End Artists' Tax-Free Status?

magpie

I found this article in the Irish Times today. Is it time to rethink the tax breaks for artists in Ireland? While I agree in principle, and it is a good way to help out struggling artists, it's a little rich that fat cats like U2, Boyzone, The Corrs and (!) Celia Ahern don't pay tax on their 'art'. Should there be, as the greens suggest, a cap on the maximum amount of tax relief that can be claimed? It's not as if any of these people are ploughing the money they save back into the economy. It just gives the Edge extra spending money for his next trip to Monaco.

The special tax relief deal available to composers, artists and writers has resulted in one multi-millionaire being able to avoid paying tax on up to €10 million earned in just eight months.

New figures from the Revenue Commissioners show 28 artists earning between €500,000 and €10 million claimed exemption on over €46.6 million in earnings in 2001.

The big winners from the scheme are thought to be music millionaires lodging claims for exemption on income from their lyrics and musical compositions.

The tax-free status for artists' and writers' earnings was introduced by former taoiseach Charles Haughey when he was finance minister in 1969. It was intended to show the State valued creative people in society.

Ireland is unique in the world for allowing artists to keep every cent of their earnings, though they do pay PRSI.

When Mr Haughey brought in the scheme there were few high earners here amongst the ranks of the country's writers, playwrights, composers, painters and sculptors.

Since then a number of novelists have written international best-sellers and Irish musical talent has scored major successes. Rock groups like U2, The Corrs, Boyzone, Westlife, singers like Enya, Van Morrison, Chris de Burgh and major shows like Riverdance are making superstar earnings around the world.

The scheme has also helped new writing successes like Cecelia Ahern, daughter of the Taoiseach, Mr Ahern, who claimed for the earnings on her best-selling first novel, PS I love you.

The most recent figures for the cost of the scheme are for the short eight-month tax year in 2001, before the switchover to calendar-year income tax returns.

There were 1,323 claims from artists, involving €80 million in income. Granting the exemptions cost the Exchequer €23.5 million.

It is estimated that the cost of the scheme in the full tax year 2000-01 was €36.8 million, according to figures supplied to Green Party TD Ciaran Cuffe by Finance Minister Mr Cowen.

Mr Cuffe, who is equality spokesman for the Greens, said he believed there should now be a cap on the amount of income tax relief that can be sought.

"This scheme was meant to assist struggling artists but it seems as though the bulk of benefits are now accruing to those on high incomes," he said.

"When you realise that there are 28 people earning an average of over a million each in the scheme I think it is time to look again at it even though most of them are probably my constituents in Dún Laoghaire."

Tax inspectors make their decision on applications using guidelines drawn up by the Arts Council and the Minister for the Arts.

chewy

cap is a good idea

luckat

Virtually all of the people who benefit from this tax relief are as poor as church mice.

Remember, the tax relief is *only* on your actual artistic work - books of fiction, paintings, compositions, films, sculptures and so on - and not on any ancillary work.

So artists have to pay tax on readings, classes, etc.

Sure, there are a few millionaire artists. But they are few, and they are not the majority.

I wouldn't agree with a cap at all. Caps have a way of quickly wiping out any advantage. Remember when there was a tax on huge houses owned by multimillionaires, houses that cost as much as *gasp* £100,000?

Why be so ungenerous as not to want to give recognition and financial reward to artists who interpret our world and our society?

Gurgle

luckat wrote:

I wouldn't agree with a cap at all. Caps have a way of quickly wiping out any advantage. Remember when there was a tax on huge houses owned by multimillionaires, houses that cost as much as *gasp* £100,000?

Good point.
Caps on pretty much anything have a habit of not being updated.

Besides, its one of precious few reasons for rich musicians, actors and artists to live here. Its pissing rain most of the time, getting from A to B is torture and a €2 million house in Dublin is a semi-detached 4 bed.

Is it worth giving these people one more reason to move to the Caymans / LA / Barbados ?

What would that do for the exchequer ?

At the moment, these artists earn plenty of tax for the country, through VAT on books, CDs etc., corporate tax paid by the publishers, printers and record companies, merchandising. They don't directly pay tax but they certainly cause tax to be paid.

Its not as if there would be €46.6 million more tax paid if they lost the tax exemption status.

cdebru

why not have a base rate say 10%
that anyone over the minimum wage must pay
irrespective of any tax breaks


that way at least everyone is paying something

chewy

that _is_a good point about caps

although I wouldn't expect them to pay it just above minimun wage, I don't know if minimun wage could be applied to someone making art for a living...?

cdebru

chewy wrote:

that _is_a good point about caps

although I wouldn't expect them to pay it just above minimun wage, I don't know if minimun wage could be applied to someone making art for a living...?

any income above the rate of the national minimum wage averaged over a 40 hour week 52 week year
ie 7e an hour 280 euro a week 14560 euro a year

anything over that ammount you pay a basic rate 10% whatever

if you earn a million you pay at least 10% of 1000000 less 14560 = 85540
for example no matter what breaks you claim ]
does that explain it

chewy

i change the could to should

m1ke

A lot of artists out there are still making a pittance, lower than minimum wage infact - many of them certainly wouldn't be creating anything without the tax break. It's extremely difficult to make a living in Ireland based just on your artistic output. By giving artists a tax break it frees them to be creative and having to work in video rental stores.

