Business Standard

The artist as tax assessee

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Bharati Chaturvedi New Delhi
IN RECENT TIMES, we've witnessed tax raids on artists and galleries. That is not a bad thing in itself. After all, if you earn, you have to pay taxes. But taxing anyone is predicated on an accurate assessment of their earning. In the art world in India, this is very hard.
 
When tax officials raid a typical premise, they find things they can make sense of "" gold, cash, jewellery. When they raid an artist, it's hard for them to figure out the worth of what they find. Such woozy knowledge is not to the benefit of the artist or art gallery, because it only makes them into victims rather than successful professionals.
 
The first need is for a registry of selling prices of various kinds of works, centrally maintained. It would need diverse inputs, but could be a government list since they are the ones who need it most.
 
This will, of course, have to be in the public domain, and open to corrections from artists. So you can look at all the artists who are on the market via galleries, shows or their own studios and look at the range of prices they sell at, and the range of media they work in. Let's face it, a successful print-maker will earn less than a successful oil painter.
 
Actually, I like this idea because it makes it harder to artificially boost prices to "create" successful artists. Imagine going through the roof on this list. You'd have to pay the appropriate taxes and if you didn't really earn it, but simply watched complex image-boosting deals, it is likely not to be worth the effort. It is fair to other buyers as well. You'll have a harder time telling a prospective buyer that Painter X is selling at Rs 5,00,000 if he is listed at less.
 
An incentive, perverse of course, will have been set up then for correcting the list all the time. Markets need an openness, especially art markets, because the buyers we have today are people who genuinely like art and won't want to buy it routinely on the sly at unofficial prices.
 
This demand coupled with transparent prices will enable the buyer to get a fair deal and for the tax officials to get a realistic sense, rather than an inflated one. Not every artist sells for multi-zero prices at Sotheby's auctions.
 
But even this won't work with the level of knowledge in the tax department today. Officials are unlikely to be able to distinguish between a silkscreen and an acrylic. Although this could be good for many silkscreen printers in the medium term, the benefits will dry out as taxation becomes more random.
 
Nothing cures ignorance better than knowledge. A small quickie on art markets and media will be useful, but only marginally. I don't suggest consultants because they will work as informers. And informers everywhere use their position to settle scores, pull rank and enhance their power, if not their personal art collection.
 
We need gallerists to inventorise what they have every quarter, with some kind of a ratification by the artist, if alive (via a letter that sends them a list with medium and size, even if they don't respond), and to be able to show that list whenever needed. Many works won't be on that list.
 
They will be sold outside the list and maybe even off the books. But in the event of a raid, they are likely to be found and maybe confiscated, a fear that could ensure the artists ensure they are formally listed. This list at least makes sure we know what is in the larder, although till it is sold it is not income, only loss and liability.
 
Most players in the art market would hate to do all this. But if they don't, they will have to live in terror of the taxman. After all, everyone knows that the impoverished artist is a romantic image from the past.

 

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First Published: Sep 15 2007 | 12:00 AM IST

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