irish writers union

Writers' tax exemption review
cowen caps tax allowance go

final points submitted by iIrish writers' union go
a simple principle scheme go
the writing industry challenged go
arts council starts postcard campaign

arts council argues for continuation of artists’ tax exemption

tax break buys writing time

Benefits far outweigh any costs arising

Ahern warns tax changes may be made

Union lodges submission on writers’ taxation

Finance Minister Cowen conducts review

Irish Writers’ Union submission on writers’ tax review

Artists' tax relief costs taxman just €36.8m a year

Half of qualifiers earn less than €200 a week

Writers taxation another view

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Cowen caps tax allowance

Minister for Finance Brian Cowen TD (right) has capped the artists' tax exemption at a level of €250,000 in any one tax year.

The no-limit exemption for writers and artists was introduced by Cowen's former party colleague Charlie Haughey TD as Finance Minister in 1969.

The exemption always applied only to approved works and is not a general exemption from taxation for the writer.

However, Irish Writers' Union chairman Peter McKimm said no cognisance has been taken in the measure for the length of time it takes a writer to produce a book.

"We would have preferred to have seen an in-depth review of the total scheme as a whole before a decision like this was made. You have to look at the totality of what artists and writers bring into the country as distinct from what they get out of it," he said.

Pointing out that many people travel here in a year to visit places associated with writers of yesteryear he said: "Another Yeats would generate a lot of revenue for the future, for instance. They should have looked at the exemption in its totality asking what they are giving in tax allowance against what are they gaining."

The IWU has asked that the new ceiling be indexed. "If it is not indexed it will be consistently reduced. If will decline in real terms," said McKimm.

Arts Council director Mary Cloake (right) said introducing a cap suggests an incomplete understanding of the inconsistent nature of artists' earnings, with even the most commercially successful of artists having very lean years when earnings are close to zero.

She said: "€250,000 earned in a very successful year may be the only income an artist has for five, eight or 10 years."

The Arts Council welcomed the news that the artists' tax exemption scheme is to remain in place but expressed disappointment that it is to be capped.

© iwu07dec05
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Final points submitted by Irish Writers' Union

The Irish Writers' Union forwarded final bullet points to Minister Cowen at the request of the Department of Finance on the writers tax exemption issue.

IWU Chair Peter McKimm said: "They, I’m sure, more than most, appreciate nothing is perfect but it is decidedly imperfect to throw out the baby with the bath water. We appreciate the decision is not an easy one yet urge a meaningful comprehensive analysis of the advantages of the measure before any decision is made."

Tax Exemption for artists.

Due to this imaginative 1969 measure we are going through an unprecedented flowering of Irish Art.

It may be a truism but excellence tends to induce greater excellence.

When this measure was introduced a high percentage of artists were drawing the dole.

The work of writers (Steinbeck, Dickens, Melville, Payton, Zuckmayer, Stowe, O’ Casey) frequently brought about beneficial changes in society proving that the pen was mightier than the sword.

As the Taoiseach has said ‘the power of music, of poetry, of dance and theatre speaks to us and speaks for itself. Art challenges not only what we think, it changes the way we think.’

In 2001 a mere two per cent of artists earned on average €60,480. A small percentage of the very high earners would have been writers.

A writer may only produce one successful book in his lifetime. There is no guarantee that his skill will continue to make for marketable works. There was never a Catch 23!

The spin off benefits to the country from writer related activities under the existing measures are very considerable. They should be assessed objectively.

It is a mistake to judge art from one perspective as there is more to an equitable society than a balanced budget.

By all means keep the measure under review – a fully rounded review.

We would ask if there is really a price on works that ‘enhances the quality of individual or social life by virtue of that works intellectual, spiritual or aesthetic form or content?'

Considerable sums of money are spent on creating favourable images for Ireland, yet this measure alone has gained world-wide recognition for Ireland as an artistic nation.

Finally, we would urge the Minister not to go for the soft option. It could be akin to eating one’s tail to survive!

© iwu 15nov05
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A simple principle scheme

John McGahern Brian Cowen Td Eugene O'Brien
John McGahern (left) and playwright Eugene O’Brien(right) , meet the Minister for Finance, Brian Cowen, TD.

Novelist John McGahern told the Minister for Finance Brian Cowen TD on November 14 that the vast majority of artists who benefit under the artists' tax exemption scheme earn very little from their work.

Ireland has a reputation abroad which is out of all proportion to its size, he said."For good reasons or bad, whenever I travel abroad, whenever work of mine is translated or whenever I represent the country, the tax scheme is seen as enlightened. If the scheme is changed in any way, this sense of enlightenment will disappear immediately. The scheme is a simple principle and costs little to administer.”

The author was part of a delegation that included Arts Council Chair, Olive Braiden, Director, Mary Cloake, and Edenderry-born playwright Eugene O’Brien, (author of the script for the award-winning RTÉ series ‘Pure Mule’). The meeting was at the Minister’s office in the Department of Finance.

The delegation told Minister Cowen, that within the debate, it is often forgotten that the exemption is not available to all artistic earnings, rather only incomes derived from original and creative work.

The Arts Council presented the Minister with a published book of biographies which gives the stories of 10 artists and how the artists’ tax exemption has benefited them.

On October 13, the Arts Council launched an email postcard campaign to the Minister for Finance urging him to retain the exemption. More than 1,600 postcards supporting the retention of the scheme had gone to the Minister before the meeting.

© iwu 15nov05
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The writing industry challenged
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from Fred Johnston

I don't particularly mind, in this case, taking my trousers off in public(see below). Like many writers, I work at a job other than writing in order to keep body and soul together. I don't see anything wrong with this. My earnings from writing are negligible, and I'm sure this is true for many other scribblers.

However, I have no hesitation in stating that anyone earning €50,000 a year or anything near it - as Dermot Bolger declares he does - should be taxed like any other worker in the State. There is, in my view, no reasonable argument to suggest he shouldn't be; if he should not, then neither should any other worker earning the same.

The spurious - and, in my view, utterly childish - argument that this could ' cost Ireland a generation of new and emerging artists,' that the Arts Council suggests is tactless and worn. If writers wish to go where it's warm and they don't have to pay tax, then let them. They'll go anyway. If money is there only concern, then off with them!

Writers are not children to be coddled and given more and more sweeties to keep them happy. We have already connived at producing a writing industry where there are few if any critical standards and anyone can pose as a teacher of creative writing, and Aosdána membership, God knows, would not stand up to a decent critical audit; so why are we starting to wax virtuous now about having to pay taxes?

Why should my postman have to pay taxes on his income and I shouldn't? Give me one good reason why I - or any other writer - should be considered to be of more value than a postman. Just one.

Sincerely,
Fred Johnston.

© iwu Fred Johnston 15novt05
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Arts Council starts postcard campaign

The state-funded Arts Council has warned the Finance Minister that abolition of the artists’ tax exemption scheme could cost Ireland a generation of new and emerging artists.

A book of biographies, including Anne Enright's (pictured) has been posted on the Council’s website giving the stories of ten writers and artists and how the artists’ tax exemption has benefited them. The Council also launched a postcard campaign urging the Minister for Finance to retain the exemption.

Council chair Olive Braiden said it was the Arts Council’s unequivocal advice that the scheme be retained in its entirety: ‘We recommend without any hesitation or doubt, the retention of the scheme in its entirety and we commend it to the Government and to the Minister for Finance,’ she said.

Arts Council director Mary Cloake, said: ‘The average earnings of 50% of beneficiaries in 2001 was €5,213. This compares with the then average industrial wage of €11,000. Only two per cent of beneficiaries are considered high earners. These artists are mostly working in popular music and writing.’

The Council asked as many people as possible to support the exemption by electronically posting a card to the Minister for Finance.

The postcard is available on the homepage of the Council’s website

siteLink

© iwu 05oct05
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Arts Council argues for continuation of artists’ tax exemption
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The Arts Council has argued strongly for retention of the artists’ tax exemption scheme at a presentation to the Oireachtas Committee on Finance and the Public Service.

The Arts Council was represented, on October 5, at the committee by its chair Olive Braiden, (pictured) council member and distinguished writer John McGahern, and council director Mary Cloake.

Braiden said the Arts Council’s unequivocal advice to the Minister for Finance was that the artists’ exemption scheme should be retained in its entirety.

“If the exemption were withdrawn, a situation would be created where there would be pressure on the exchequer to replace the income that would be lost,” she said. “The choice would be stark: either supply from the State resources such income as the market now provides, or lose entirely or in part to the art world or other jurisdictions a considerable number of artists. This would not be for the public good.”

She warned that if the exemption was capped, it would yield much less than has been claimed in terms of tax garnered for the exchequer.

“In the medium to long-term, a cap would serve to drive out artists who make significant contributions from non-exempt income. It would discourage artists who might have the potential for very significant commercial success at the early stages of their careers from staying here."

The artists’ exemption scheme is not a ‘rich man’s’ relief as has been presented in some quarters, said Braiden. "The greatest number of its beneficiaries struggle for financial viability on a year-on-year basis. This is true of relatively unknown beneficiaries, as well as certain of Ireland’s most internationally renowned and critically acclaimed artists.”

