Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

Question 15: To ask the Minister for Arts, Sport and Tourism his views on the artists tax exemption scheme; the recommendations he has given to the Department of Finance regarding this programme; if he will support an income averaging of taxation or a reduced tax exemption figure; and if he will make a statement on the matter. [32329/09]

Martin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

As I outlined in my reply of 16 June 2009, the operation of the Artists Exemption scheme is a matter for the Revenue Commissioners under the terms of the Taxes Consolidation Act 1997.

The original intention of the legislation was, inter alia, to create an environment in which the Arts could flourish and to encourage Irish artists to remain here rather than going abroad to earn their living. I fully support this scheme, which is in operation now for 40 years.

The Report of the Commission of Taxation has recommended the substitution of this scheme by a system of income averaging of taxation for artists. Such matters will be addressed in the context of how to improve the efficiency of the scheme and streamline its operation so as to maintain the legislation's original intentions for the benefit of artists and their work and to maintain equity in the system. This consideration will also be dealt with as part of the review by Government of the Commission's overall taxation proposals.

When the then Minister for Finance introduced the Finance Act 1969, he stated that the proposal for artists exemption from income tax was nothing less noble than to enrich our daily lives. A more immediate and pragmatic objective of the legislation was also to strengthen and expand the existing cultural milieu by attracting major established international artists to Ireland, thereby facilitating a synergy with the local arts culture. This was the defining aim of the legislation and not, as some critics of the scheme would have it, to solely support struggling artists. In any review of this imaginative decision it is worth recalling that these artists would not have come to live in Ireland if the tax relief was not introduced, nor indeed would many of our own artists have remained. Therefore, artists availing of the scheme by taking up residence here did not cost the Exchequer anything but they became additional taxable consumers.

It is generally recognised that the Irish have a unique aptitude for words, written or spoken, but the relatively stagnant economy of the sixties meant that our artists, with just a very few exceptions, had low international profiles and low levels of income. Given the economic climate, most artists were struggling to make a living and few could earn enough to be liable for tax. There was little incentive for potential writers to risk undertaking full time writing.

Section 2 of the Finance Act 1969 and its successor, section 195 of the Taxes Consolidation Act 1997, transformed the artistic environment. The inflow of established artists illustrated what could be achieved. In effect, it created a climate for encouraging and sustaining other artists to enter, in increasing numbers, into full time practice of their art. Thus the legislation's objectives were steadily realised.

As regards the current proposal to review the scheme it is my belief that the 1997 Finance Act and the 2005 review were a comprehensive re-evaluation of the whole scheme and brought in several very worthwhile amendments, without interfering with the basic thrust of the legislation and they addressed the equity issue.