists still earn very little. Dermot Bolger, one of our established authors, outlined in this newspaper the financial challenges associated with being a full-time writer. His experience is mirrored by many other artists - half of those availing of the exemption in 2001 earned an average of €5,213 from their creative work that year. By comparison, the average industrial wage was €11,000. Of the other half, 48 per cent earned between €10,000 and €50,000. In many cases this income represents the result of three, four or five years' work on a book, a play, an exhibition of paintings. Income can vary radically from year to year, and the scheme represents the difference between taking a second job and being able to concentrate fully on creative work.
The exemption therefore allows artists to persevere. The very successful RTÉ TV drama series Pure Mule was the result of sustained work by its author Eugene O'Brien over four years. It took three years for playwright Billy Roche to write the screenplay for the film Trojan Eddie. And for some visual artists, whose reputation is established late in their career, an income from a successful exhibition has to be taken in the context of a whole lifetime of low earnings, rather than just for one year.
Artists tax exemption encourages artists to stay and work in Ireland. Paul Brady recalls that in the 1980s there was little or no support in terms of infrastructure for the musician in Ireland, and the number of venues and audiences was limited. It was difficult to gain a foothold as a recording artist in the international arena while still living here. Brady seriously considered making New York his home. The tax exemption was instrumental in tipping the balance in favour of staying in Ireland.
The scheme has therefore supported a generation of artists to stay in Ireland and help to build on our history of excellence in literature and traditional music. In a handful of cases high earnings in the area of popular music have been achieved. By staying in Ireland throughout the 1980s, these musicians and song writers have helped to develop the vibrant music industry and infrastructure that exists today, and their ongoing work here maintains employment as well as artistic and technical know-how in the music industry. These benefits are both cultural and economic.
If a ceiling on tax-free earnings - a cap - were to be introduced into the scheme, what would be the effect?
Certainly, it would not be a windfall in tax revenue for the exchequer. The economic effect would, in fact, be the reverse. For the very small number of high-earning artists, their income is largely made up of foreign earnings - the proceeds from sales abroad of books or music publishing. If the scheme were to be capped it is highly unlikely that this income would continue to come into Ireland. High-earning artists may arrange to have their income taxed elsewhere. This would mean, under tax legislation, that these artists would be precluded from working in Ireland for even one day per year. This would have two effects. Firstly, it would drive away the economic activity that results from their creative work (and the consequent tax income) thereby increasing the tax burden for other taxpayers. Secondly, employment which arises from the investment in, for example, music recording studios, would be lost along with the expertise that has taken years to build up.
High-profile artists provide role models as well as encouragement and advice to those who are up-and-coming. If the scheme is capped, we will lose some of our high-profile artists. We may well also be faced with a new generation of artists who will choose to base themselves in London, New York or Paris, where they are close to bigger and more central markets.
A society's wealth is more than just financial. What artists contribute to Irish society is a perpetual wealth of creative capital. Capping the exemption would make it harder for artists to make that contribution. If we want to encourage a high quality of life for all our people - not just artists - then we need home-grown writers, painters and musicians, who paint or write or compose about, and in, Ireland. We must therefore encourage artists to stay even, and perhaps especially, if they are successful. The successful artists are those whose work is considered relevant and meaningful by many people.
The tax exemption scheme is an equitable piece of legislation - any individual who can produce a creative and original book, play, painting, sculpture or piece of music which is of cultural or artistic merit can avail of the tax exemption. Of course it requires qualities such as talent and application, and we do not all have these in equal measure. But it does not require any investment of funds. It rewards productivity and hard work, in that the benefit accrues when a work of art is made and sold. It encourages people from all walks of life, equally, whether rich or poor, to make art.
The artists tax exemption is an extremely efficient piece of legislation as it costs very little to administer, the State foregoes a small amount of tax for a great benefit, and it is not abused. It has transformed the arts in Ireland. Ending it or capping it would be most short-sighted.
Mary Cloake is director of the Arts Council