It is important for Ireland to have internationally famous artists resident in the country like Seamus Heaney(pictured), Roddy Doyle, John Banville, Colm Toibin, Irvine Welsh, Len Deighton, Patricia Scanlan, the Corrs, U2, Enya, Westlife, Boyzone, the Cranberries, Paul Brady, Louis le Brocquy, Robert Ballagh, Anne Madden, Felim Egan, Eilis O’Connell, Jim Sheridan, Neil Jordan, Maeve Binchy, Cathy Kelly and Marion Keyes, she said.

Mary Cloake Arts Council director said more than half the beneficiaries of the scheme have average earnings of less than half the minimum wage. Of the two per cent who are considered high earners, most of whom are in popular music and writing, much of their income is from foreign earnings. she said

“These earnings would simply not come into the country at all if the scheme were capped. Commercially successful artists will work elsewhere. They will effectively be prevented from working in Ireland. We will not gain additional tax revenues – we will lose the contribution these earnings make to the economy, and more importantly, the jobs and the artistic know-how that the work of successful artists bring to Ireland,” said Cloake.

© iwu 05oct05
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Tax break buys writing time _______________________

In an open letter to the Minister for Finance, Dermot Bolger makes his argument for retaining the artists' tax exemption.
(reprinted by permission)

Dear Brian Cowen,

In the scale of things it should not be a balding middle-aged novelist addressing this open letter, but a superstar such as Bono or Van Morrison - respectively possessing the eloquence or glare to impress you - as you make a decision of seemingly far greater financial importance for such folk than for lesser-known writers and artists like me.

Of course that tiny cluster of deservedly rich artists may have already made private submissions. My reasons for doing so publicly is that, although my earnings are pigmy-esque in comparison, the human consequences of your decision will be far greater for hundreds like me who just about manage to support our families in Ireland - and who each in our own way reflect aspects of Ireland to the outside world - by availing of the 1969 Tax Act on part of our income.

Arminta Wallace recently noted in the Irish Times that: "Many artists are reluctant to discuss their personal finances in public. Others are uncomfortable about taking a principled stand on an issue from which they, personally, will benefit." When asked once what embarrassed him most, the late Phil Lynott replied, "taking off my trousers before strange women". Publicly discussing your personal finances is like taking off your trousers before the entire nation.

Based on 2001 figures, more than half (694) the writers and artists availing of the scheme earned less than €10,000 a year in exempt income. Another third (456 artists, including myself) earned between €10,000 and €50,000. As someone from the second group, I have a profile (in Ireland at least) as author of nine novels and 10 plays. My work has been published in French, German, Swedish, Dutch, Japanese, Serbian, Italian, Greek, Portuguese and Czech, and received awards, here and abroad. If this suggests a glamorous working life, the reality is more mundane.

I live in a small terraced corporation-built house, which I managed to buy in the 1980s. My "office" is a corner of my son's bedroom, although All Hallows College generously provide a small room at present to write in. Like half of Ireland, I aspire to a larger house with my own writing room. So far, that remains an aspiration because it is difficult bidding against people on secure incomes who know what they expect to earn every year. I know my income for the next seven months. Beyond that, like with most writers, it's a blank I need to fill in with the thin sliver of my imagination.

In 2001, 28 people earned between €500,000 and, in one case, a staggering €10,000,000. Their problems of millionaires will never be mine and if some lose their exemption I won't lose much sleep. However, as John O'Donoghue points out, you won't gain much money. Almost 64 per cent of the extra millions in potential taxation that might be raised if this scheme was abolished would come from these 28 super-earners. The problem is that there is little chance of this money reaching the Irish exchequer. These 28 artists would appear liable for almost twice as much taxation on non-exempt income as the other 1,295 claimants claim in exemption. While abolishing the exemption would yield more taxation from us, our increased contribution could never replace the existing taxes presumably lost to the exchequer if most high earners left.

Your cabinet colleague, John O'Donoghue, said as much: "terminating or even capping the scheme is more likely to result in high earners legally leaving the jurisdiction or structuring their earnings in a way that avoids or greatly reduces any tax liability than in any revenue windfall for the exchequer."

I see no merit in making a case for retaining this exemption because its abolition will cost the exchequer revenue. The exemption is either a good thing or bad thing. In my case it allows me some small safety net in buying time to write plays that, by deliberately focusing on locations like Ballymun, have little chance of economic success beyond Ireland. However, because play royalties are tax exempt (unlike journalism) it buys me more time to write directly for the people my plays are about, without diluting their story to make it more palatable abroad.

Except for a few who enjoy commercial success, a writer's life revolves around transactions designed to literally "buy time" to write. Inspiration is fine but time is a precious commodity for a writer with a family.

I began as a factory worker and know how privileged I am to make a living doing what I love. I am better off than huge numbers bypassed by the Celtic Tiger. However, I also know that, as a writer, I can almost certainly never afford to be sick nor ever retire. Hopefully, I won't wind up like Francis Stuart, who fell asleep during his last public appearance in his 90s, but that may depend on whether I'm still alive and need the fee.
This exemption gives people a chance to take a chance on writing, painting or composing. But what does art give Ireland? Watching my books and plays make tiny journeys across Europe, I sometimes feel Irish writers play a small but critical role in explaining Ireland to our new neighbours.

In High Germany recently appeared in Czech (exempt royalty $500, less deductions by various agents). Parts of Belgrade were transformed into a giant outdoor version of a Dublin hotel to mark the Serbian publication of the collaborative novel Ladies Night at Finbar's Hotel (exempt royalty $500 divided by seven women and a balding man).
Last year Hungarian students staged my play, The Passion of Jerome - no fee charged because they could not afford one. My fee for introducing the first Slovenian anthology of Irish writing was a bottle of Slovenian juniper brandy. A French language revival of my play, April Bright, was declared an Irish-Kurdish friendship night in a working class Paris suburb, with the Irish ambassador and myself besieged by Kurds dancing to a middle-eastern Lambeg drum.

If the work of a relatively unknown writer such as myself creates such small links, imagine the far greater impact of major Irish writers such as Seamus Heaney and Roddy Doyle. Irish books, films and music are among the few things many new European nations know about us. It would be hard to financially justify the time invested in such collaborations. But the safety net of tax exemption allows me to set aside time to work with translators keen to bridge cultures, without having to always focus on commercial success.

Moreover, writers pay tax. I will pay tax on this and other articles written to keep my family afloat. I pay tax on workshops and teaching. I will pay PRSI on all income. The only income tax-free is direct royalties from works created from my imagination.

Virtually all such exempt income is in foreign currencies generated outside Ireland and spent here. I hardly tip any balance of payments but an amount of foreign currency circulates in the Irish economy every year without any outlay of raw materials beyond my brain cells.

In economic terms, it may be hard to justify why I pay no tax on certain royalties, while all of us pay tax on incomes generated in other ways. But it is similarly impossible to economically justify the time spent writing a play or a poem.

Similarly, I don't know how you economically quantify the PR effect of the artists gathered here to what executives called "Brand Ireland". But Ireland's worldwide perception as a nation where creativity is cherished has helped us to punch beyond our numerical weight. When the IDA sought out major corporations to locate in Dublin, such corporate decisions were taken for hard economic reasons.

But somewhere in that bargaining - it would only be a small card but occasionally may have helped to win the pot - was the fact that some executives felt their families would be happy to resettle in Ireland because of our image projected by the Chieftains, U2 and others: the perhaps illusory belief that you might rub shoulders in pubs with rockstars and writers and that if this hotbed of creativity could produce Bono and Bob Geldof and Roddy Doyle, it might also produce an intelligent, literate young workforce capable of thinking outside the box.

People mention putting a cap on it, but what size cap? Tax allowances work best for people with definite incomes. My most recent novel was published five months ago but commissioned and paid for five years ago. It was meant to take 18 months to write but took four years because I wanted to get it right. This delay had serious financial consequences but the exemption meant an advance could be stretched over the years - supplemented by dozens of other activities - because it was not taxed as a lump sum in one year.

My income is erratic. Plumbers or other self-employed people similarly lack security, but everyone needs a plumber sometime, whereas poets are expendable. Fashions change. You can't always rely on someone having a leaky metaphor that needs fixing. Also, local committees never expect plumbers to make 300-mile round trips, then look happy to be offered €100 in payment.

The exemption has not made me rich, though one day I hope not to work from a corner of a child's bedroom. What it does allow me is the confidence to continue to try and support my family doing what I do, hoping that if my ship finally comes in during one good year then I will be able to hold onto sufficient money made that year to keep us going during fallow years when I am sick or my imagination fails.

If the exemption goes I'll obviously continue to write novels - they would just take far longer to complete and be less plentiful. Some critics might argue that this would be a good thing, and I stake no claim to my work having any particular cultural importance, or indeed that anything except a tiny fraction of the works nurtured under this act will live on to be read by future generations. The chaff count is always high in any era of writing; however, if the working conditions created by this exemption did nothing beyond producing a dozen books of the stature of Sebastian Barry's It's a Long Long Way or John McGahern's Amongst Women then I suspect that future generations will consider it well worth the price.

