Art For Banks' Sake: IVA and works of art

The Spanish Government is to reduce the rate of IVA (VAT) on transactions involving works of art from 21% to the 10% rate which commonly applies to certain tourism businesses. It is doing so, according to deputy prime minister Soraya Sáenz de Santamaría, in order to promote Spanish culture. She has said that a similar reduction is being considered for other cultural and artistic endeavour, such as for the film industry.

The government has been put under pressure to cut the tax rate and to bring it in line with rates of value add tax that are applied to works of art in other European countries. In December last year the Spanish Consortium of Art Galleries wrote to the finance minister Cristóbal Montoro and let him know what they thought of the government's attitude towards art; a lack of empathy and sensitivity, said the galleries' people.

The Spanish art world is in crisis - though there again, what area of activity isn't - and the market for Spanish art has contracted by a third in the past five years. This is one statistic that highlights problems in the art world, though it isn't as catastrophic as another one, revealed by the magazine "Artprice", which suggests that sales of works of art in Spain plummeted by almost two-thirds in 2013 alone.

This depression in the art market clearly has a negative impact on artists as well as on galleries, and where the former are concerned, young artists are being affected the most. The consequence of this is that, as with younger people in all manner of sectors, they may look and are looking to work in other countries, thus fuelling a cultural drain from Spain as much as a brain or brawn drain.

But behind the gloomy situation depicted by the galleries there lies much which, regardless of increases in prices because of tax, is stacked against a thriving art market in Spain. Some galleries may be collectors in their own right, but who actually stands to benefit most from a measure designed to breathe life into sales of works of art?

Spain has few serious private collectors of art and the number has been dwindling, the reason being that they are broke. This was an observation made almost three years ago, and the situation will not have altered since then. Indeed, it will have got worse. With the art world already well mired in crisis in 2011, the government, helpfully, went and upped the IVA rate, thus making the situation that much worse. But Spain does have some serious collectors. It's who they are which can be seen as part of the problem affecting the art world. They are banks and the State. It is they who would, because they are the most important collectors, stand to benefit the most from a cut in IVA.

If the government doesn't now extend the tax reduction to other areas of the arts and culture, ones with which it and its friends in the banking sector are not so intimately engaged, then it runs the risk of exposing itself to a charge of self-interest. As it is, selecting works of art as the first (and possibly only) beneficiary of a tax cut has to be looked upon with some cynicism. But more than a potential accusation of looking after their own, the dominance of the banks and the State in art collection has been singled out as a reason why Spanish art has been in the doldrums in any event. Artists are dissuaded from displaying originality and critical thinking, meaning that more innovative artists have indeed opted to work abroad where they might find more receptive and open-minded audiences. 

The governmental-banking nexus, the one that did so much to bring about general economic crisis, did at least attempt to boost the art world through developing new infrastructure in the form of arts centres. But as with other projects that involved regional administrations and banks in cahoots, some of these have floundered while others, not untypically, were too grand for their boots. Everyone seemed to want another Guggenheim but ended up with a gooey mess that couldn't be afforded. They were projects undertaken with little planning either for what they would be or why they were even being created.

Yet, governments and banks can't really be held responsible for what Adrian Searle, the art critic of "The Guardian", said about Spanish art three years. "Why is painting so lousy here?" It was a staggering comment that reflected awfully on the nation that produced Miró, Dali and Picasso and many others going further back in time, such as the greatest of them all, Francisco de Goya. Searle attributed this to inadequate art schools, the absence of an arts "movement" and to artist emigration.

The cut in IVA, while welcome, doesn't address a more deep-rooted problem for Spanish art, one that merely adjusting tax will not solve.