Economic impact of tax offsets on the live music industry

Summary

Overview

• APRA AMCOS engaged BIS Oxford Economics (BISOE) to undertake an independent report on how and whether tax incentives for venues and artists would support live music.
• 325 hospitality venues surveyed, plus workshops conducted with stakeholders.
• The survey showed a 70% reduction in the number of venue-based live music gigs in FY20-21 as a result of the COVID-19 pandemic as compared to the last full pre-pandemic year (2018-19)
• This research comes after earlier reports from Ernst & Young commissioned by APRA AMCOS in 2012 and in 2016 on the economic contribution of the venue-based live music industry and the impact of tax offsets.

Supporting live music at venues

• The BISOE report found that a tax offset would incentivise existing live music venues to host more live performances and enable non-live music venues to host live music performances.
• A combined venue offset (of 5% of expenses for current live music venues and $12,000 in expenses for those not currently hosting) would boost the incomes of musicians and artists by $205 million per year with an additional 203,200 gigs.
• Such a combined offset could also support 7,400 direct and indirect jobs across entertainment, hospitality and tourism, and contribute $636 million per annum to Gross Value Added (GVA).
• A key motivation of the offsets is to encourage a healthy live performance ecosystem. Apart from establishing a vibrant cultural life in Australia’s cities and rural centres and enhancing quality of life, supporting live music may also provide other long-term benefits such as enhancing Australian musical exports and soft power.

Existing live music venues

• Three tax offset scenarios for existing live music venues were modelled and consulted on:
  - 5% of expenses;
  - 10% of expenses; and
  - 20% of expenses.
• 60% of venues agreed an offset of at least 5% would encourage them to host more live music [page 6]. These venues would host an average of 18 more gigs per creating a total of 52,000 extra gigs per year under the 5% scenario.
• Revenue impact on venues:
  - $235 million rise in revenue across live music venues under the 5% scenario. This equates to approximately $80,000/year per venue.
  - $60 million to $230 million cost to Government depending on the scenario.
  - $90 million to $120 million benefit to Government in terms of contribution to tax revenue, depending on the scenario.

Non live music venues

• Three tax offset scenarios for non-live music venues were modelled and consulted on:
  - $12,000 (12K);
  - $24,000 (24K); and
  - $48,000 (48K).
• 64% of venues agreed that an offset of at least 12K would incentivise hosting live music.
• 16 gigs per year for each venue with a total of 150,000 additional gigs per year under the 12K model.
• Total revenues of non-live music venues are estimated to rise by $247m in the 12K tax offset scenario, this equates to approximately additional $30,000/year per venue.
• $110 million to $440 million cost to Government depending on the scenario.
• $90 million to $140 million benefit to Government in terms of contribution to tax revenue depending on the scenario.

Supporting touring artists

• Tax offset for artists based on travel expenses - transport (van/vehicle hire and airfares) and accommodations.
• Proposed offset would be set at 50% of travel expenses.
• Based on feedback received by BISOE, stakeholders favoured tax offsets over a grants program as offsets are non-competitive and more sustainable long term.
• APRA AMCOS proposes the following minimum criteria for artists to be eligible for tax offsets each year:
  - 20 performances;
  - $20,000 travel expenditure;
  - 4 singles released; and
  - At least 4 regional shows.
• An artist receives $20,000 to $30,000 each per year in offsets under the proposed model.
• 200-300 of 10,000 artists will be eligible for tax offsets based under the proposed minimum criteria.
• The proposed tax offset would cost between $4 million to $9 million per year.
• It is estimated that the program would return between $4 and $9 million per annum to Australian touring artists.
• Indirect flow-on effect of this policy have not been estimated.

Read the full report (PDF 2MB)