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Bertie Ahern and the artists’ tax exemption

Bertie AhernBono, Enya, Elvis Costello, Maeve Binchey, Louis Walsh and now Bertie Ahern . Who’da thunk.

Section 195 of the Taxes Consolidation Act 1997 is the legislation under which Bertie Ahern claimed his tax exemption as an artist of ‘cultural or artistic merit’. The exemption was introduced by Ahern’s mentor, Charles J. Haughey, in 1969 as a way to encourage individuals with artistic talent to work in, or continue working in, the Arts. Until 2006 when a €250,000 cap was placed on the level of tax-free earnings, all income through artistic endeavor was completely tax free (this cap has since been lowered to €125,000). Last year the Commission on Taxation recommended a completely abolished, though arts minister Martin Cullen has rejected that out-right.

Judging by details available on claimants since 2001, somewhere near three quarters of claimants each year – approx 800 to 1000 individuals – sought exemptions on less than one and a half times the average industrial wage (excuse the ill-defined figures, inflation and other economic flucuations mitigate against exactitude). Approximately half that number were claiming on less than one third of the same figure. Quite rightly too, it was brought in help struggling artists and encourage people not working full-time in the area to produce work of note, despite what some wealthy artists will try to tell you.

On the other hand, a small percentage of claimants earn many multiples of the average industrial wage, some even moved into the country solely to avail of the deal. Artist Freddie Forsyth, writers Irvine Welsh (Trainspotting, Filth) and DBC Pierre (Vernon God Little) and journalist John Simpson were among those who became tax residents here partially (or solely, in Simpson’s case) for the exemption. These wealthy foreign-nationals, combined with their Irish peers, cost the country’s coffers multiple times more annually than their lesser-earning contemporaries. Worth knowing; before the introduction of the to the cap just 2% of claimants accounted for 50% of the tax exempted.

The 2006 capping of the exempt income has – as artists’ lobby group, Visual Artists warned – resulted in some high-earning individuals moving their tax residency abroad. The most infamous case, of course being U2, who moved their tax residency to The Netherlands.

However, a stark majority stayed, obviously, as it’s almost always awkward to uproot.

Bertie Ahern’s claiming of the exemption is notable for two reasons, one perhaps less noteworthy than the other.

Firstly, it illustrates just how little civic responsibility the man feels for the situation the country finds itself in today, something that will surprise few. Ahern is already in receipt of a number of State pensions, these total more than €120,000. He also has use of a State car 24 hours a day, every day, which transports him wherever he wishes to go at no personal cost. On top of this he receives a TD’s salary of more than €100,000. He also earns, or has earned, considerable amounts from private speaking engagements, though it is said business is slow these days for ‘the architect of the Celtic Tiger’. In short, he’s not in search of a few pence to rub together, unlike many PAYE workers and private sector taxpayers as of late. Still, he actively sought the exemption on a book ghost-written by Richard Aldous for which Ahern received more than €400,000 in an advance when he could have left the money in the nation’s coffers. This is where, I argue, it is needed and should be. He did so knowing it would cause controversy and offense.

More importantly however, it shows that reform of how the artists’ exemption is administered is required. A person earning such sums should not be able to claim such massive tax reliefs, whether it be on property or paintings. Most artists earn very little (and those that earn large sums can find themselves taking in €300,000 one year, and nothing for the next five years) the exemption should remain available to these people, but not to those who also earn vast sums for non-artistic sources.

My argument: If the income an individual earns from contracts outside the Arts comes to more than the level of the cap then they should not have the option of seeking the exemption.

So, a person taking in more than €151,000 as a journalist/politician/public servant/company director gets no tax relief on additional earnings from their artistic work. However, those taking in €75,000 from artistic means and earning €60,000 from another source still get tax relief on their artistic works. Those who are paid in capital sums, as many authors are, should have their artistic income assessed over a three year period and be taxed according to their average annual artistic income.

Footnote One: Point four remains, and it is not what Twenty guessed.

Footnote Two: Other prior claimants include Labour deputy Ruiari Quinn, Conor Cruise-O’Brien and other respected journalists, most of whom claimed on income from books, though a small few did – arguably in a hypocritical manner – claim on all income while denouncing the likes of Haughey for his Ansbacher behaviour. Vincent Browne spoke about these on The Right Hook yesterday, without naming names.

Footnote three: The Arts Council Revenue Commissioners can reject a book from the exemption, all fiction is covered but biographies can and often are refused. I’ll be interested to see the minutes of the meeting whereby the Arts Council granted the book on Ahern exempt status.

Footnote Four: More on this subject in Sold! The Inside Story of the Spectacular Rise of Irish Art by John Burns.

Artists… cut me down, you know you want to.

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11 Responses

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  1. John Burns says

    The writer to whom Vincent Browne is referring is Conor Cruise O’Brien. Dunno why VB is shy about naming him: if memory serves, the Cruiser told Browne live on air that he was treating all his income from journalism as tax exempt. Whoops. I believe he got a large tax bill from Revenue soon afterwards.

    There’s a bit more background in this piece I did recently for Sunday Times

    http://www.timesonline.co.uk/tol/news/world/ireland/article6832225.ece

  2. Daniel J. O' Keeffe says

    Bertie Ahern is a degenerate of the highest order. He has brought the country to its knees through reckless mismanagement of the country for the past decade. This makes the blood boil no end. He has absolutely no integrity and no shame, he has made himself a millionaire on the back of these pensions and salaries. It makes me sick.

  3. Mark Coughlan says

    Thanks for the comments.

    @John,

    I went searching for that clip but had no luck, seems to online archive for Vincent Browne on RTE only goes back to 2006, strangely.

    @Daniel,

    Fair comment IMO.

    I think there was another comment here that I accidentally deleted. I read it a clicked the wrong “Approve” “Unapprove” or “Trash” option. It was insightful. Sorry to the person who left it, if they’re reading.

  4. pookawoowoo says

    Total tunic, he is!

  5. Jonathan says

    Just out of curiosity, does the substantial advance he received not count as income earned on the book, and therefore put him over this cap? I’m not sure how this works…

  6. John Burns says

    It does put him over the cap. But I would imagine that he and his publishers agreed to make the payment over two tax years – 180k in 09 and 180k in 2010.

  7. Conan says

    My understanding is that the way the scheme works with other (non creative) income is that it pushes the other income into the higher tax brackets. So, as an example, if Art ui Craftaigh earned €50,000 from artsy painting and €50,000 from a day job the latter amount would be counted as earned income €50,001 to €100,000 and taxed accordingly. He couldn’t avail of the lower tax band on the first portion of it.

    I may be wrong.

  8. John Smith says

    Bertie is in the list as a politician his book is deemed to be of cultural interest.

    Shane Ross should have said his banking book was political and he could have got the same treatment.

  9. John Smith says

    On footnote 3 there are two people to apply to if your submission is rejected and one is Bertie Ahern’s brother-in-law. Small world.

Continuing the Discussion

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