An artists income isn't fixed: some years they make nothing, some years they do well. As an example, if a painter spends 5 years creating a body of work and then exhibits and makes 100,000 euro - they're launched unfairly into the high tax rate when infact it's taken five years effort.

Some individuals may only write one best selling novel or book that contributes a lot to our society and the way we look at ourselves - and I believe they should be able to profit to the maximum extent possible.

VAT is still charged on sales over 50,000 euros, so the taxpayer benefits. If individuals in the music industry are faced with a cap they might also lower their production to avoid the cap and cause a fall in VAT revenue.

OfflerCrocGod

Wont Someone Think Of The Artists!!

AngelofFire

I wouldn`t call westlife or boyzone "artists", they dont even write their own songs, they`re just a marketing tool that helps to make a record company rich, therefore they should be taxed

An artists income isn't fixed: some years they make nothing, some years they do well. As an example, if a painter spends 5 years creating a body of work and then exhibits and makes 100,000 euro - they're launched unfairly into the high tax rate when infact it's taken five years effort.

i agree ,REAL artists deserve tax concessions not tossers like westlife.

cdebru

AngelofFire wrote:

I wouldn`t call westlife or boyzone "artists", they dont even write their own songs, they`re just a marketing tool that helps to make a record company rich, therefore they should be taxed




i agree ,REAL artists deserve tax concessions not tossers like westlife.

afaik westlife dont come under this as you have to create something for it to be art covering other people music is not covered
if they have an orignal song that they wrote income from that would be tax free

Victor

luckat wrote:

Virtually all of the people who benefit from this tax relief are as poor as church mice.

To gain from from tax relief you need to be paying tax, to be paying tax, you need to have an income of approximately minimum wage. In practice, the vast majority of the relief goes to a very few, very rich, artists.

Remember, the tax relief is *only* on your actual artistic work - books of fiction, paintings, compositions, films, sculptures and so on - and not on any ancillary work.

Artistic work covers both the creation and performance, but not and media involved.

Sure, there are a few millionaire artists. But they are few, and they are not the majority.

But they get all the money.

I wouldn't agree with a cap at all. Caps have a way of quickly wiping out any advantage.

The suggested cap (rather a minimum tax) only removes the (part of) advantage to the super-rich, while redistributing the income to those in greater need (whether you restrict that to artists or not is another matter).

Why be so ungenerous as not to want to give recognition and financial reward to artists who interpret our world and our society?

Maybe healthcare is more important to ordinary people?

Redleslie2

Section 195 of the Taxes Consolidation Act, 1997 provides that a work for the purpose of the Section is an original and creative work if it is in one of the following categories:

Books or other forms of writing
Plays
Musical compositions
Paintings or other similar pictures
Sculptures.

In broad terms, therefore, in order to secure exemption under Section 195, your work has to be both original and creative and to have either cultural merit or artistic merit. It is not necessary for your work to have both cultural and artistic merit - the presence of either quality is sufficient.

Cultural or artistic merit

A work has cultural merit if:

Its contemplation enhances the quality of individual or social life as a result of its intellectual, spiritual or aesthetic form and content.
A work has artistic merit when:

Its combined form and content enhances or intensifies the aesthetic apprehension of those who experience or contemplate it.

"Original and creative"

For the purpose of a determination under Section 195 of the Taxes Consolidation Act, 1997, the term "original and creative" encompasses any unique work that is brought into existence for the first time as an independent entity by the use of its creator's imagination.

Any clearer? I reckon the rich artists should be taxed to pay for the Arts Council or something.

steviec

If an artist is earning so little that he needs tax exemption to get by, then there mustn't be any demand for his 'product', so why waste our Governments money encouraging him while his local school is falling apart? Why not let him get a job and pay his own way like everybody else who actually contributes to society does.

Redleslie2

steviec wrote:

If an artist is earning so little that he needs tax exemption to get by, then there mustn't be any demand for his 'product', so why waste our Governments money encouraging him while his local school is falling apart?

Because sometimes it takes the public a long time to become aware of an artist's work, especially if the work is considerably different to what has gone before. The market needs time to adjust. Van Gogh is the classic example. He sold two paintings out of about 800 created while he was alive, and one of those was to his brother.

Why not let him get a job and pay his own way like everybody else who actually contributes to society does.

Lots of artists do this already.

Victor

steviec wrote:

If an artist is earning so little that he needs tax exemption to get by, then there mustn't be any demand for his 'product', so why waste our Governments money encouraging him while his local school is falling apart? Why not let him get a job and pay his own way like everybody else who actually contributes to society does.

Stop. Put brain in gear. Back up. Read my post again.

Tax breaks only really help sucessful artists.

m1ke

Victor, you should re-read my post. Artists success in financial terms can vary year after year in extremes. Your generalisation that 'Tax breaks only really help sucessful artists' is just too simplistic.

Victor

m1ke wrote:

'Tax breaks only really help sucessful artists'

OK, I'll be more specific - 'Tax breaks only really help sucessful artists in their sucessful years'.

