Artists face taxing times

According to a recent BBC report, he and the rest of U2 have earned more than $1.1 billion since 1990 and thanks to the Irish government, they have enjoyed a sizeable chunk of their earnings tax-free.
But that may soon change, as the Department of Finance in Ireland reviews the Artist’s Tax Exemption Scheme, which excuses individuals who produce original works of art, writing or music in Ireland from paying tax on their earnings from those works.
Charles Haughey introduced the pioneering scheme in 1969 as a means of supporting struggling artists, acknowledging the importance of the Arts in Irish culture and encouraging artists from abroad to choose Ireland as a location to live and work.
In 2002, more than 1,300 artists benefited from the scheme, which is now costing the Government around $130 million annually.
Over 50 percent of qualifying artists earn less than $12,500 tax-free income per year, however, critics have tended to focus on the small minority of high-profile Irish artists like U2, the Corrs and Elvis Costello, whom the scheme enables to earn massive amounts of money without paying tax.
The scheme has also attracted a number of high-profile artists from abroad, who qualify as long as they buy property and live in Ireland for most of the year.
BBC’s foreign affairs editor John Simpson lived in Ireland for several years, where he wrote three books, before returning to Britain last year.
“Trainspotting,” author Irvine Welsh moved to Dublin from his native Scotland in 2003 to work on his latest novel while his girlfriend attended university there.
“I want to be a bit bourgeois now, and sit in front of the fire with my pipe and slippers,” he told a British newspaper prior to his move.
British rock bands Def Leppard and Spandau Ballet also moved to Ireland at the height of their fame in order to avail of the tax exile.
The Revenue Commissioner’s office in Ireland estimates that discluding high-earning artists from the scheme would save the government $45 million per year.
Arts Minister John O’Donoghue indicated recently that the Department of Finance may introduce a cap on tax-relief for artistic earnings.
“We have a situation in this county where some extraordinarily wealthy people pay no tax, whereas some people on incomes of 30,000 are paying 42 percent tax. It’s a very unhealthy for democracy,” according to Joan Burton TD, the Labor Party’s spokesperson on Finance, who has campaigned for an annual cap of $245,000 on artistic tax relief. Recent reports have suggested that the cap might be as low as $123,000 per year.
The Irish Arts Council is fighting to keep the exemption. They argue that capping or removing tax relief on artistic earnings will, in the long-term, prove costly to the government and damaging to Ireland’s international reputation as an artistic hub.
“A cap would actually mean less money to the exchequer,” according to the Council’s director Mary Cloake, who submitted a number of proposals to the Department of Finance before the review began in March.
“Its worth having a small number of high-earners here because they spend a lot of money. If there were no exemption, they would move to Paris or London where the art market is bigger and we would lose the tax they do pay. In year one, we estimate that the Government would benefit to the tune of around