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Bono will leave country, Irish government warned

Published Friday 16 September 2005 at 16:15

The Irish government has been warned that it could drive out some of the country’s millionaire stars, such as U2, if it opts to scrap the artists’ tax exemption scheme in the forthcoming budget.

The warning was delivered by David Kavanagh of the Irish Playwrights and Screenwriters Guild, testifying last week in Dublin to an Irish parliamentary committee on the arts. If the scheme was abolished or capped, he said, millionaire artists would come under great pressure to leave the country and live and work abroad.

An artist like Bono was “priceless”, he told the committee. If he left, Ireland would lose “an extraordinary economic advantage”. By staying in Ireland, the small number of high-earning artists such as the U2 lead singer made an immense contribution to the country’s arts reputation internationally, as well as to the domestic economy.

The artists’ tax exemption, introduced by former Taoiseach Charles Haughey almost 40 years ago, is one of 20 similar relief schemes currently being reviewed. Revelations that artists, mainly in the music business, are exempt from tax while earning between 500,000 euro and 10 million euro have put the government under pressure. Finance minister Brian Cowen has promised to take action in his next budget, due in December.

But Kavanagh told the committee that of the 1,300 who benefit under the scheme, only 30 are top earners. Of the rest, 52% had an average exempted income of just 3,909 euro, while the tax-free incomes of a further 34% ranged from 10,000 euro to 50,000 euro. Working artists’ income, he said, could be defined in two ways: “First of all, there is very little of it and secondly, it comes in very irregularly.”

But the income was improved by the exemption scheme. Scrapping it would mean the state would have to subsidise artists directly instead, so there would be no benefit to the exchequer. Capping the scheme by setting an income limit over which artists could not claim tax exemption could be counter-productive, he claimed, as the high earners might simply leave the country for a friendlier tax climate.

One committee member, Senator Labhras O’Murchu, took issue, saying it sounded “most unpatriotic” to suggest wealthy artists might leave the country just because they would have to pay taxes like everyone else. Another member, Fiona O’Malley, suggested a cap on the scheme was necessary to protect the public purse, as the exemption meant a theoretical tax loss annually of 24 million euro.

However, an independent member of the committee, Finian McGrath, said he supported the scheme and wanted to see it continue.

“A society that does not nurture the arts is a society without soul and a country without spirit,” he declared. The committee is expected to hold further hearings before making a recommendation on the future of the scheme to Cowen.

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