Dáil debates
Thursday, 14 October 2010
Other Questions
Artists' Tax Exemption
4:00 pm
Ciarán Lynch (Cork South Central, Labour)
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Question 8: To ask the Minister for Tourism; Culture and Sport her plans to recommend a review of the artists exemption tax; and if she will make a statement on the matter. [36700/10]
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The artists' exemption was introduced in 1969 to create an environment in which the arts could flourish. In 2007, a restriction was applied to the scheme which capped the relief at â¬250,000 per annum.
In 2009, the Commission on Taxation recommended the abolition of the exemption. As a result, the scheme was reviewed following which the Minister for Finance announced in last December's budget that, from the 2010 tax year, the restriction of reliefs applicable to the exemption would be changed by imposing a new entry level threshold to the restriction at adjusted income levels of â¬125,000, with the full restriction applying at â¬400,000. This change was effected in the Finance Act 2010.
On Second Stage of the Finance Bill 2010, the Minister for Finance announced the further review of the effectiveness of sectoral tax expenditures with the results feeding into the 2011 budget. This review required an assessment to be undertaken by Ministers into the effectiveness of tax expenditures within their sectors of responsibility that were examined by the Commission on Taxation. This review has been completed and was sent to the Minister for Finance earlier this year.
The artists' exemption scheme, which has been in place now for 40 years, marks Ireland out as unique in Europe in its support for its artists. The rationale behind the legislation was, inter alia, to create an environment in which the arts could flourish and to encourage Irish artists on modest incomes to remain here rather than go abroad to earn their living. The scheme has been of great benefit and provides encouragement for artists on modest incomes to practice their creative skills. In fact, most of those benefiting are on relatively low incomes. In 2007, 69% of those who benefited from the exemption had incomes of less than â¬20,000 per annum; 77% had an income of less than â¬30,000 and 82% had an income of less than â¬40,000. I have no plans to have any further review of the scheme carried out at this time.
Mary Upton (Dublin South Central, Labour)
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I support the tax exemption scheme for artists because I believe it is important. We could perhaps examine how it is distributed. Perhaps, it could be distributed over a number of years because often an artist might earn a great deal of money in one year from, for example, a piece of sculpture, and may not earn anything for three or four more years. The Minister indicated there will be further changes to the scheme in the forthcoming budget. Does she know at what level the exemption will be capped?
Mary Upton (Dublin South Central, Labour)
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I must have misinterpreted what the Minister said. As she pointed out, the majority of people who benefit from the artists' tax exemption earn below â¬50,000 per annum. Why then are we putting such a high cap of â¬125,000 on it?
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I did not say the amount would be reviewed again this year. I said that tax expenditures generally were being reviewed by the Minister for Finance. I do not think he intends to review the artists' tax exemption.
The limit of â¬125,000 was set in last year's budget. As I stated, 82% of people who benefit from the tax exemption earn â¬40,000 per annum or less. The â¬125,000 limit was put in place to ensure people in the higher income bracket contribute to taxation. The number of people in this category is quite small. In 2006, 1,300 people had an income of less than â¬10,000. Some 50% of all artists earn less than that amount. Fewer than 200 people earned more than â¬125,000. Only the people in that bracket were affected. This was part of an overall policy to hit the higher income earner rather than the lower income earner.
I appreciate what the Deputy had to say in respect of an artist who might spend some time working on a particular piece and who might not do any work the following year. I am reluctant to suggest we change the scheme at all lest people think we would like to change it entirely.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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We do not want to do that as this is a good, internationally recognised scheme. It is one of the areas in respect of which I would suggest it is best to let the hare sit.
Mary Upton (Dublin South Central, Labour)
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There may be scope to review the eligibility of particular individuals. I accept this issue has been raised before. There are people who have availed of the artists' tax exemption who, in hindsight, should not have been eligible to avail of it.
Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I will not get into determining what is literature and what is not. Other issues that arose include whether if something is fixed, it attaches VAT attachment and so on. The tax exemption scheme is good and we are anxious that it would continue.