5 July 2021

Celebrities trying to slap taxes on gadgets should exit stage left

By Hannah Ord

In a move as well-intentioned but off-key as last year’s celebrity rendition of Imagine, a new mish-mash of high-profile artists have delved into the complex world of taxes to sign a letter in support of a UK gadget tax. In theory, this would be a 1-3% levy placed on all devices that could be used to download, store and produce “creative content” such as phones, laptops, and tablets.

The revenue raised from this tax, expected to be £250-300 million, would then be used to fund the arts. Reluctant as I am to criticise the queen that is Olivia Coleman (a signatory of the scheme), this really is starry-eyed nonsense.

This so-called “Smart Fund” is designed to “fairly reward creators and performers in making a living from their content”. It is clear that the arts, and those who work in them, make Britain a stronger and more interesting place, and an essential escape for many during the pandemic. Unfortunately, it is also clear that those who work in the creative industry have been some of the hardest hit by the pandemic with the closure of galleries, theatres and concert halls. What is not clear is how it is fair to tax everyone in order to reward individuals, not for merit, but simply because they have chosen to pursue a career in the creative industry.

The biggest proponents of the tax argue that it is needed to help underprivileged communities and underfunded creative institutions, but an unprogressive tax on devices would hit the poorest the hardest. Slapping 1-3% extra on iPhones will not stop A-listers from upgrading to the latest model, but it will make life harder for unknown artists trying to make a living. It will stop the people who can no longer afford a phone with a high resolution camera to record their auditions, or the young artists who want to use social media to showcase their art on a far wider platform than any gallery could, or the hopeful musician needing a laptop to create their music to stream to countless people. The pandemic has revealed how essential these devices are in this modern world. It is grossly unfair to implement a tax which will disproportionately disadvantage the poorest and increase inequality.

On the topic of fair distribution, how will the revenue from this tax be divided? Yes, the gadget tax may raise £300 million to fund the arts, but which ones? The arts, by nature, are subjective. I would wager that your definition of them will differ from the person next to you and the person next to them. For me, an artist can be anything from a potter to a pianist to a playwright: do they all deserve the same funding? In the absence of an objective definition, “fund the arts” becomes an opaque and meaningless phrase. It is impossible to divide, distribute, and regulate the funding for a catch-all word. How can we check that the money is being distributed to where it is needed most? It may be heartwarming to think that the money raised will revive kids’ theatres and foster a new generation of talent, yet the lack of transparency surrounding the funding allocation mechanisms mean that our hard-earned money could be spent on a darker shade of burgundy curtains for the Royal Albert Hall.

At its heart, this tax denies the public the right to choose where our money goes. As free individuals,  we should be able to decide whether or not we wish to fund the arts and what within the arts is most important to us. Do those passionate about music really want to pay a tax on top of the already hefty VAT on gadgets, only for their money to go to, say, a painters’ art studio when they could spend that money supporting a local band that they care about?

While I do believe that certain sectors of the arts may need some government assistance to bounce back after the pandemic, the use of a gadget tax to achieve this is unfair and is unlikely to help the artists hit hardest by the pandemic. How we will revive the “arts” in the coming years remains a pressing issue without a perfect solution. Either way, it’s high time for the ‘gadget tax’ idea to exit stage left.

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Hannah Ord is a Research Assistant at the Adam Smith Institute.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.