John O'Donoghue (Kerry South, Fianna Fail)

I have consistently argued that the tax exemption for artists has very positive effects on the arts in Ireland. The scheme was innovative and imaginative from the outset, and the benefits are many. This scheme increases the level of artistic activity, encourages artists to stay with the arts rather than moving to more lucrative occupations, makes Ireland a more attractive place for artists to live and enhances our image throughout the arts world internationally.

For most artists, the questions of milking the system or making vast dividends from the scheme simply do not arise. Earnings in the arts, unfortunately, are low, and the issue facing most artists is that of economic survival. It is clear that most of those benefiting under the scheme are very low earners. Revenue's own figures for 2001 show that more than 50% of beneficiaries had earnings of less than €10,000 per annum and 90% had less than €50,000 per annum. The very low-income figures available from Revenue for this scheme must be viewed in the context of very uneven earnings profiles. An artist who earns €50,000 in a given year may earn little or nothing in years either side of it. Annual earnings can be very much lower when averaged out.

It has validly been pointed out that 2% of beneficiaries account for 58% of the exempted income, indicating that there is a small number of people who make very large amounts of money on which they do not pay tax. However, while equity suggests that capping the scheme would correct this, much of these earnings are foreign income which simply will not come here at all if the exemption goes. The really high earners are predominantly musicians, and research carried out in 2002 indicated that 97% of the income of the top twenty music recording artists is from foreign sources.

Essentially, the anticipated benefits of adjusting the scheme are likely to be outweighed by the negatives. I have made these views known to my colleague, Deputy Cowen, the Minister for Finance, and officials of our two Departments have had detailed consultations on the issues, which are continuing. It will ultimately be a matter for the Government to decide on the continuation of this and other tax concessions in the context of its consideration of the outcome of the general review of tax concessions initiated by the Minister for Finance.

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