Millionaire musicians to lose Irish tax free status

Published Friday 31 December 2004 at 13:10 by Anthony Garvey

The tax free status accorded to writers, artists and musicians in the Irish Republic is to be reviewed, with a minimum tax rate or sliding scale of reliefs likely to be introduced for top earners.

The review has been announced by finance minister Brian Cowen in response to widespread public anger that millionaires in the music business and other fields have been using relief schemes that allow them, legitimately, to avoid paying any tax on their earnings. Cowen has promised that the changes recommended by the review will be put in place in his budget for 2006.

The tax free scheme for writers, artists and musicians was introduced more than 30 years ago by former Taoiseach Charles Haughey, an arts patron who was then finance minister. The scheme, unique to Ireland, was intended to show how the country valued artistic and creative talent, as well as being of practical help to struggling artists.

At the time there were few high earners in the Irish arts. Today, music groups like U2, The Corrs and Westlife, singers including Enya, Van Morrison and Chris de Burgh and shows like Riverdance, are earning millions worldwide.

Under the scheme, according to figures from the Irish Revenue Commissioners for 2001, 28 artists and musicians earning between half a million and ten million euros paid no tax. In total there were 1,323 claims for tax exemption involving 80 million euros in income, with just 446 of these from artists earning less than 5,000 euros.

Green Party member of the Irish parliament Ciaran Cuffe called for the tax benefits under the scheme to be capped or operated on a sliding scale.

He said: “This scheme was meant to assist struggling artists, not bolster those on high incomes. When you realise that some of the people who now benefit are earning an average of over a million euros, it’s time to look at it again”.

Taoiseach Bertie Ahern told parliament that with restrictions on the way, “the game is up” for wealthy people who used relief schemes to avoid paying tax. His deputy, Mary Harney, argued that, irrespective of reliefs, high earners should be subject to a minimum tax rate of 20%.

“I don’t believe that anyone should be able to write off 100% of their income by using relief schemes,” she said.