The exemption allows me to balance out the extremes between the good and bad times and risk embarking on long journeys into the imagination that can last several years. During this period a writer can only hope that there will be readers at the end willing to share their landfall and also hope that if they succeed (even by tearing up several years' work to begin again) then in a small way, they may have left behind an imperfect but emotionally honest record of what it was like to be an Irish citizen at this time.

Yours sincerely,

Dermot Bolger

© Dermot Bolger 05
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Benefits far outweigh any costs arising
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Arts Minister John O'Donoghue on April 12, 2005 endorsed the view of the Arts Council in its submission to his cabinet colleague Brian Cowen TD.

"I believe that the benefits of the scheme to the artistic life of the State far outweigh any costs arising, and it should be retained in its existing form," he said.

The Arts Council submission on the Artists Exemption Scheme concludes
that the scheme should be retained in its entirety, and explains, in some detail, the
reasons for this position.

Adding his support to the case against change, on April 12, 2005, Mr O'Donghue said: "I consider this scheme to be extremely beneficial for the arts in Ireland. It would be gravely mistaken to judge the scheme on the basis of perceived benefits to a very small number of high earners. Most of those benefiting from the scheme are on very modest incomes.

"Further, we have good reason to believe that terminating or even capping the scheme is more likely to result in high earners legally leaving the jurisdiction, or structuring their earnings in a way that avoids or greatly reduces any tax liability, than in any revenue windfall for the Exchequer," said the Arts Minister.

download the Arts Council (pdf) submission here

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Ahern warns tax changes may be made
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AN Taoiseach Bertie Ahern TD warned that changes will be made to the writers' tax-exemption scheme in Ireland, if they are required.

Speaking at an April 14 visit to the offices of the Arts Council he said the scheme is an imaginative legacy of his predecessor, Charles Haughey, who introduced the Artists' Exemption Scheme in 1969 to help create an environment in which the arts could flourish, by encouraging artists to live and work in Ireland.

Ahern said: "It is a template for supporting the arts that is known and admired around the world. If change is required it will be forthcoming; but be assured that the continuing benefit to the arts will be fully borne in mind."

The Taoiseach, in his speech to the Arts Council, raised a number of hares when he asked rhetorically whether a cap should be placed on the amount that can be earned under the scheme; whether criteria for eligibility should be tighter; and how the tax code should treat interpretive artists?

However, half of all writers and other artists who qualified in 2001 for income tax exemption earned less than €10,000 in artistic income in that year, according to the Revenue Commissioners.

The Arts Council, in its submission to Finance Minister Brian Cowen TD, said the proceeds of a book in any one year may represent all of the artist's significant artistic earnings for a period of up to five years.

Minister Cowen is engaged in a review of tax exemption schemes in preparation for the annual Budget which will be announced in December.

A number of writers' organisations, as well as individual writers, have made submissions to the review on tax exemption.

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Union lodges submission on writers’ taxation
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THE Irish Writers’ Union lodged a detailed submission on the Artists’ Exemption Scheme with the Minister for Finance Brian Cowen TD.

IWU Chair Peter McKimm said union research revealed considerable misunderstanding on the criteria for tax exemption and quite how it has been instrumental in growing the arts in Ireland to a level where it produces significant economic spin offs, not least in cultural tourism and international interest in matters Irish.

“The growth in arts in Ireland had been spectacular. It is our view that the current environment can lead towards more international renown and national job creation,” he said.

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Finance Minister Cowen conducts review
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Brian Cowen TD THE Minister for Finance, Brian Cowen, TD, on December 1, 2004, announced that the Department of Finance and the Office of the Revenue Commissioners would undertake a detailed review of certain tax incentive schemes and tax exemptions in 2005.

" I believe the time is now right to conduct a full review of these incentive reliefs, in particular to evaluate in detail their impact and how they are operating in practice," said the Minister.

His preference is for a complete and comprehensive reform of the system rather than a piecemeal approach, he said.

The Minister directed that a thorough evaluation of the effect of all relevant incentive reliefs and exemptions be undertaken and that proposals be brought forward to achieve balance.

"I am now making it clear that I intend to include appropriate follow-up measures in next year's Budget," said the Minister.

Those using reliefs should realise that the concept of unlimited or unrestricted reliefs is no longer viable, he said.

Examination of data already available on exemptions, including the scheme for writers will be incorporated in the review.

The review included a public consultation seeking submissions on measures that could be introduced to limit the extent to which reliefs and exemptions can be used by high-earners to reduce or eliminate their tax bill.

The closing date for submissions was March 31, 2005.

The Minister for Finance will consider the outcome of this work and bring forward proposals for the 2006 Budget which will be announced in December 2005.

The Irish Writers' Union established a sub-committee to prepare the union's submission and invited views, and comments from writers on the union's submission.

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Irish Writers’ Union submission on writers’ tax review
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When the then Minister for Finance introduced the Finance Act, 1969, he stated that the proposal for artists exemption from income tax was nothing less noble than to enrich our daily lives.

But a more immediate and pragmatic objective of the legislation was to strengthen and expand the existing cultural milieu by attracting major established international artists to Ireland, thereby facilitating a synergy with the local arts culture.

This was the defining aim of the legislation and not, as some critics of the scheme would have it, to support struggling artists.

The Irish Writers Union is of the strong opinion that this innovative measure should be maintained, given the compelling arguments in favour of its retention.

In any review of this imaginative decision it is worth recalling that these artists would not have come to live in Ireland if the tax relief was not introduced. Therefore, their availing of the scheme by taking up residence here did not cost the Exchequer anything, to the contrary rather in that they became additional taxable consumers.

It is generally recognised that the Irish have a unique aptitude for words, written or spoken, but the relatively stagnant economy of the sixties meant that our artists, with just a very few exceptions, had low international profiles and low levels of income.

Given the economic climate, most artists were struggling to make a living and few could earn enough to be liable for tax. There was little incentive for potential writers to risk undertaking full time writing.

Section 2 of the Finance Act, 1969 and its successor, Section 195 of the Taxes Consolidation Act, 1997, transformed the artistic environment.

The inflow of established artists illustrated what could be achieved.

In effect it created a climate for encouraging and sustaining other artists to enter, in increasing numbers, into full time practice of their art. Thus the legislation's objectives were steadily realised.

As regards the current proposal to review the scheme, it is our belief that the 1997 Finance Act was a comprehensive review of the whole scheme and brought in several very worthwhile amendments, without interfering with the basic thrust of the legislation - to nurture and extend the cultural pool.

Benefits of the Scheme

The tax exemption facilitates start-up writers and encourages them to persevere in their careers. Usually for a writer, the early years are spent writing, then securing a first publication and then continuing to write in the hope of further publication.

This period requires an enormous investment of a writer's time over many years, with very little or no income being generated from writing.

Even for the successful writer, income is frequently sporadic, with many intervening lean years.

Calculations, of course, cannot take into account the fragility associated with a writer's work.

Too many are one-book writers while others have to struggle to achieve a modicum of success without any guarantee that they will, after years of work, write any more successful works.

A tax exemption is immensely influential in motivating writers to persevere in this precarious process.

The benefits of the tax exemption scheme for writers are enormous, leading to an explosion in the number of writers in the country.

The steady growth is shown in the numbers registering for tax exemption in the table above, rising to a total of 934 over the ten year period 1995 to 2004. This represents an increase of 580 per cent on the base year 1995/96, an average increase of about 60 per cent per year.

Determinations of artists exemption granted under section 195 Taxes Consolidation Act, 1997

Tax Year Writers

1995/96 137

96/97 84

97/98 72

98/99 96

99/00 90

00/01 88

06/04/2001 - 31/12/2001 79

01/01/2002 - 31/12/2002 86

01/01/2003 - 31/12/2003 92

01/01/2004 - 31/12/2004 110

Source: Office of the Revenue Commissioners, January, 2005

Cultural Benefits

Ireland has always valued and fostered its cultural identity. In achieving its independence, the contributions made by theatre, music, dance and language are invariably credited with playing a pivotal part in the emergence of an independent nation and identity.

Today, as Ireland increases its capability to contribute confidently on the world stage, the growing numbers of writers make an immense contribution.

Their publications explore, challenge, record and enrich and contribute in the broadest sense to our cultural, spiritual and national identity as a people within the European Union.

Such cultural impact is not amenable to measurement, but it is within such a burgeoning cultural milieu that artistic practices are thriving.

There is a huge educational spin-off from writing activities in courses, library programmes, summer schools, and more.

This activity further adds to the creative energy of the country.

A vibrant creative climate generates a synergy among the participants, facilitating inter-linking of writers with film-makers and poets with musicians and so on.

Such synergy takes time to establish but can be quickly sundered, especially by a departure of talent to other havens.

Cultural tourism is of increasing significance to the economy in bringing increased spending into the country, as seen in summer schools, cultural programmes, and other attractions. Another aspect is the development of a cultural industry surrounding deceased writers' work and lives.

In all of these activities, not only are jobs being created and tax income thereby generated, but tourist expenditure is also increasing as a result.

In addition, there is the taxation income generated by the writers themselves in writing-related activities. Furthermore, the value of an artist's work may increase both during his/her lifetime and afterwards, yielding taxable profits for the sellers and the state.

Increased employment is a factor in areas associated with writing and related activities - publishing, printing, marketing, publicising, and in writing courses, cultural programmes, and summer schools.