Cork

There was a time that certain foriegn artiests actually lived in Irelad to avoid paying tax.

If we did away with this exemption - would our successful artiests gather up sticks and move to a less taxaing country?

So, would any changes be self defeating and generate precious little in additional tax revenue?

Victor

Cork wrote:

So, would any changes be self defeating and generate precious little in additional tax revenue?

Hence suggestions like:

cdebru wrote:

why not have a base rate say 10% that anyone over the minimum wage must pay irrespective of any tax breaks that way at least everyone is paying something

Redleslie2

Victor wrote:

OK, I'll be more specific - 'Tax breaks only really help sucessful artists in their sucessful years'.

Have you any evidence of that? I know a few people who avail of it and it does help them get by.

m1ke

According to the article in the first post - 'Granting the exemptions cost the Exchequer €23.5 million'

A 10% base rate would generate 2.35m for the state. Is it even worth the hassle? Is there really a need for a poll tax, considering it'll mostly screw over the many poorer artists? Especially considering the nature of the work involved - many large once off payments - and then years where income is for some individuals is zero. I can think of other areas that deserve taxation over this to be honest, it's a pointless attack.

Victor

Honestly guys, trolling or naivety?

Redleslie2 wrote:

Have you any evidence of that? I know a few people who avail of it and it does help them get by.

To repeat.

To gain from from tax relief you need to be paying tax, to be paying tax, you need to have an income of approximately minimum wage. In practice, the vast majority of the relief goes to a very few, very rich, artists.

m1ke wrote:

According to the article in the first post - 'Granting the exemptions cost the Exchequer €23.5 million' A 10% base rate would generate 2.35m for the state. Is it even worth the hassle?

If you are going to comment at least get your figures about right. The figure would be (using the 42% higher tax rate) in the order of €23.5/.42*.1 = €5.6m

m1ke wrote:

Is there really a need for a poll tax, considering it'll mostly screw over the many poorer artists?

No! A poll tax is a fixed tax regardless of income. Income tax is progressive (the less you earn the less you pay), it is not a poll tax. "Poorer" artists (under about €12,000) don't pay income tax, so they can't avail of this tax relief.

m1ke wrote:

Especially considering the nature of the work involved - many large once off payments - and then years where income is for some individuals is zero. I can think of other areas that deserve taxation over this to be honest, it's a pointless attack.

Actually a rebalancing between some income tax and lower VAT would benefit the poorer artist more.

m1ke wrote:

I can think of other areas that deserve taxation over this to be honest, it's a pointless attack.

Yes there are, but please stop defendin Bono paying little or no income tax.

Redleslie2

Victor wrote:

Honestly guys, trolling or naivety?

Neither, just not sure what the facts and figures are and how the shceme works in practice.

m1ke

Yeah my figs are incorrect in the previous post. However, so are your revised figures, because the taxable income is actually 80m. It still doesn't matter, it's a very small amount and I stand by my original point.

I'm certainly not trolling and take offence to that suggestion. It's a typically Irish thing to go after one of ours who are successful such as Bono and just disregard all the other people who are affected in the spillover - maybe a Bono tax would satisfy you?

Victor

m1ke wrote:

because the taxable income is actually 80m.

No it says claims were €80m. Not all claims are granted.

Cork

Why are people obsessed that earnings should be taxed?

IF FF had left the property tax they brought in in place property prices would be far lower today. But alas the Irish middle classes revolted.

But, why not put a cap on the earnings of high earning artiests & see if they will flee the country? Before, they'd leave they'd do the chat show and radio circuit.

We'd haer all the guff about the jobs they are providing etc + all the good charity work they do.

But I surpose it would bring more equity into the system.

Victor

How about we do tax breaks for politicians?

Cork wrote:

But I surpose it would bring more equity into the system.

Yes and it means we could pay nurses more (or tax them less). Won't somebody think of the nurses!

Gurgle

Victor wrote:

To gain from from tax relief you need to be paying tax, to be paying tax, you need to have an income of approximately minimum wage.

IMHO Minimum wage is not enough to get by on, especially if you need to buy (for example) art materials, instruments etc.
Even less so if your actually trying to support a family at the same time.

Victor wrote:

In practice, the vast majority of the relief goes to a very few, very rich, artists.

Ah come on now Ted!

For every 1 artist earning millions there will be 10 under minimum wage and 1000 in between the two.*

*Figures may vary depending on reality and semantics

cdebru

Gurgle wrote:

IMHO Minimum wage is not enough to get by on, especially if you need to buy (for example) art materials, instruments etc.
Even less so if your actually trying to support a family at the same time.

no one is suggesting that artists should only be paid the minimum wage
so what is your point
i merely suggest that anybodys income(over the minimum wage although the base could be higher than that) not just artists should be at least taxed at a base rate if they are not paying paye
this would also apply to the millionaires who pay no income tax
why should any group of people earning good money be exempt from paying to wards the cost of schools, hospitals, gardai, public transport, roads etc

I presume artists send their children to school go to the hospital when they are sick why should they expect to piggy back on the rest of society