Most OECD countries support the arts with a broad range of tax incentives. The primary incentives provided in New Zealand are direct subsidies to traditional art forms, such as the ballet and the symphony orchestra; tax credits for donations to certain not-for-profit organisations, which may include arts organisations; and tax incentives for New Zealand production of films, digital and visual effects. This paper investigates the economic, philosophical and sociological arguments raised for, and

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... against, the provision of tax incentives for 'the arts'. A variety of direct and indirect instruments are discussed. A trans-Tasman comparison of arts related funding and incentives is undertaken and the suggestion made that New Zealand must engage in more effective targeting of scarce resources in order to maximise outcomes from tax incentives and increase economic efficiency. I INTRODUCTION Countries throughout the OECD provide tax based support for the arts. This may take the form of tax credits, tax deductions for charitable donations, direct grants or targeted support. Incentives are provided to a range of industries that include, but are not limited to, the performing arts, film, publishing, music, digital media, literature and television. Typically, government support of the arts is justified with the assumption that the market for the arts does not work, or that the arts generate a social benefit that validates state support. There are a number of issues in quantifying and justifying state support for the arts. Of particular relevance are the definitional issues around what qualifies as 'art'; the difficulties associated with measuring the potential economic contribution, if any, from the arts; and measuring the level of assistance provided to the arts community, particularly in relation to indirect assistance. As observed by Frey: creativity is an elusive concept and most difficult to deal with in a way providing useful insights for the typical problems with which the economics of art is concerned. In particular, the effect of government intervention on artistic activity is complex, and does not lend itself to simple relationships and conclusions. 1 In the current environment of constrained resources, it would appear timely to revisit the issue of tax incentives for the arts and ask the questions of who receives tax incentives, how * Lisa Marriott is a Senior Lecturer at the School of Accounting and Information Systems, University of Canterbury, Christchurch, New Zealand. Correspondence to Lisa.Marriott@canterbury.ac.nz. The author is grateful for the helpful comments provided by an anonymous reviewer in the preparation of this article.