Artist tax exemption faces major shake-up over books loophole
THE controversial artists’ tax exemption scheme — recently used by high earners including Ryan Tubridy and Paul O’Connell — is under investigation by the Department of Finance ahead of the October Budget.
The cost of the scheme to the Exchequer has almost doubled in just two years.
It costs taxpayers €10.8m in 2015 — with 2,840 people using the scheme, compared with €5.8m in 2014 when 2,640 applicants avoided tax on their earnings.
As preparation for the Budget gathers pace, there is growing disquiet the system is excessively benefiting too many wealthy people.
The Sunday Independent has confirmed that the Department of Finance is now investigating the operation of the scheme. In a statement, the department refused to rule out scrapping it entirely come Budget time.
Pop impresario Louis Walsh and former Taoiseach Bertie Ahern are among those who have benefited from the exemption.
Minister for Children and Youth Affairs Katherine Zappone, former Irish rugby fly-half Ronan O’Gara, Kilkenny manager Brian Cody, pundit George Hook and former athlete Ron Delany have also availed of the scheme.
But sources suggest strict new guidelines may be on the way so that claims can only be used for works of clear “artistic merit”. Alternatively, the tax-free income threshold of €50,000 could be sharply reduced.
It is understood one option being considered by Finance Minister Paschal Donohoe is to reduce the tax-free allowance for those with proven financial resources — a sort of means-test. This could apply to writers, composers, visual artists and sculptors, resulting from earnings gained from a particular piece of work.
The original purpose of the scheme was to assist those in the “creative sphere” of limited financial means.
However, some believe it is being “undermined” by entertainers, singers and sport stars, deemed eligible for tax breaks, from work not of artistic or literary merit. The existing guidelines have also favoured ‘celebrities’ from the world of show business and broadcasting, as well as ghost-written sports biographies and political memoirs.
The scheme was introduced by Charlie Haughey in 1969 to support creative talent in musical composition, literature, painting and sculpture.
It was also seen as an incentive for writers and painters to settle in Ireland.
In 2011, during the austerity years, a cap of €40,000 was placed on the amount of income exempt from tax in a given year.
This was increased to €50,000 from January 2015 and renewed efforts were made to make the scheme “more targeted” towards applicants on low incomes.