A tax exemption scheme for struggling artists has been spared abolition by finance minister, Michael Noonan, following a favourable review of its value.
A report on the artists’ tax exemption, which is worth more than €5m to writers, composers, artists and sculptors, supported, on the balance of arguments, retention of the scheme.
The decision will come as a relief to members of the arts community who were concerned that it faced abolition.
The exemption has been in place since 1969 as a result of the initiative of Charles Haughey who as minister for finance wanted to support the artistic community.
Under the scheme, income earned by artists from the publication or sale of their works is exempt under certain circumstances, but generally for original works of artistic or cultural merit.
However, it had fallen into some disrepute in recent years due to celebrities and sports stars claiming tax exemptions for income generated from sales of their autobiographies.
The review said the original intention of the scheme had been “undermined” as biographers of celebrities, politicians and sports persons had availed of the exemption. Among those to benefit from tax breaks were Bertie Ahern, Brian O’Driscoll and Ronan O’Gara.
A cap of €40,000 was placed on the exemption level in 2011 — a figure increased to €50,000 last year. As a further restriction on high earners, the amount that artists can claim under various tax reliefs is limited to €80,000 in any one year.
At its height, the exemption cost taxpayers €37m in relief 2001, falling to €21m by 2008. However, the introduction of lower caps saw the figure shrink to €5.3m by 2013, although the number of annual claimants has remained largely static at 2,580.
The review contrasted the cost of the scheme and the number of beneficiaries with direct funding provided by the Arts Council to less than 260 artists, for €3.4m.
It said the fall in the cost reflected the cap and the impact of the economic downturn on artists’ incomes. It noted that several high-earners might also have changed their tax residency after restrictions were introduced in 2007. The scheme costs around €270,000 annually to administer.
The review said such changes meant the artists’ exemption was now a more targeted scheme aimed at supporting artists on low incomes . It did not support calls by the Arts Council for the introduction of income averaging over a number of years to counteract the high volatility in artists’ income but said it would examine the option further in 2016.
The report acknowledged that the perception that many artists survived on very low income was supported by Revenue statistics. It averaged €11,200 in 2013, although about 10% of artists earn in excess of €100,000.
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