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Trade bid for rise in ARR threshold

13 May 2013Written by Ivan Macquisten

Art dealer Niall Fairhead is leading a new campaign to persuade the Government to raise the Artist’s Resale Right threshold from €1000 to the €3000 stipulated by the European Commission.

Mr Fairhead, who spearheaded a similar campaign this time last year by setting up an online petition and persuading thousands of people to send specially designed postcards to then culture secretary Jeremy Hunt, says recent surveys by the leading trade associations show how badly the industry is being affected.

The costs and administrative burden for both dealers and the collecting societies far outweigh any benefits to artists below the €3000 threshold, he says. And he added that the latest survey figures show just how "grossly inaccurate" the Design and Artists Copyright Society (DACS) were in underestimating these costs when persuading the then Labour government to lower the anticipated threshold from the €3000 stipulated by the EC Directive to €1000 in 2006.

This 'gold-plating' of the Directive also went directly against Government policy.

In 2005, in the run-up to the levy's introduction, DACS submitted evidence to the Government claiming the administrative costs to the trade per transaction for collecting and paying ARR would be about £1, but even then industry figures estimated that they would be around £30-40. The latest set of surveys put it at around £50 - and that is without factoring in DACS' own costs related to the transactions and payments.

Now Mr Fairhead and fellow dealers have drawn up a report showing these effects, which they have submitted to Viscount Younger of Leckie, parliamentary under secretary of state for intellectual property, in the hope of a change of heart.

Administrative Burden

This impact assessment study is being considered by the Intellectual Property Office, who are keen for interested parties to contribute their thoughts and evidence before the Government assesses the claims further.

A survey of around 20 members of The Association of Art & Antiques Dealers (LAPADA), The British Antique Dealers' Association (BADA) and the Society of London Art Dealers (SLAD) compiled in December 2012 showed it takes an average of just under an hour and 20 minutes to complete the task of administering a single transaction involving ARR payment, with the overall cost averaging £50.85. Earlier surveys showed similar results.

When it comes to costs incurred by DACS, their 2010 Westminster Briefing reveals that they made around 29,160 individual payments to beneficiaries, at an average of £360 each.

DACS stress that they are a not-for-profit organisation, so their 15% fee can be presumed to reflect the costs of administering the ARR payments. If that is so, in order to pay out £360, they must have collected £423.50, putting their collection and distribution costs per transaction at an average of £63.50.

Together with dealer costs, this makes an average overall cost per transaction fulfilment of £114.35, equivalent to more than 30% of the average payment.

This indicates that DACS must be losing money on lower-end transactions - the sale of a picture at €1000 generates €40 (around £28) in ARR, for instance - with the costs far outweighing actual payments to artists.

"The extension of ARR to the work of deceased artists in 2012 has added to the cost burden, as four times the number of sales are now liable to ARR than was the case before," states Mr Fairhead and his colleagues' submission to the minister.

"Small businesses in the art market were disproportionately affected by the decision to introduce a lower threshold, since they are most active in the market at lower values."

He further advises: "There is no requirement in the Directive to apply ARR to art sales below €3000 and therefore the British Government is free to restore the threshold without recourse to the European Commission. Doing so would bring UK law in line with the precise requirements of the EC Directive."

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