These jobs all generate tax income for the State. An amendment to the tax-free status of artists would impact immediately on the level of advances required by writers from their publishers, resulting in a knock-on effect for publishing costs and consequently for employment.

This, in turn, would impact immediately on the publishing lists, with publishers reluctant to take on more risky, experimental works, surely the opposite of the original intent of the legislation.

It will most certainly affect children's books, where publishing is already seriously reduced in this country, with consequences for child literacy.

Recent years have seen severe discounting of book prices by publishers and booksellers as a result of the abolition of the Net Book Agreement.

This increased competitiveness and consequent caution by publishers has seriously affected writers' royalty earnings.

Any further erosion of such earnings by the abolition of the tax exemption scheme cannot be justified either in economic or cultural terms.

Taxes paid by writers themselves on writing-related activities, like training and creative writing courses, for instance, must be included here.

It is, however, important to note that the vast majority of writers cannot manage to live off their writing incomes and are liable for all the usual taxes in whatever other areas of work they are involved, in common with the rest of the working population.

Cost Consideration

Cost to Exchequer

year million

1994/95 £5.1

95/96 £8.1

96/97 £10.4

97/98 £15.5

98/99 £19.3

99/2000 £23.71 (€ 30.1)

2000/2001 € 36.8

6/4/01-31/12/01 €23.5 euro (short tax year)

Source: Office of the Revenue Commissioners, January, 2005

It has become the practice in recent years to represent the tax exemption scheme for artists from one perspective only - as a cost on the exchequer.

The benefits, however, clearly indicate the array of activities generating income for the state resulting from writing and related areas.

Furthermore, it is important in considering the cost to the State of the artists’ exemption scheme to take into account the annual state spend of 50 billion euro.

The cost to the exchequer of the tax exemption determination for writers has risen from £5.1 million in 1994/95 (6.47million euro) to 36.8million euro in 2000/01 or 23.5 euro in short tax year Apr 2001/Dec 01.

However, the figures for incomes of individual artists, which figures include writers, convey a very different picture.

Short tax year 2001:

Income -Number of Claimants.................. Income Subject to Exemption

€5,000 or less 446 ............................ ........€ 916,555

€5,001-10,000 248 ........................................€1,796,686

€10,001-50,000 456....................................... € 9,867,796

€50,001-100,000 75............................................€ 5,411,767

€100,001-200,000 39............................................ €5,298,712

€200,001-500,000 31................................................€ 10,092,434

€500,001-10,000,000 28............................................. €46,631,246

The most recent figures available for artists' and writers' incomes subject to tax exemption show 86.9 per cent earning below € 50,000, with a majority of 52.4 per cent earning less than €10,000 in a year.

In the bracket between € 50,000 and €500,000, there are 10 per cent of artists, with only two per cent earning above €500,000.

It is abundantly clear from these figures, given recently by Brian Cowan, TD, Minister for Finance, that the vast majority of artists in this country do not live off the meagre earnings of their art.

Consequently, the importance of the tax exemption scheme is of huge significance in aiding their financial viability as arts practitioners and in continuing to foster a dynamic cultural climate.

The need for its continuation cannot be overstated.

The submission was lodged, before deadline, with the Minister for Finance, on behalf of members and writers in general by the executive committee of the union.

===========
Artists' tax relief costs taxman just €36.8m
-------------------------------

Some 1,323 claims for tax exemptions were made by Irish artists in one year, involving € 80 million euro in income.

Granting the exemptions cost the exchequer just € 36.8 million

While some writers manage to earn a living income from writing, the focus always lands on the big money earners, which includes prominent musicians and composers, earning music royalties, as well as writers, under the scheme.

Latest figures showed one claimant avoiding paying tax on up to €10 million.

In contrast to the image of writers being a wealthy elite enjoying tax free status in Ireland, the vast majority do not earn a living through writing alone, said the IWU.

The tax-free status for artists' and writers' earnings on approved works was introduced by former taoiseach Charles Haughey as the then finance minister in 1969.

It is estimated that the cost of the scheme in the full tax year 2000-01 was € 36.8 million, according to figures supplied by Finance Minister Brian Cowen TD.

Tax inspectors make their decision on applications using guidelines drawn up by the Arts Council and the Minister for the Arts.

However, research conducted last year by the Irish Writers' Union showed the number of books whose royalties were exempt from tax in 2000/1 was 88.

The previous year, 90 books availed of the exemption; some 96 the year before that, and 72 for 1997/8.

In Britain, the Society of Authors in a report found that some 75 per cent of writers who responded to a survey earned under £20,000 (€ 27,000) a year; some 61 per cent earned under £10,000(€13,600) and 46 per cent earned under £5,000 (€6,500).

Perhaps gaining a few hundred pounds a year from the exemption scheme, the rest of a typical writer's income will be from part-time work, teaching, giving courses and other work; all of which is taxed.

===================================
Half earn less than €200 a week
=========================

Mary Cloake THE net cost to the Irish exchequer of allowing writers tax-free status on their royalties is far less than media speculation would indicate, according to the Arts Council.

"Recent commentary suggests a limited appreciation of the facts of the Artists' Exemption Scheme," said Mary Cloake, (picured) Director of the Arts Council.

The scheme came into being in 1969. The rationale for its introduction was to help create a sympathetic environment in which the arts could flourish by encouraging artists to live and work in Ireland.

"The Arts Council is satisfied that the Artists' Exemption Scheme, over 35 years, has been very successful - given its pioneering nature in 1969 and the challenges of implementing such an incentive," said Cloake.

Evidence of success is found in the global commercial achievement of a small number of Irish artists and the international critical acclaim enjoyed by many more, she said.

“Brand Ireland' is based to a large extent on Ireland's creative and artistic output. The success can be gauged by the fact that, in 2002, for example, at least 1,300 individuals working as creative artists in Ireland on a professional basis availed of the scheme, creating the basis of a flourishing artistic community," said Cloake.

But, the greatest number of beneficiaries of the scheme earn considerably less than the legal minimum wage.

Statistics provided by the Revenue Commissioners for year 2001, indicate that some 50 per cent of all qualifying artists earned less than €10,000 artistic income in this year.

Artists' earnings are subject to very considerable annual variation. The proceeds of, say, the sales from an exhibition or the publication of a book in any one year, may represent all of the artist's significant artistic earnings for a period of three to five years.

Even the most commercially successful of Irish artists report experiencing years of minimal earnings during the peak years of their careers.

A small number of Irish artists have enjoyed global commercial success on an unimaginable scale.

This cohort of artists is dominated by musicians, whose earning profile is very different from that of most other qualifying artists.

Their exempt income constitutes a relatively small share of total earnings.

In any case, many high-earning artists are liable for Irish tax on a significant share of their incomes.

For example, an established artist in the music business earns income from publishing, recording and touring. The only part of this income that is tax-free is the income arising from music publishing, all other earnings are taxable.

By living in Ireland (which they must do to qualify for the relief) they generate considerable ancillary economic activity, and have invested quite significantly in the infrastructure for their sectors - especially in film, music and publishing.

The inclusion of many non-fiction titles in the list of exempt publications has also been a cause for comment, with implications that a liberal definition of 'original, creative and of artistic or cultural merit' has been applied in the operation of the scheme.

"However, it is unfortunate if such examples, or the cases of a very small number of high-earning individuals, were to discredit artists' tax relief, which has done so much, through a relatively simple instrument, to support creative artists working in Ireland in a practical and meaningful way," said Cloake.

The Arts Council's findings were presented in a submission to the Department of Finance, to help inform their review of the scheme.

The Finance Minister has promised a review of tax exemption schemes in the December 2005 budget.

The Arts Council’s 38-page submission is available to download directly (along with submissions from other bodies, including the IWU) from the Department of Finance website.

siteLink

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Writers taxation another view
by Kieran Fagan
===========

I wonder if it is wise to defend the indefensible?

Everybody has to pay taxes and we risk coming across as spoiled brats.

Why should the mother of five working at a supermarket checkout to feed her kids pay taxes, and we get a free ride?

Instead could we accept the inevitable and look for ways of getting a tax regime that is "writer and artist" friendly? Like seeking to have earnings spread across a number of tax years so the "spike" in earnings from a book or other work years in gestation does not all get taxed in one year, when the bulk of the money comes in? I think we need to look at how the royalties on inventions are taxed.

I'm afraid the point about "half the qualifiers earn less than €200 a week" does not really get us very far.

Self-employed people like myself don't pay tax on earnings that low. The self-employed who pay tax are allowed reasonable deductions for costs incurred, light, heat, phones, writing materials, research costs and travel, for example, reducing the liability to tax.

And we might be able to trade co-operation with Mr Cowen for action on authors' royalties from libraries.

And yes, before anyone asks, I have benefited in the past from the tax exemption.

