How deep is the artists exemption cut?
A €210,000 drop in the artists exemption seems a dramatic figure, but what do the artists who will – or, in some cases, won’t – be affected think?
ON WEDNESDAY, as part of the cutbacks being implemented in the Department of Tourism, Sports and Culture, it was announced that the cap on the income tax exemption on artists’ earnings would drop from €250,000 to €40,000 per year.
First established in 1969 by former taoiseach Charles Haughey, there was originally no cap on the amount that could be earned, tax-free, by writers, artists, musicians, composer and other professional artists ordinarily resident in Ireland. This changed in 2006 to €250,000 a year, although the number of people earning above this figure has never been more than a handful.
The Department of Revenue regularly publishes data on the number of people who avail of the scheme, and the amount of income that is exempt. The latest figures are for 2007. They also publish the names of those who successfully apply for the exemption, although they do not identify how much each individual saves by the process.
The great majority of those artists who avail of the scheme already earn under €40,000. Two of these who will come under the threshold this year are visual artists Oliver Comerford and Nick Miller.
Comerford had a mid-career retrospective at the RHA this year. “The sales of artworks are quantifiable in monetary terms, but the time to make the work is not,” he points out. “I feel there’s an underlying suggestion in the figure of €40,000 that says something from officialdom about a lack of ambition for artists; that €40,000 becomes the acceptable threshold for them to earn.”
“There doesn’t seem to be any logic to the figure of €40,000,” says Miller, who recently had a show at the Rubicon Gallery in Dublin. “It seems an entirely arbitrary figure. I know what they’re trying to do: they are trying to hit the very small percentage of people who make a lot of money. The thing is, that has an impact on everyone. The majority of artists I know are not even hitting the €40,00 bracket.
“I would only show every two to three years, so in that way, your income should really be assessed over a few years. If you were lucky enough to make €40,000 in a show, you have to make that money spread over three years.
“It’s difficult for people who don’t work in that way to understand. It would be far better to have a way of assessing the income over the time it takes to create the work. I would call on the authorities to look at doing that,” says Miller.
Conversely, two of those who currently qualify for the exemption and will come in over the new threshold of €40,000 this year are crime writer John Connolly and Paul Howard, author of the Ross O’Carroll-Kelly series of books.
“The fact that any exemption at all remains in place is something to be celebrated,” says Connolly. “The purpose of the exemption was to create a climate in which writers and artists could flourish, particularly at the start of their careers. It wasn’t there so that a small handful of individuals could bank large sums, tax-free.
“The exemption is also a more efficient way of encouraging artistic endeavour than, say, grant aid, since it requires the beneficiaries to actually produce work that sells before any benefit accrues.
“On a personal level, will the reduction hurt? Yes, of course. I suppose it allowed me to pretend that I wasn’t running a business. I employ a couple of people to deal with bookstores, promotion, organisation, publicity etc, particularly in the US, as publishers are no longer really in a position to do that on a micro level for their writers. I also pay someone to maintain my website, as that’s a technical skill I don’t have.
“All of this will continue to be necessary, but the cost will impact much more. But, in the end, paying taxes is a social duty, and nobody should be entirely exempt from some contribution.”
“I have absolutely no problem with the idea of paying tax,” says Howard. “For me, it was something I enjoyed for a few years while the country could afford it, and now I think it’s glaringly obvious that we can’t. In common with everyone, I want to pay as little tax as possible – but I earn a decent living from my writing and I’m more than happy to pay my taxes.
“One thing we’re notexempt from as writers is empathy for other people. I think it would be the height of arrogance for me to stand up and say ‘nurses should pay tax but I, as a writer, shouldn’t’.”
Artists exemption: The figures
In 2007 – the year for which the latest figures are available from Revenue:
2,427 people availed of the artists exemption scheme
The total exempt income for 2007 was €84,876,253
The largest single cohort was 951 people, who earned less than €6,000
Three people earned between €500,000 and €1 million while seven people earned more than €1 million
The total figure rendered exempt from tax by these 10 people was €13,811,636