Funding the Arts and Culture Through Tax Incentives

Tax incentives can be a policy instrument to fund the arts and culture. Such incentives must meet certain rules and principles, including, for EU Member States, EU requirements. In addition, various other aspects must be taken into account in the appreciation of tax incentives as a cultural funding instrument. This includes, on the one hand, notions of fairness, concerns about ‘philanthrocapitalism’, wealthier citizens undemocratically deciding on government spending through tax incentives and, on the other hand, opportunities to engage citizens and take their preferences into account. Tax incentives are not inherently better or worse than other policy instruments. The most effective and efficient instrument or mix of instruments depends on the policy aim. In addition, the funding culture and mix in a certain country is of relevance. As tax incentives are currently not always democratically controlled, accounted for and evaluated in the same way as direct spending programs, these must be handled with care.