THE SCIENCE OF TAXING THE ARTS

Most OECD countries support the arts with a broad range of tax incentives. The primary incentives provided in New Zealand are direct subsidies to traditional art forms, such as the ballet and the symphony orchestra; tax credits for donations to certain not-for-profit organisations, which may include arts organisations; and tax incentives for New Zealand production of films, digital and visual effects. This paper investigates the economic, philosophical and sociological arguments raised for, and against, the provision of tax incentives for 'the arts'. A variety of direct and indirect instruments are discussed. A trans-Tasman comparison of arts related funding and incentives is undertaken and the suggestion made that New Zealand must engage in more effective targeting of scarce resources in order to maximise outcomes from tax incentives and increase economic efficiency.