=========================
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	Irish Writers Union Chomhar na Scribhneoiri	*Writers' Tax Exemption*
This is the website of the Irish Writers' Union, 19 Parnell Square, Dublin 1. 01-872 13 02. or email The website is edited by Brendan Nolan and produced by WritingNews.net.	Writers' tax exemption review cowen caps tax allowance go final points submitted by iIrish writers' union go a simple principle scheme go the writing industry challenged go arts council starts postcard campaign arts council argues for continuation of artists’ tax exemption tax break buys writing time Benefits far outweigh any costs arising Ahern warns tax changes may be made Union lodges submission on writers’ taxation Finance Minister Cowen conducts review Irish Writers’ Union submission on writers’ tax review Artists' tax relief costs taxman just €36.8m a year Half of qualifiers earn less than €200 a week Writers taxation another view _____________________ Cowen caps tax allowance Minister for Finance Brian Cowen TD (right) has capped the artists' tax exemption at a level of €250,000 in any one tax year. The no-limit exemption for writers and artists was introduced by Cowen's former party colleague Charlie Haughey TD as Finance Minister in 1969. The exemption always applied only to approved works and is not a general exemption from taxation for the writer. However, Irish Writers' Union chairman Peter McKimm said no cognisance has been taken in the measure for the length of time it takes a writer to produce a book. "We would have preferred to have seen an in-depth review of the total scheme as a whole before a decision like this was made. You have to look at the totality of what artists and writers bring into the country as distinct from what they get out of it," he said. Pointing out that many people travel here in a year to visit places associated with writers of yesteryear he said: "Another Yeats would generate a lot of revenue for the future, for instance. They should have looked at the exemption in its totality asking what they are giving in tax allowance against what are they gaining." The IWU has asked that the new ceiling be indexed. "If it is not indexed it will be consistently reduced. If will decline in real terms," said McKimm. Arts Council director Mary Cloake (right) said introducing a cap suggests an incomplete understanding of the inconsistent nature of artists' earnings, with even the most commercially successful of artists having very lean years when earnings are close to zero. She said: "€250,000 earned in a very successful year may be the only income an artist has for five, eight or 10 years." The Arts Council welcomed the news that the artists' tax exemption scheme is to remain in place but expressed disappointment that it is to be capped. *© iwu07dec05* more stories here _____________________ Final points submitted by Irish Writers' Union The Irish Writers' Union forwarded final bullet points to Minister Cowen at the request of the Department of Finance on the writers tax exemption issue. IWU Chair Peter McKimm said: "They, I’m sure, more than most, appreciate nothing is perfect but it is decidedly imperfect to throw out the baby with the bath water. We appreciate the decision is not an easy one yet urge a meaningful comprehensive analysis of the advantages of the measure before any decision is made." Tax Exemption for artists. Due to this imaginative 1969 measure we are going through an unprecedented flowering of Irish Art. It may be a truism but excellence tends to induce greater excellence. When this measure was introduced a high percentage of artists were drawing the dole. The work of writers (Steinbeck, Dickens, Melville, Payton, Zuckmayer, Stowe, O’ Casey) frequently brought about beneficial changes in society proving that the pen was mightier than the sword. As the Taoiseach has said ‘the power of music, of poetry, of dance and theatre speaks to us and speaks for itself. Art challenges not only what we think, it changes the way we think.’ In 2001 a mere two per cent of artists earned on average €60,480. A small percentage of the very high earners would have been writers. A writer may only produce one successful book in his lifetime. There is no guarantee that his skill will continue to make for marketable works. There was never a Catch 23! The spin off benefits to the country from writer related activities under the existing measures are very considerable. They should be assessed objectively. It is a mistake to judge art from one perspective as there is more to an equitable society than a balanced budget. By all means keep the measure under review – a fully rounded review. We would ask if there is really a price on works that ‘enhances the quality of individual or social life by virtue of that works intellectual, spiritual or aesthetic form or content?' Considerable sums of money are spent on creating favourable images for Ireland, yet this measure alone has gained world-wide recognition for Ireland as an artistic nation. Finally, we would urge the Minister not to go for the soft option. It could be akin to eating one’s tail to survive! *© iwu 15nov05* more stories here _____________________ A simple principle scheme John McGahern (left) and playwright Eugene O’Brien(right) , meet the Minister for Finance, Brian Cowen, TD. Novelist John McGahern told the Minister for Finance Brian Cowen TD on November 14 that the vast majority of artists who benefit under the artists' tax exemption scheme earn very little from their work. Ireland has a reputation abroad which is out of all proportion to its size, he said."For good reasons or bad, whenever I travel abroad, whenever work of mine is translated or whenever I represent the country, the tax scheme is seen as enlightened. If the scheme is changed in any way, this sense of enlightenment will disappear immediately. The scheme is a simple principle and costs little to administer.” The author was part of a delegation that included Arts Council Chair, Olive Braiden, Director, Mary Cloake, and Edenderry-born playwright Eugene O’Brien, (author of the script for the award-winning RTÉ series ‘Pure Mule’). The meeting was at the Minister’s office in the Department of Finance. The delegation told Minister Cowen, that within the debate, it is often forgotten that the exemption is not available to all artistic earnings, rather only incomes derived from original and creative work. The Arts Council presented the Minister with a published book of biographies which gives the stories of 10 artists and how the artists’ tax exemption has benefited them. On October 13, the Arts Council launched an email postcard campaign to the Minister for Finance urging him to retain the exemption. More than 1,600 postcards supporting the retention of the scheme had gone to the Minister before the meeting. *© iwu 15nov05* more stories here ______________________ The writing industry challenged _______________________ from Fred Johnston I don't particularly mind, in this case, taking my trousers off in public(see below). Like many writers, I work at a job other than writing in order to keep body and soul together. I don't see anything wrong with this. My earnings from writing are negligible, and I'm sure this is true for many other scribblers. However, I have no hesitation in stating that anyone earning €50,000 a year or anything near it - as Dermot Bolger declares he does - should be taxed like any other worker in the State. There is, in my view, no reasonable argument to suggest he shouldn't be; if he should not, then neither should any other worker earning the same. The spurious - and, in my view, utterly childish - argument that this could ' cost Ireland a generation of new and emerging artists,' that the Arts Council suggests is tactless and worn. If writers wish to go where it's warm and they don't have to pay tax, then let them. They'll go anyway. If money is there only concern, then off with them! Writers are not children to be coddled and given more and more sweeties to keep them happy. We have already connived at producing a writing industry where there are few if any critical standards and anyone can pose as a teacher of creative writing, and Aosdána membership, God knows, would not stand up to a decent critical audit; so why are we starting to wax virtuous now about having to pay taxes? Why should my postman have to pay taxes on his income and I shouldn't? Give me one good reason why I - or any other writer - should be considered to be of more value than a postman. Just one. Sincerely, Fred Johnston. *© iwu Fred Johnston 15novt05* more stories here *************** Arts Council starts postcard campaign The state-funded Arts Council has warned the Finance Minister that abolition of the artists’ tax exemption scheme could cost Ireland a generation of new and emerging artists. A book of biographies, including Anne Enright's (pictured) has been posted on the Council’s website giving the stories of ten writers and artists and how the artists’ tax exemption has benefited them. The Council also launched a postcard campaign urging the Minister for Finance to retain the exemption. Council chair Olive Braiden said it was the Arts Council’s unequivocal advice that the scheme be retained in its entirety: ‘We recommend without any hesitation or doubt, the retention of the scheme in its entirety and we commend it to the Government and to the Minister for Finance,’ she said. Arts Council director Mary Cloake, said: ‘The average earnings of 50% of beneficiaries in 2001 was €5,213. This compares with the then average industrial wage of €11,000. Only two per cent of beneficiaries are considered high earners. These artists are mostly working in popular music and writing.’ The Council asked as many people as possible to support the exemption by electronically posting a card to the Minister for Finance. The postcard is available on the homepage of the Council’s website siteLink © iwu 05oct05 more stories here ======================== Arts Council argues for continuation of artists’ tax exemption ======================== The Arts Council has argued strongly for retention of the artists’ tax exemption scheme at a presentation to the Oireachtas Committee on Finance and the Public Service. The Arts Council was represented, on October 5, at the committee by its chair Olive Braiden, (pictured) council member and distinguished writer John McGahern, and council director Mary Cloake. Braiden said the Arts Council’s unequivocal advice to the Minister for Finance was that the artists’ exemption scheme should be retained in its entirety. “If the exemption were withdrawn, a situation would be created where there would be pressure on the exchequer to replace the income that would be lost,” she said. “The choice would be stark: either supply from the State resources such income as the market now provides, or lose entirely or in part to the art world or other jurisdictions a considerable number of artists. This would not be for the public good.” She warned that if the exemption was capped, it would yield much less than has been claimed in terms of tax garnered for the exchequer. “In the medium to long-term, a cap would serve to drive out artists who make significant contributions from non-exempt income. It would discourage artists who might have the potential for very significant commercial success at the early stages of their careers from staying here." The artists’ exemption scheme is not a ‘rich man’s’ relief as has been presented in some quarters, said Braiden. "The greatest number of its beneficiaries struggle for financial viability on a year-on-year basis. This is true of relatively unknown beneficiaries, as well as certain of Ireland’s most internationally renowned and critically acclaimed artists.” It is important for Ireland to have internationally famous artists resident in the country like Seamus Heaney(pictured), Roddy Doyle, John Banville, Colm Toibin, Irvine Welsh, Len