Tax incentives for live music
Interested in Tax Offsets? While the lockout laws debate rages across the country, there is a silver lining for the live music industry. APRA AMCOS and other stakeholders commissioned Ernst and Young (EY) to investigate whether tax offsets would stimulate more live music activity across the country. It is well known that the live music industry kicks goals for the whole economy, with every dollar consumers spend in this sector delivering three times that in economic riches - through food and beverage consumption, audio visual hire, wages, hotel stays and more.
EY surveyed some 23,000 venues (both those staging live music and those not staging live music) and a range of major and independent record labels, offering several options for tax offsets. Almost half (45 per cent) of restaurants and cafes surveyed stated they would stage live music if tax offsets were provided. Hotels and bars also supported the move, with one in five stating they would introduce (or re-introduce) live music if tax offsets were on the table. EY’s study concluded that the greatest increase in market value, employment and value-adding would come from the introduction of cash-based tax offsets for venues not currently staging live music, combined with a percentage-of-expenses tax offset for venues already staging live music. If the government were to adopt the findings of this report, the initial fall in tax revenue would be more than compensated by additional tax generated from a wider base, including income tax from employment, resulting in an estimated $40.2m economic windfall for the whole country in the medium term.
APRA AMCOS Head of Member Services, Dean Ormston, said, “In a purely economic sense, investing in the live music industry pays dividends. For every dollar Australians spend on live music, three dollars circulates back into the economy. An investment incentive of this nature will stimulate an immediate lift - more venues will host live music, more often, which means more artists performing, more jobs in production, more jobs to serve the patrons attending, more accommodation and travel expenditure across the whole country - millions of dollars in revenue. The contemporary music industry has traditionally received very little investment support. A vibrant local live music sector is critical to ensuring broader industry success and developing Australia’s considerable music export potential."
“Tax offsets have been applied and work well in other industry sectors including the film and research and development industries, both here and in large markets like the US and UK. Based on this research, we think there’s enormous potential to apply similarly agile and smart thinking to the Australian contemporary music industry,” Dean said.
HIGHLIGHTS & KEY FINDINGS
- Increase in total output, employment and value add: The highest output, employment and value-add came from providing a ‘combination’ venue cash offset of $40,000 for new live music venues, and 20 per cent expenses offset for existing live music venues.
- Increase in venues staging live music: Based on the venue survey data, 45 per cent of restaurants/cafes/other, 21 per cent of hotels/bars and 5 per cent of clubs and nightclubs that are not currently staging live music would stage live music if a range of tax offsets were provided, an estimated 2,017 new venues intending to stage live music across Australia.
- Increase in live music performances: Up to 284,193 additional live music performances per year are expected under the combined venue scenarios. This is an increase of approximately 87 per cent over current levels.
- Increase in live music attendances: Up to 31.1 million additional attendances are expected under the combined venue scenarios.
- Increase in sound recording investment: Sound recording producers reported that an offset would assist in reducing overhead costs and allow for increased investment in new and current artists.
- Impact on tax flow and net difference: Tax offsets generate additional spending in the economy, which results in additional tax revenue for government. The net difference between the total tax offset paid by government and the additional tax revenue received varied across the various scenarios investigated, and was highest under the combined venue scenario of $10,000 cash offset for new music venues and 5 per cent expenses offset for existing music venues, providing a net return to government of $40.2m, and the greatest return on investment for government.