Ernie Money on the arts and VAT
When VAT was introduced in this country by the Finance Act of 1972 the Treasury was quick to proclaim the inviolable principle that it must he an 'across the board' tax. If the revenue was to surrender other forms of levy like purchase tax, ran the argument, and make allowance for the statutory spheres of exemption built into the scheme from its initiation, then in the interests of both uniformity and ostensible equality, as many forms of commercial activity as possible should be caught in the net.
In fact, even on an abstract basis, this was a principle which it became difficult rigidly to sustain. I can remember, for example, spending a happy afternoon in helping to Persuade the Customs and Excise that the services of an undertaker Should be regarded as a once-andfor-all event. On social reasons forms of commodity like children's Shoes and disablement aids had to be further taken outside the ambit of the tax. In the case of the fine arts, ordinary commercial prudence, based on the special position of London as the centre of the world art market, led to a modification of the scheme to shift the burden from the total selling price of a work of art sold by an auctioneer or dealer to a charge on the profit margin of the sale concerned.
As the original Bill was debated, therefore, it became clear that the system could be made slightly more flexible without the economy going. totally to rack and ruin. Although variations necessarily have to be few and far between they may have from time to time to be considered on their merits. Currently, the argument is whether, in a time of economic stringency and at a cost to the Exchequer of something !c'etween £2 million and £4 million it is reasonable to safeguard our Present national achievements in e arts by zero-rating the work of wing writers, composers and artists and theatre and concert tickets. Additionally, there is a case 1,0 be Considered for alteration to
help the British film industry and Public museum acquisitions.
, In order to understand the case !or zero-rating the arts it is necessary nenecessaryto
look at the background to look at the background to
the necessary for their Continued existence at the present level. Whether we like it or not, the tate
has now become irrevocably forms with the future of most of artistic activity in Britain. In a recent Parliamentary debate on the subject Mr Bryan Magee estimated the total figures for public expenditure on the arts as representing 1 per cent of government spending and 0.2 per cent of local authority spending as a whole. By comparison the amount involved in private patronage, though psychologically important, is very small indeed. Without state aid, therefore, the arts would scarcely be in business at all at the present time. Successive governments have, in recognising this, committed themselves to estimates in this field which last year involved a grant of £23.4 million for the Arts Council. In doing so they have also recognised that the arts have a vital role to play in invisible earnings and tourism. At the same time, last year the government claimed back £1.2 million from the Arts Council's clients by way of VAT. Although this was partially made up by the supplementary grant of £750,000 it was made clear that this additional estimate was not to be considered as setting any sort of precedent. With inflation running at its present rate, it is a matter of simple arithmetic that the outlook for a good many of these clients is going to be very bleak indeed unless something can be done to help them.
What makes the position of the Arts Council different from, for example, sport or other forms of commercial entertainment, is the way in which its activities have become basically subsidy(in other words, government-) dependent. Except for particular eventualities, like the implementation of the Safety of Sportsgrounds Bill as and when this measure is eventually passed, commercial sport is still looked on in this country as a paying rather than a subsidised form of activity. Money spent by the Sports Council and its agencies has basically been applied to amateur or specialist needs. Without the Arts Council's grant from Parliament, or to be more precise without the grant plus a built-in factor to take into account the effects of inflation and of VAT, most forms of artistic enterprise on a professional level will cease to function here or will become a minority cult for the very rich.
If we are going to spend public money to maintain the arts in Britain then the argument that the price of admission to theatre § and concerts should be increased to find an economic level, including VAT charges, is self-contradictory. This is, after all, why a previous Conservative government abolished entertainment tax. As tickets become increasingly expensive so audiences diminish and become , more elitist rather than less.
The suggestion that subsidised commercial managements would use relief from VAT to increase their profits without passing on the benefit to the public simply cannot .hold water at a time of continually rising costs. In the present situation it is going to be a question of holding admission charges to a containable level unless the public are going to have to pay a good deal more than most of us can afford. However keen governments of either colour have been to acknowledge the importance of the arts in terms of national prestige or invisible exports, neither side has so far shown itself willing to grasp this nettle in office. If somebody does not do so soon it may well throttle the plant on which it feeds. To suggest, as Mr Hugh Jenkins, the present Minister for the Arts, has been doing in recent speeches, that we have got to wait, before taking action, for a harmonisation of policies in this field within the EEC is an utter, total and dangerous fallacy.
Ernie Money was Conservative MP for Ipswich from 1970 to 1974 and Shadow Minister for the Arts in the last Parliament
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