Deighton, Patricia Scanlan, the Corrs, U2, Enya, Westlife, Boyzone, the Cranberries, Paul Brady, Louis le Brocquy, Robert Ballagh, Anne Madden, Felim Egan, Eilis O’Connell, Jim Sheridan, Neil Jordan, Maeve Binchy, Cathy Kelly and Marion Keyes, she said. Mary Cloake Arts Council director said more than half the beneficiaries of the scheme have average earnings of less than half the minimum wage. Of the two per cent who are considered high earners, most of whom are in popular music and writing, much of their income is from foreign earnings. she said “These earnings would simply not come into the country at all if the scheme were capped. Commercially successful artists will work elsewhere. They will effectively be prevented from working in Ireland. We will not gain additional tax revenues – we will lose the contribution these earnings make to the economy, and more importantly, the jobs and the artistic know-how that the work of successful artists bring to Ireland,” said Cloake. © iwu 05oct05 more stories here _______________________ Tax break buys writing time** _______________________ In an open letter to the Minister for Finance, Dermot Bolger makes his argument for retaining the artists' tax exemption. (reprinted by permission) Dear Brian Cowen, In the scale of things it should not be a balding middle-aged novelist addressing this open letter, but a superstar such as Bono or Van Morrison - respectively possessing the eloquence or glare to impress you - as you make a decision of seemingly far greater financial importance for such folk than for lesser-known writers and artists like me. Of course that tiny cluster of deservedly rich artists may have already made private submissions. My reasons for doing so publicly is that, although my earnings are pigmy-esque in comparison, the human consequences of your decision will be far greater for hundreds like me who just about manage to support our families in Ireland - and who each in our own way reflect aspects of Ireland to the outside world - by availing of the 1969 Tax Act on part of our income. Arminta Wallace recently noted in the Irish Times that: "Many artists are reluctant to discuss their personal finances in public. Others are uncomfortable about taking a principled stand on an issue from which they, personally, will benefit." When asked once what embarrassed him most, the late Phil Lynott replied, "taking off my trousers before strange women". Publicly discussing your personal finances is like taking off your trousers before the entire nation. Based on 2001 figures, more than half (694) the writers and artists availing of the scheme earned less than €10,000 a year in exempt income. Another third (456 artists, including myself) earned between €10,000 and €50,000. As someone from the second group, I have a profile (in Ireland at least) as author of nine novels and 10 plays. My work has been published in French, German, Swedish, Dutch, Japanese, Serbian, Italian, Greek, Portuguese and Czech, and received awards, here and abroad. If this suggests a glamorous working life, the reality is more mundane. I live in a small terraced corporation-built house, which I managed to buy in the 1980s. My "office" is a corner of my son's bedroom, although All Hallows College generously provide a small room at present to write in. Like half of Ireland, I aspire to a larger house with my own writing room. So far, that remains an aspiration because it is difficult bidding against people on secure incomes who know what they expect to earn every year. I know my income for the next seven months. Beyond that, like with most writers, it's a blank I need to fill in with the thin sliver of my imagination. In 2001, 28 people earned between €500,000 and, in one case, a staggering €10,000,000. Their problems of millionaires will never be mine and if some lose their exemption I won't lose much sleep. However, as John O'Donoghue points out, you won't gain much money. Almost 64 per cent of the extra millions in potential taxation that might be raised if this scheme was abolished would come from these 28 super-earners. The problem is that there is little chance of this money reaching the Irish exchequer. These 28 artists would appear liable for almost twice as much taxation on non-exempt income as the other 1,295 claimants claim in exemption. While abolishing the exemption would yield more taxation from us, our increased contribution could never replace the existing taxes presumably lost to the exchequer if most high earners left. Your cabinet colleague, John O'Donoghue, said as much: "terminating or even capping the scheme is more likely to result in high earners legally leaving the jurisdiction or structuring their earnings in a way that avoids or greatly reduces any tax liability than in any revenue windfall for the exchequer." I see no merit in making a case for retaining this exemption because its abolition will cost the exchequer revenue. The exemption is either a good thing or bad thing. In my case it allows me some small safety net in buying time to write plays that, by deliberately focusing on locations like Ballymun, have little chance of economic success beyond Ireland. However, because play royalties are tax exempt (unlike journalism) it buys me more time to write directly for the people my plays are about, without diluting their story to make it more palatable abroad. Except for a few who enjoy commercial success, a writer's life revolves around transactions designed to literally "buy time" to write. Inspiration is fine but time is a precious commodity for a writer with a family. I began as a factory worker and know how privileged I am to make a living doing what I love. I am better off than huge numbers bypassed by the Celtic Tiger. However, I also know that, as a writer, I can almost certainly never afford to be sick nor ever retire. Hopefully, I won't wind up like Francis Stuart, who fell asleep during his last public appearance in his 90s, but that may depend on whether I'm still alive and need the fee. This exemption gives people a chance to take a chance on writing, painting or composing. But what does art give Ireland? Watching my books and plays make tiny journeys across Europe, I sometimes feel Irish writers play a small but critical role in explaining Ireland to our new neighbours. In High Germany recently appeared in Czech (exempt royalty $500, less deductions by various agents). Parts of Belgrade were transformed into a giant outdoor version of a Dublin hotel to mark the Serbian publication of the collaborative novel Ladies Night at Finbar's Hotel (exempt royalty $500 divided by seven women and a balding man). Last year Hungarian students staged my play, The Passion of Jerome - no fee charged because they could not afford one. My fee for introducing the first Slovenian anthology of Irish writing was a bottle of Slovenian juniper brandy. A French language revival of my play, April Bright, was declared an Irish-Kurdish friendship night in a working class Paris suburb, with the Irish ambassador and myself besieged by Kurds dancing to a middle-eastern Lambeg drum. If the work of a relatively unknown writer such as myself creates such small links, imagine the far greater impact of major Irish writers such as Seamus Heaney and Roddy Doyle. Irish books, films and music are among the few things many new European nations know about us. It would be hard to financially justify the time invested in such collaborations. But the safety net of tax exemption allows me to set aside time to work with translators keen to bridge cultures, without having to always focus on commercial success. Moreover, writers pay tax. I will pay tax on this and other articles written to keep my family afloat. I pay tax on workshops and teaching. I will pay PRSI on all income. The only income tax-free is direct royalties from works created from my imagination. Virtually all such exempt income is in foreign currencies generated outside Ireland and spent here. I hardly tip any balance of payments but an amount of foreign currency circulates in the Irish economy every year without any outlay of raw materials beyond my brain cells. In economic terms, it may be hard to justify why I pay no tax on certain royalties, while all of us pay tax on incomes generated in other ways. But it is similarly impossible to economically justify the time spent writing a play or a poem. Similarly, I don't know how you economically quantify the PR effect of the artists gathered here to what executives called "Brand Ireland". But Ireland's worldwide perception as a nation where creativity is cherished has helped us to punch beyond our numerical weight. When the IDA sought out major corporations to locate in Dublin, such corporate decisions were taken for hard economic reasons. But somewhere in that bargaining - it would only be a small card but occasionally may have helped to win the pot - was the fact that some executives felt their families would be happy to resettle in Ireland because of our image projected by the Chieftains, U2 and others: the perhaps illusory belief that you might rub shoulders in pubs with rockstars and writers and that if this hotbed of creativity could produce Bono and Bob Geldof and Roddy Doyle, it might also produce an intelligent, literate young workforce capable of thinking outside the box. People mention putting a cap on it, but what size cap? Tax allowances work best for people with definite incomes. My most recent novel was published five months ago but commissioned and paid for five years ago. It was meant to take 18 months to write but took four years because I wanted to get it right. This delay had serious financial consequences but the exemption meant an advance could be stretched over the years - supplemented by dozens of other activities - because it was not taxed as a lump sum in one year. My income is erratic. Plumbers or other self-employed people similarly lack security, but everyone needs a plumber sometime, whereas poets are expendable. Fashions change. You can't always rely on someone having a leaky metaphor that needs fixing. Also, local committees never expect plumbers to make 300-mile round trips, then look happy to be offered €100 in payment. The exemption has not made me rich, though one day I hope not to work from a corner of a child's bedroom. What it does allow me is the confidence to continue to try and support my family doing what I do, hoping that if my ship finally comes in during one good year then I will be able to hold onto sufficient money made that year to keep us going during fallow years when I am sick or my imagination fails. If the exemption goes I'll obviously continue to write novels - they would just take far longer to complete and be less plentiful. Some critics might argue that this would be a good thing, and I stake no claim to my work having any particular cultural importance, or indeed that anything except a tiny fraction of the works nurtured under this act will live on to be read by future generations. The chaff count is always high in any era of writing; however, if the working conditions created by this exemption did nothing beyond producing a dozen books of the stature of Sebastian Barry's It's a Long Long Way or John McGahern's Amongst Women then I suspect that future generations will consider it well worth the price. The exemption allows me to balance out the extremes between the good and bad times and risk embarking on long journeys into the imagination that can last several years. During this period a writer can only hope that there will be readers at the end willing to share their landfall and also hope that if they succeed (even by tearing up several years' work to begin again) then in a small way, they may have left behind an imperfect but emotionally honest record of what it was like to be an Irish citizen at this time. Yours sincerely, Dermot Bolger *© Dermot Bolger 05* more stories here ========================= Benefits far outweigh any costs arising ,========================= Arts Minister John O'Donoghue on April 12, 2005 endorsed the view of the Arts Council in its submission to his cabinet colleague Brian Cowen TD. "I believe that the benefits of the scheme to the artistic life of the State far outweigh any costs arising, and it should be retained in its existing form," he said. The Arts Council submission on the Artists Exemption Scheme concludes that the scheme should be retained in its entirety, and explains, in some detail, the reasons for this position. Adding his support to the case against change, on April 12, 2005, Mr O'Donghue said: "I consider this scheme to be extremely beneficial for the arts in Ireland. It would be gravely mistaken to judge the scheme on the basis of perceived benefits to a very small number of high earners. Most of those benefiting from the scheme are on very modest incomes. "Further, we have good reason to believe that terminating or even capping the scheme is more likely to result in high earners legally leaving the jurisdiction, or structuring their earnings in a way that avoids or greatly reduces any tax liability, than in any revenue windfall for the Exchequer," said the Arts Minister. download the Arts Council (pdf) submission here =============== Ahern warns tax changes may be made ----------------------- AN Taoiseach Bertie Ahern TD warned that changes will be made to the writers' tax-exemption scheme in Ireland, if they are required. Speaking at an April 14 visit to the offices of the Arts Council he said the scheme is an imaginative legacy of his predecessor, Charles Haughey, who introduced the Artists' Exemption Scheme in 1969 to help create an environment in which the arts could flourish, by encouraging artists to live and work in Ireland. Ahern said: "It is a template for supporting the arts that is known and admired around the world. If change is required it will be forthcoming; but be assured that the continuing benefit to the arts will be fully borne in mind." The Taoiseach, in his speech to the Arts Council, raised a number of hares when he asked rhetorically whether a cap should be placed on the amount that can be earned under the scheme; whether criteria for eligibility should be tighter; and how the tax code should treat interpretive artists? However, half of all writers and other artists who qualified in 2001 for income tax exemption earned less than €10,000 in artistic income in that year, according to the Revenue Commissioners. The Arts Council, in its submission to Finance Minister Brian Cowen TD, said the proceeds of a book in any one year may represent all of the artist's significant artistic earnings for a period of up to five years. Minister Cowen is engaged in a review of tax exemption schemes in preparation for the annual Budget which will be announced in December. A number of writers' organisations, as well as individual writers, have made submissions to the review on tax exemption. =========== Union lodges submission on writers’ taxation ---------------------- THE Irish Writers’ Union lodged a detailed submission on the Artists’ Exemption Scheme with the Minister for Finance Brian Cowen TD. IWU Chair Peter McKimm said union research revealed considerable misunderstanding on the criteria for tax exemption and quite how it has been instrumental in growing the arts in Ireland to a level where it produces significant economic spin offs, not least in cultural tourism and international interest in matters Irish. “The growth in arts in Ireland had been spectacular. It is our view that the current environment can lead towards more international renown and national job creation,” he said. ============= Finance Minister Cowen conducts review ---------------------- THE Minister for Finance, Brian Cowen, TD, on December 1, 2004, announced that the Department of Finance and the Office of the Revenue Commissioners would undertake a detailed review of certain tax incentive schemes and tax exemptions in 2005. " I believe the time is now right to conduct a full review of these incentive reliefs, in particular to evaluate in detail their impact and how they are operating in practice," said the Minister. His preference is for a complete and comprehensive reform of the system rather than a piecemeal approach, he said. The Minister directed that a thorough evaluation of the effect of all relevant incentive reliefs and exemptions be undertaken and that proposals be brought forward to achieve balance. "I am now making it clear that I intend to include appropriate follow-up measures in next year's Budget," said the Minister. Those using reliefs should realise that the concept of unlimited or unrestricted reliefs is no longer viable, he said. Examination of data already available on exemptions, including the scheme for writers will be incorporated in the review. The review included a public consultation seeking submissions on measures that could be introduced to limit the extent to which reliefs and exemptions can be used by high-earners to reduce or eliminate their tax bill. The closing date for submissions was March 31, 2005. The Minister for Finance will consider the outcome of this work and bring forward proposals for the 2006 Budget which will be announced in December 2005. The Irish Writers' Union established a sub-committee to prepare the union's submission and invited views, and comments from writers on the union's submission. ============ Irish Writers’ Union submission on writers’ tax review ----------------------- When the then Minister for Finance introduced the Finance Act, 1969, he stated that the proposal for artists exemption from income tax was nothing less noble than to enrich our daily lives. But a more immediate and pragmatic objective of the legislation was to strengthen and expand the existing cultural milieu by attracting major established international artists to Ireland, thereby facilitating a synergy with the local arts culture. This was the defining aim of the legislation and not, as some critics of the scheme would have it, to support struggling artists. The Irish Writers Union is of the strong opinion that this innovative measure should be maintained, given the compelling arguments in favour of its retention. In any review of this imaginative decision it is worth recalling that these artists would not have come to live in Ireland if the tax relief was not introduced. Therefore, their availing of the scheme by taking up residence here did not cost the Exchequer anything, to the contrary rather in that they became additional taxable consumers. It is generally recognised that the Irish have a unique aptitude for words, written or spoken, but the relatively stagnant economy of the sixties meant that our artists, with just a very few exceptions, had low international profiles and low levels of income. Given the economic climate, most artists were struggling to make a living and few could earn enough to be liable for tax. There was little incentive for potential writers to risk undertaking full time writing. Section 2 of the Finance Act, 1969 and its successor, Section 195 of the Taxes Consolidation Act, 1997, transformed the artistic environment. The inflow of established artists illustrated what could be achieved. In effect it created a climate for encouraging and sustaining other artists to enter, in increasing numbers, into full time practice of their art. Thus the legislation's objectives were steadily realised. As regards the current proposal to review the scheme, it is our belief that the 1997 Finance Act was a comprehensive review of the whole scheme and brought in several very worthwhile amendments, without interfering with the basic thrust of the legislation - to nurture and extend the cultural pool. Benefits of the Scheme The tax exemption facilitates start-up writers and encourages them to persevere in their careers. Usually for a writer, the early years are spent writing, then securing a first publication and then continuing to write in the hope of further publication. This period requires an enormous investment of a writer's time over many years, with very little or no income being generated from writing. Even for the successful writer, income is frequently sporadic, with many intervening lean years. Calculations, of course, cannot take into account the fragility associated with a writer's work. Too many are one-book writers while others have to struggle to achieve a modicum of success without any guarantee that they will, after years of work, write any more successful works. A tax exemption is immensely influential in motivating writers to persevere in this precarious process. The benefits of the tax exemption scheme for writers are enormous, leading to an explosion in the number of writers in the country. The steady growth is shown in the numbers registering for tax exemption in the table above, rising to a total of 934 over the ten year period 1995 to 2004. This represents an increase of 580 per cent on the base year 1995/96, an average increase of about 60 per cent per year. Determinations of artists exemption granted under section 195 Taxes Consolidation Act, 1997 Tax Year Writers 1995/96 137 96/97 84 97/98 72 98/99 96 99/00 90 00/01 88 06/04/2001 - 31/12/2001 79 01/01/2002 - 31/12/2002 86 01/01/2003 - 31/12/2003 92 01/01/2004 - 31/12/2004 110 Source: Office of the Revenue Commissioners, January, 2005 Cultural Benefits Ireland has always valued and fostered its cultural identity. In achieving its independence, the contributions made by theatre, music, dance and language are invariably credited with playing a pivotal part in the emergence of an independent nation and identity. Today, as Ireland increases its capability to contribute confidently on the world stage, the growing numbers of writers make an immense contribution. Their publications explore, challenge, record and enrich and contribute in the broadest sense to our cultural, spiritual and national identity as a people within the European Union. Such cultural impact is not amenable to measurement, but it is within such a burgeoning cultural milieu that artistic practices are thriving. There is a huge educational spin-off from writing activities in courses, library programmes, summer schools, and more. This activity further adds to the creative energy of the country. A vibrant creative climate generates a synergy among the participants, facilitating inter-linking of writers with film-makers and poets with musicians and so on. Such synergy takes time to establish but can be quickly sundered, especially by a departure of talent to other havens. Cultural tourism is of increasing significance to the economy in bringing increased spending into the country, as seen in summer schools, cultural programmes, and other attractions. Another aspect is the development of a cultural industry surrounding deceased writers' work and lives. In all of these activities, not only are jobs being created and tax income thereby generated, but tourist expenditure is also increasing as a result. In addition, there is the taxation income generated by the writers themselves in writing-related activities. Furthermore, the value of an artist's work may increase both during his/her lifetime and afterwards, yielding taxable profits for the sellers and the state. Increased employment is a factor in areas associated with writing and related activities - publishing, printing, marketing, publicising, and in writing courses, cultural programmes, and summer schools. These jobs all generate tax income for the State. An amendment to the tax-free status of artists would impact immediately on the level of advances required by writers from their publishers, resulting in a knock-on effect for publishing costs and consequently for employment. This, in turn, would impact immediately on the publishing lists, with publishers reluctant to take on more risky, experimental works, surely the opposite of the original intent of the legislation. It will most certainly affect children's