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Art

WE URGENTLY NEED YOUR HELP!

Art Dealers may be aware that there is a continuing campaign to increase the threshold at which ARR is charged from €1000 to €3000. If we are successful in achieving this it will have great benefits for the entire art industry for whom payment of ARR is a very great Financial and Administrative burden.

A group of Art Dealers had a meeting at the IPO recently and the question is now being considered by the Minister. In our submission to the Minister we suggested that the existing system of ARR was not “Fit for purpose” inasmuch as it did little to benefit needy artists on low incomes and was a very severe burden on the Art Trade generally because the “Delivery Cost” for paying a comparatively small amount (€1000/€3000) was too great. To assist our submission the Minister requires an IMPACT STUDY.

We are in the process of gathering anecdotal information on the cost of administering ARR to your business as we urgently need approximately 20 case studies demonstrating the administrative burden and estimated costs of ARR on your business. Please could I ask you to enclose your submission on this Blog post within the next 14 days.

The Facts and Figures to date:

The most recent empirical evidence gathered on the costs per transaction for dealers in administering ARR are from the recent survey conducted on LAPADA dealers. This indicates that dealers spend approximately 68 minutes per transaction at an estimated cost of £45. These rates are similar to the estimates used by BAMF and the British Government of £30 to £40 per transaction. They are slightly higher than those found by Froschauer in his 2008 report which suggested costs per transaction of £23.30 to £26.50 (although these were as high as £53.60 when set up costs were included). One of the reasons LAPADA estimates could be slightly higher may be that the dealers responding were generally smaller dealers and the costs to these business are higher than for some larger companies. They may simply also reflect that dealers have revised their estimates upwards as they have had more practical experience in actually dealing with administering the right over the last couple of years.

The other recent research to consider is the 2008 report produced for the IPO by Graddy, Horowitz and Szymanski which had mixed results which found that 50% of those questioned reported that the cost per transaction had been less than £10. 20% calculated that it had been between £10 and £40 per transaction, 5% considered it to have been more than £40 and the remaining 25% were unable to produce a precise figure. It is important to note however that in their sample, for those that had sales in the secondary market that may have been applicable, these sales accounted for less than 10% of their total sales in all cases ( and 23% of their sample only conducted sales in the primary market), and as such many respondents may have had little experience of the right or its administration.

The figures quoted by DACS of 40p per transaction are impossible to validate in any way and are implausible given the physical, information and labour costs that have to be involved in even the simplest transaction and even using the minimum wage rather than professional rates. Costs will vary greatly between businesses and specific transactions, but it would seem likely that a very conservative estimate of costs per transaction for those regularly conducting sales in this sector lies somewhere between £23 to £45 per transaction. It is important to note that all of these cost estimates are unlikely to include pro rated professional fees of accountants, lawyers and other professionals that may be required in more complicated transactions, which could add to the totals significantly. We urgently need approximately 20 case studies demonstrating the administrative burden and estimated costs of ARR on your business. Please help us with a comment on this Blog post which can be used as evidence to assist our cause.