Economic impact of tax offsets on the live music industry

Summary

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.

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.

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.