More than $2.1 million would have been paid to visual artists or their estates if a royalty scheme had been operating between 2018 and 2020, modelling shows.
The modelling was released by the Ministry for Culture and Heritage and estimates that 3600 visual artists could benefit from the scheme that’s due to come into effect in late 2024 and will provide a royalty payment to artists when their art re-sells.
Auction house data from 2018 to 2020 showed an average $702,858 in royalties per year would have been distributed to Kiwi artists or their estates if a scheme had been in place, representing 666 artists and estates across 5139 sales.
Of those, 66% of payments would have gone to estates, with the rest to living artists. The median royalty for a living artist would have been $182 and $490 for estates.
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While a significant portion of royalties would have gone to artists aged over 50, younger artists would still have had modest returns.
But any actual scheme would have likely paid out more, as it will cover sales through dealer galleries, independent agents, brokers, and re-sales to and from public institutions. It will not apply to private re-sales between individuals, but individuals will be able to opt into the scheme.
Auction houses represent 80% of secondary art market sales in New Zealand.
While many auction houses and dealer galleries were opposed to the scheme due to compliance costs and concerns it could depress the art market or deter sales, modelling showed a median cost of $180 to $400 per year for sellers.
Officials said the definition of visual art needed to be broad as the digital art market emerged.
Legislation will broadly define toi Māori and Pacific art as the “cultural expression” of Māori or Pacific peoples, to ensure no art form is excluded.
An artist’s estate could be an immediate family member, their broader estate or iwi they’re affiliated to. If an artist has not specified, the royalty will go to their legal heir.
Risks of introducing a scheme included art market professionals not reporting sales or the art market going underground, artworks being sold privately or sold overseas to avoid a royalty payment, or the scheme not being self-sustaining.
But international evidence didn’t show any clear links between a royalty scheme and negative impacts on the art market.
Further analysis was needed to determine whether a royalty constituted taxable income, the documents said.
Officials were also exploring introducing a cultural fund, which would be funded by declined royalties and voluntary donations and be dedicated to supporting the career sustainability of artists.
Eventually, it’s hoped the fee the collection agency deducts from royalties will cover its operating costs. Until then, the Government will fund the agency’s costs. What percentage of royalties will be deducted to support the agency hadn’t been decided.
There will also be costs for the ministry to monitor the agency, which will be able to take civil proceedings in cases of non-compliance to recover unpaid royalties.
Joint liability for the royalty will sit with the seller and the seller’s agent or art market professional, who will each pay 50%. In the case of no seller’s agent, liability will be shared between the seller and buyer’s agent.
The royalty will be available to citizens and residents of New Zealand and countries Aotearoa has a constitutional relationship with including Tokelau, Niue and the Cook Islands.
It will also have international reciprocity, with Kiwi artists receiving royalties from re-sales in all countries that have a comparable scheme which Aotearoa has an arrangement in place with.
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