Whenever I have met a dealer or a collector, they always seem wealthy; and whenever I have met an artist, they seem poor."
These sharp words were uttered by Chris Bryant, a British MP, during the discussion of a new law by which a living artists or their heirs for 70 years after their death will receive a cut of about 3 per cent whenever a piece is sold. Some commentators argue that this gives poor artists a slice of future success. Others believe it threatens to cripple the market. The law is causing conflict throughout Europe, especially in Britain, where the Patent Office is currently deciding how to implement it.
The levy, called "droit de suite" or "artist's resale right", was initiated in 1920s France to help impoverished artists and their heirs. In 2006 it is due to be introduced across the European Union in order to stop vendors from avoiding the levy by moving sales away from France, Germany and four other European countries in which the law now applies.
But is Bryant's view - that the levy will improve the financial security of artists - correct? In countries where the levy was applied in 2003, only 11 per cent went to living artists while heirs scooped the rest. Moreover, it is a tiny handful of successful artists that receives most. Artists who are poor because their work sells cheaply receive a pittance at best.
Many dealers and auctioneers are furious at the introduction of the levy, not only because they will lose 3 per cent of their earnings and pay for administration but also because they fear that trade that now passes to EU nations without the levy will move away to America and Switzerland. The directive was passed in the hope that these countries would adopt the levy but they did not. A British government report predicts job losses.
Alan Cristea, a London dealer, says: "In principle, [the levy] is an apparent benefit. In practice, it is destructive." He believes London's Frieze art fair will lose out to fairs such as Art Basel, the world's biggest for contemporary art. Walter Feilchenfeldt, the president of the Swiss Art Dealers' Association, admits that levy-free countries will probably benefit: "It will make a difference in Switzerland," he says, "but even more in America."
Artists dislike the levy too. Allen Jones, famous for his Pop Art, sees little point in it: "[The money] will stop trickling in because people will not bring [works] to this country." He fears that British artists will lose out to non-EU artists who do not attract the levy, since "commercial dealers may be encouraged subconsciously to show artists who are unencumbered".
Revered figures such as Anthony Caro and successful younger artists, including Keith Tyson, have joined Jones in criticising the proposals. Artists from David Hockney to Georg Baselitz put their names to a poster against the levy, organised by John Sailer of Ulysses gallery, Cologne, which was displayed in Brussels when the directive was debated.
Perhaps artists who are respected but lack such stratospheric profiles might appreciate the levy more. But John Lessore, a painter and a trustee of the National Gallery in London, says he is "not terribly keen on it at all". John Wonnacott thinks it would hardly benefit him at all. "I have only had two paintings sold at auction," he says.
The biggest supporters of the levy are the agencies that collect it, charging some 25 per cent for administration in the process. Germany's Bild-Kunst agency and the French authors' society, ADAGP. commissioned a report in 1994 that supported the levy. Bild-Kunst was made to retract a denial of the facts of Sailer's poster in the face of legal action.
In the UK, the Design and Artists Copyright Society has lobbied for the levy. Joanna Cave, chief executive of DACS, argues: "The thing that determines a sale is where to get the best price" - so denying that the levy will affect the market. She cites an auction last year in Cologne where the levy already applies and where an American collector achieved a record price for a Kurt Schwitters piece. Moreover, she says, the levy costs less than the transport required to avoid it.
However, Unicef recently realised $70m (£40m) by auctioning an art bequest, the Gaff collection, in Christie's, New York, rather than Paris. François Curiel of Christie's, Paris, and the charity both confirm that the levy was a contributing factor, although not the main one, in their decision to hold the sale in the US.
Curiel says: "The droit de suite is not the only element preventing sales in France but it adds to a complicated French administrative system and, nine times out of 10, it swings the balance in favour of New York or London."
Yet DACS's argument will remain hard to refute unless a vendor announces that the levy caused a sale to be moved. Victor Ginsburgh, an economist at the European Center for Advanced Research in Economics and Statistics in Brussels, who criticised the levy in a pamphlet sponsored by the Maastricht art fair, can demonstrate in economic terms that the levy damages the market. But he could not name a vendor who has said as much. He is certain, nevertheless. "More will be sold in New York once droit de suite is collected in London, no doubt at all," he says.
Britain was especially keen to water down the directive because it has 24 per cent of the world art auction market, second only to the US and far ahead of its nearest EU rival, France. Moreover, 40 per cent of Britain's art market is imported specifically for sale. Anthony Browne, chairman of the British Art Market Federation, explains: "If you are a businessman sitting in an office in Tokyo, it costs the same amount to transport a painting to London or New York." Thus the levy will be the sole differentiating factor.
In its opposition to the EU directive, the British government won several concessions. First, a cap has been applied. Normally, the first €50,000 (£35,000) attracts 4 per cent, and the rest a reducing scale. With the cap, the levy becomes in effect a flat fee of €12,500 for works worth more than €2m. Second, the levy may be paid only to living artists, not their heirs, until 2012. Third, the minimum threshold for a work to attract the levy has been raised from €1,000 to €3,000, which will avoid payments to artists that are smaller than the administration costs.
Some of these concessions, however, are now under threat as the Patent Office decides how to implement the directive. DACS is campaigning to "gold-plate" the scheme by putting the threshold back to €1,000, and by immediately making artists' heirs eligible.
However, the terms of the levy are fixed with unusual strictness in the EU directive. The right is unwaivable and unassignable: an artist must take the money. So an artist might waive copyright fees to reproduce a work in an exhibition catalogue but nevertheless earn the resale right when the work is sold. On death, the right may be passed on only to a natural relation or a charity. Artists may leave individual works to different charities and members of the family. The inalienable right of partial family inheritance in some countries need not be a barrier to a bequest to a charity as long as the rest of the estate makes up the difference. These laws would not, however, have pleased Francis Bacon who left all his works to his lover, John Edwards.
Yet the directive may prove hard to police because private individuals (as opposed to dealers) are exempt if they sell a work to another individual or to an institution. Some dealers believe they are unfairly penalised by this, and the loophole may tempt them to evade the levy by claiming they are acting as or for private individuals. Dealers who represent living artists may allow the artist to sell the work directly and ask for a fee or put private individuals in contact with each other and then ask for a fee for "advice".
The policing of the scheme is complicated further by vendors' understandable desire for confidentiality. The information that the holder of the right may request is "any that may be necessary in order to secure payment". But Pierre Valentin, a lawyer with Withers LLP who specialises in art, considers this "very unattractive". The message is: "Forget data protection. Forget confidentiality," he says.
Discussion of all these difficulties still does not decide the question of whether or not the levy truly helps artists. Allen Jones says he would prefer to see a reduction in value added tax on art works, especially since VAT in America is lower than in Europe. Sadly, the debate has long gone past that point.
