Artists Tax Exemption is Deadweight, says Tax Commission

The Irish Times points out today that while the Tax Commission recommends the scrapping of the Artists Tax Exemption because it is a "deadweight" element, it proposes maintaining the Sportsperson's relief (subject to a cap) partly because of their "encouragement of positive role models which younger people may seek to emulate."

Here is the entire text of the reasoning behind the scrapping of the Artists Tax Exemption, as listed in the Tax Commission's report:

13.23 Artist’s exemption

Description
Income derived from original and creative artistic works (of artists, writers, composers and sculptors), which are recognised as having cultural or artistic merit, is exempt from income tax.

Conclusion
This exemption is not compatible with the equity principle. In addition, it is likely that the exemption involves a significant deadweight element in that the beneficiaries of the relief are likely to engage in their creative activities regardless of the existence of the relief. It is of no benefit to artists whose income does not reach the taxable threshold.

While the tax exemption may have created an environment in which the arts can flourish, considerations of equity and efficiency outweigh this factor and, accordingly, we recommend that the exemption be discontinued. To the extent that there is a need for recognition of income from artistic activity in the tax system, this should focus on those who derive their income solely or predominantly from creative work and in this context, income averaging may have a role to play.

In making this recommendation we note also the fact that the Arts Council operates a system of grants in support of all arts disciplines.

Recommendation 8.98
The artist's exemption should be discontinued; consideration should be given to introducing income averaging in the taxation of income from creative work.

The emphasis in the quoted material is my own.

The concept that Artists should not receive any relief for their work because they would engage in it anyway is simply a leap of imagination on the part of the Tax Commission entirely without any factual basis, and implies an utter disdain for the work of Artists and their contribution to Irish culture. It also implies that Art has no cost: as if the time, materials, and tools that Artists require to perform their work is free.

In relation to the gross generalisation about the Arts Council funding, it is imperative to point out that there is intense competition for those grants, not everyone is in receipt of that aid, and the Arts Council is facing a vicious cut of its budget, which will result in a significant reduction of those few grants.

Thus the Tax Commission is going to scrap the Artists Exemption partly based on the concept that Artists are receiving grant aid - which most Artists don't receive on any kind of regular basis!

At no point is it noted that the payment of Artists in Ireland is calculated upon the fact that they are tax exempt, and if the exemption is scrapped Artists will need an equivalent pay increase - which no theatrical/production/publishing company or gallery is going to be able to match in this economy.

The dirty secret in Ireland is that writers/artists/musicians on the whole are vastly underpaid, not even matching the hourly minimum wage. It's true that many Artists' incomes don't meet the taxable threshold, but this horrific fact is not given any consideration.

The only argument in favour of getting rid of the tax exemption would be if it resulted in an improvement of Artists' wages (which would bring in a proper revenue stream for the government). This would require a mandatory overhaul of the payment schemes for Artists in Ireland. Yet, clearly this idea has never entered the consciousness of the Tax Commission.

It's going to scrap a scheme that has allowed Artists to endure the long process of establishing a career (often reckoned at ten years) on low and inconsistent incomes. The Tax Commission makes a throwaway concession that Artists often endure on erratic wages (one large payment may have to cover several years work), but doesn't offer any comprehensive solution for this issue.

And apparently sportspeople make excellent role models for young people, but Artists do not.

If the Tax Commission's recommendation comes to pass then certainly Artists won't be role models for young people, because they will be on the streets, broke.