Government report reveals impact of levy... and the cost The introduction of Droit de Suite in the UK could result in the loss of up to ten art dealing jobs for every artist who would benefit from the tax.

The ongoing impact could raise that figure to 13 industry jobs for every benefiting artist.

This alarming statistic is just one of a catalogue of threats to the British art market arising from plans to introduce the measure, also known as the artists’ resale right – which aims to benefit artists by paying them a percentage of every resale of their work – under a European Union directive on January 1 next year.

Proposals being put forward by the Department of Trade and Industry, which go directly against Chancellor Gordon Brown’s Budget pledge not to make EU directives worse, could put British dealers at a further serious disadvantage against the trade from other countries in Europe and beyond.

There are also serious questions over the statistics used by those supporting the levy to push the measures they want through.

The headline figure on potential job losses among dealers – which does not include the likely impact on auction houses – comes from the Government-commissioned report into the effects of Droit de Suite on the UK, which was published at the end of 2003. Assessing the market for 2001/2002, the report’s author Gerard Leeuwenburgh revealed that 189 artists would have benefited from the levy had it been in place at the time. But the result would have been the loss of 8.6* per cent (1715) of all jobs in art dealing firms (not including auction companies).

The impact on small auction houses, also published in the report, has been distorted when picked up by the official DTI consultation document into Droit de Suite. Quoting the Leeuwenburgh report, the consultation document claims that “small auction houses have indicated that they do not expect to see a decline in business as a result of artists’ resale right... They estimate administration costs to be approximately £30 per sale, but not to exceed £1000 per year”. However, close scrutiny of the Leeuwenburgh report reveals that only one small auction house was interviewed.

Despite Gordon Brown expressly promising that the Government would avoid “goldplating” EU directives – jargon for adding to their stringency – the DTI have done just that over Droit de Suite, creating one of the biggest threats for dealers standing at fairs in the United States. They propose that wherever a UK dealer sells, British jurisdiction should apply. It means that even when conducting transactions outside the EU, such as at a fair in the US, they would still have to pay the levy.

US fairs blow

If adopted, this proposal could see a British dealer standing at a fair in New York or Florida being forced to pay Droit de Suite on works they are selling by US artists to US buyers on US soil. Other European dealers standing next to them, who are currently paying Droit de Suite in their own countries, such as the Germans, would not have to do this.

To cap it all, the levy is payable on every resale of a work of art, even if the vendor is making a loss in selling it.

As for the statistics put forward to support the case for Droit de Suite, the Culture Select Committee has recommended a dramatic lowering of the threshold at which it should apply based on claims made by the Design and Copyright Society (DACS), who expect to win the exclusive contract to collect the levy. DACS quoted the Leeuwenburgh report to argue that the threshold should be lowered to €1000 (about £600) from €3000. This would increase the number of UK artists who would benefit by 92%, they said. However, it has emerged that they misinterpreted the report and that there is no reference to any such figure anywhere within it.

* The European Art Market in 2002, A Survey – TEFAF
• See this week’s Back Page Personal View on page 63 of the Antiques Trade Gazette.