The tax exemption enjoyed by artists is expected to survive Budget Day restrictions, following the decision of the Minister for Arts, Sport and Tourism to declare his public support for it. John O'Donoghue said yesterday the exemption was "enormously encouraging" for artists and brought international kudos to the Republic.
"I am concerned that the... scheme has come in for quite a bit of criticism in recent times," he told a conference on the economic and social significance of the performing arts in Dublin.
He opposed changes, saying restrictions would not force internationally known performers such as U2, Enya and others to pay tax on foreign earnings, since the money would not come to the Republic if the exemption went.
The Minister has had talks with Minister for Finance Brian Cowen on the matter, though Mr Cowen officially, at least, has so far reserved comment.
Last night, official sources indicated a belief that the exemption would survive, even if the Minister moves on Budget Day in early December to curb property tax breaks.
Mr O'Donoghue said: "I have always supported the scheme, and I continue to support it, for what I believe are very good reasons that stand up to scrutiny.
"[ It] emphasises and expresses, in a very tangible way, the special position that Ireland affords to its artists and to the arts in general.
"The exemption is enormously encouraging to artists, it increases arts activity in the State, and it makes the difference for many artists when they reach the stage in their lives of having to consider whether to stay with an artistic career or to leave it for something more economically mainstream.
"Internationally, this exemption is extremely well regarded, and it has very positive effects on the way artists and others view Ireland from all around the world. To significantly restrict a scheme that has operated very successfully since 1969 would send a most negative signal to artists in Ireland and to those looking in at us from abroad about Ireland's attitude to the arts.
"The absence of a cap means major international figures live here, who might otherwise live abroad," he said.
Figures from the Revenue Commissioners for 2001 show over 50 per cent of beneficiaries earned less than €10,000, 90 per cent less than €50,000, while just 2 per cent accounted for 58 per cent of the exempted income.
Rejecting calls for a cap on tax-free earnings, Mr O'Donoghue said: "We also have to be very cautious about capping the income levels at which artists qualify. At one level, it seems to be fairer to apply a cap, but it seems unlikely that this would in fact bring any benefits for the Exchequer."