books, where publishing is already seriously reduced in this country, with consequences for child literacy. Recent years have seen severe discounting of book prices by publishers and booksellers as a result of the abolition of the Net Book Agreement. This increased competitiveness and consequent caution by publishers has seriously affected writers' royalty earnings. Any further erosion of such earnings by the abolition of the tax exemption scheme cannot be justified either in economic or cultural terms. Taxes paid by writers themselves on writing-related activities, like training and creative writing courses, for instance, must be included here. It is, however, important to note that the vast majority of writers cannot manage to live off their writing incomes and are liable for all the usual taxes in whatever other areas of work they are involved, in common with the rest of the working population. Cost Consideration Cost to Exchequer year million 1994/95 £5.1 95/96 £8.1 96/97 £10.4 97/98 £15.5 98/99 £19.3 99/2000 £23.71 (€ 30.1) 2000/2001 € 36.8 6/4/01-31/12/01 €23.5 euro (short tax year) Source: Office of the Revenue Commissioners, January, 2005 It has become the practice in recent years to represent the tax exemption scheme for artists from one perspective only - as a cost on the exchequer. The benefits, however, clearly indicate the array of activities generating income for the state resulting from writing and related areas. Furthermore, it is important in considering the cost to the State of the artists’ exemption scheme to take into account the annual state spend of 50 billion euro. The cost to the exchequer of the tax exemption determination for writers has risen from £5.1 million in 1994/95 (6.47million euro) to 36.8million euro in 2000/01 or 23.5 euro in short tax year Apr 2001/Dec 01. However, the figures for incomes of individual artists, which figures include writers, convey a very different picture. Short tax year 2001: Income -Number of Claimants.................. Income Subject to Exemption €5,000 or less 446 ............................ ........€ 916,555 €5,001-10,000 248 ........................................€1,796,686 €10,001-50,000 456....................................... € 9,867,796 €50,001-100,000 75............................................€ 5,411,767 €100,001-200,000 39............................................ €5,298,712 €200,001-500,000 31................................................€ 10,092,434 €500,001-10,000,000 28............................................. €46,631,246 The most recent figures available for artists' and writers' incomes subject to tax exemption show 86.9 per cent earning below € 50,000, with a majority of 52.4 per cent earning less than €10,000 in a year. In the bracket between € 50,000 and €500,000, there are 10 per cent of artists, with only two per cent earning above €500,000. It is abundantly clear from these figures, given recently by Brian Cowan, TD, Minister for Finance, that the vast majority of artists in this country do not live off the meagre earnings of their art. Consequently, the importance of the tax exemption scheme is of huge significance in aiding their financial viability as arts practitioners and in continuing to foster a dynamic cultural climate. The need for its continuation cannot be overstated. The submission was lodged, before deadline, with the Minister for Finance, on behalf of members and writers in general by the executive committee of the union. =========== Artists' tax relief costs taxman just €36.8m ------------------------------- Some 1,323 claims for tax exemptions were made by Irish artists in one year, involving € 80 million euro in income. Granting the exemptions cost the exchequer just € 36.8 million While some writers manage to earn a living income from writing, the focus always lands on the big money earners, which includes prominent musicians and composers, earning music royalties, as well as writers, under the scheme. Latest figures showed one claimant avoiding paying tax on up to €10 million. In contrast to the image of writers being a wealthy elite enjoying tax free status in Ireland, the vast majority do not earn a living through writing alone, said the IWU. The tax-free status for artists' and writers' earnings on approved works was introduced by former taoiseach Charles Haughey as the then finance minister in 1969. It is estimated that the cost of the scheme in the full tax year 2000-01 was € 36.8 million, according to figures supplied by Finance Minister Brian Cowen TD. Tax inspectors make their decision on applications using guidelines drawn up by the Arts Council and the Minister for the Arts. However, research conducted last year by the Irish Writers' Union showed the number of books whose royalties were exempt from tax in 2000/1 was 88. The previous year, 90 books availed of the exemption; some 96 the year before that, and 72 for 1997/8. In Britain, the Society of Authors in a report found that some 75 per cent of writers who responded to a survey earned under £20,000 (€ 27,000) a year; some 61 per cent earned under £10,000(€13,600) and 46 per cent earned under £5,000 (€6,500). Perhaps gaining a few hundred pounds a year from the exemption scheme, the rest of a typical writer's income will be from part-time work, teaching, giving courses and other work; all of which is taxed. =================================== Half earn less than €200 a week ========================= THE net cost to the Irish exchequer of allowing writers tax-free status on their royalties is far less than media speculation would indicate, according to the Arts Council. "Recent commentary suggests a limited appreciation of the facts of the Artists' Exemption Scheme," said Mary Cloake, (picured) Director of the Arts Council. The scheme came into being in 1969. The rationale for its introduction was to help create a sympathetic environment in which the arts could flourish by encouraging artists to live and work in Ireland. "The Arts Council is satisfied that the Artists' Exemption Scheme, over 35 years, has been very successful - given its pioneering nature in 1969 and the challenges of implementing such an incentive," said Cloake. Evidence of success is found in the global commercial achievement of a small number of Irish artists and the international critical acclaim enjoyed by many more, she said. “Brand Ireland' is based to a large extent on Ireland's creative and artistic output. The success can be gauged by the fact that, in 2002, for example, at least 1,300 individuals working as creative artists in Ireland on a professional basis availed of the scheme, creating the basis of a flourishing artistic community," said Cloake. But, the greatest number of beneficiaries of the scheme earn considerably less than the legal minimum wage. Statistics provided by the Revenue Commissioners for year 2001, indicate that some 50 per cent of all qualifying artists earned less than €10,000 artistic income in this year. Artists' earnings are subject to very considerable annual variation. The proceeds of, say, the sales from an exhibition or the publication of a book in any one year, may represent all of the artist's significant artistic earnings for a period of three to five years. Even the most commercially successful of Irish artists report experiencing years of minimal earnings during the peak years of their careers. A small number of Irish artists have enjoyed global commercial success on an unimaginable scale. This cohort of artists is dominated by musicians, whose earning profile is very different from that of most other qualifying artists. Their exempt income constitutes a relatively small share of total earnings. In any case, many high-earning artists are liable for Irish tax on a significant share of their incomes. For example, an established artist in the music business earns income from publishing, recording and touring. The only part of this income that is tax-free is the income arising from music publishing, all other earnings are taxable. By living in Ireland (which they must do to qualify for the relief) they generate considerable ancillary economic activity, and have invested quite significantly in the infrastructure for their sectors - especially in film, music and publishing. The inclusion of many non-fiction titles in the list of exempt publications has also been a cause for comment, with implications that a liberal definition of 'original, creative and of artistic or cultural merit' has been applied in the operation of the scheme. "However, it is unfortunate if such examples, or the cases of a very small number of high-earning individuals, were to discredit artists' tax relief, which has done so much, through a relatively simple instrument, to support creative artists working in Ireland in a practical and meaningful way," said Cloake. The Arts Council's findings were presented in a submission to the Department of Finance, to help inform their review of the scheme. The Finance Minister has promised a review of tax exemption schemes in the December 2005 budget. The Arts Council’s 38-page submission is available to download directly (along with submissions from other bodies, including the IWU) from the Department of Finance website. siteLink =============================== Writers taxation another view by Kieran Fagan =========== I wonder if it is wise to defend the indefensible? Everybody has to pay taxes and we risk coming across as spoiled brats. Why should the mother of five working at a supermarket checkout to feed her kids pay taxes, and we get a free ride? Instead could we accept the inevitable and look for ways of getting a tax regime that is "writer and artist" friendly? Like seeking to have earnings spread across a number of tax years so the "spike" in earnings from a book or other work years in gestation does not all get taxed in one year, when the bulk of the money comes in? I think we need to look at how the royalties on inventions are taxed. I'm afraid the point about "half the qualifiers earn less than €200 a week" does not really get us very far. Self-employed people like myself don't pay tax on earnings that low. The self-employed who pay tax are allowed reasonable deductions for costs incurred, light, heat, phones, writing materials, research costs and travel, for example, reducing the liability to tax. And we might be able to trade co-operation with Mr Cowen for action on authors' royalties from libraries. And yes, before anyone asks, I have benefited in the past from the tax exemption. ========================= home aims benefits committee events faq honoured plunkett join links contract membersites news plr reviewing tax	changes will be made to the writers' tax-exemption scheme, if they are required. an Taoiseach. A cap would serve to drive out artists who make significant contributions from non-exempt income. Olive Braiden Arts Council chair I believe the time is now right to conduct a full review of these incentive reliefs... Finance Minister a majority of 52.4 per cent earn less than €10,000 in a year. The exemption allows me to balance out the extremes between the good and bad times and risk embarking on long journeys into the imagination that can last several years. Dermot Bolger It is our view that the current environment can lead towards more international renown and national job creation... Peter Mc Kimm IWU "Recent commentary suggests a limited appreciation of the facts of the Artists' Exemption Scheme," Mary Cloake, Director of the Arts Council.. Submissions may be downloaded directly from the Department of Finance website. siteLink Submissions were received under the public consultation process as advertised on the Department of Finance website and in the national daily newspapers on January 8, 2005. . The benefits of the scheme to the artistic life of the State far outweigh any costs arising, and it should be retained in its existing form. Minister for the Arts
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