[BCMA] CMA Clip Serv: Artists fighting for re-sale rights

Thu Mar 15 12:38:37 PDT 2012

I have artists in my family but I have to disagree completely with residual
rights of an artist to a percentage of a piece that they had sold and is now
being sold for much more. 

When you sell an original of something, it is SOLD. In a voluntary sale (to
distinguish this from seizures and thefts), the artist received a FAIR
MARKET VALUE which they agreed to at the time of sale. Even if the artist
was starving and the sale only paid the rent or for a week's worth of
groceries, the artist agreed to the price at the time. 

Claiming a percentage of increased value after one has sold something is
immoral. You have not really sold it in that case as you have a lien on any
future increase in value. Imagine if you bought a house in Vancouver in 1960
and sold it today, with the builder then wanting a percentage of the
increased value! The old impolite term "Indian giver" comes to mind.

If an artist sells a work, and it happens to go up in value later because
he/she becomes famous, then that is the reality of the process of becoming
famous. I doubt if a single famous artist ever started out their career
selling art works for the same top value that they do when they famous and
are in their seventies or eighties. Fame goes up, prices go up. They have
the option of creating more works of art and selling these at the new high
reputation prices. 

Dan Gallacher has a point in the difficulty of keeping track of artists or
even finding artists. How could one possibly trace the folk artists, the
artists of unsigned works, or artists of works signed illegibly? What about
when the death of an artist cannot be established (e.g. She would be 115
years old now but we cannot find a death record for her because she died in
Zambia on a vacation.) No doubt for these puzzles the government would
consider setting up a "trust fund" and collect an "artist aftermarket resale
tax" (as good a description as any) to be used for the good of other
artists, minus operating costs of course.  Would a buyer wishing to avoid
this tax have to produce a death certificate of the artist? (Hmm.... selling
death certificates = more money into the government coffers).

Who would administer this database and fund? Assuming that this tax would go
into a holding fund to be paid out periodically, who would administer the
fund? Would the artists be charged collection fees? (They would if eBay ran
it!) Who would get any interest earned on funds held? Having seen the chaos
in so many museums' collections' records and the horrendous expense (and
screw ups) of the expanded Federal gun registry (and that is with items that
usually have unique serial numbers!), I have no faith in an accurate
database. Who polices it? What if in private sales between two collectors
that they do not collect and pay the tax (then one has tax on public sales
but not on private sales)? What are the legal penalties for those who do not
pay the tax? Jail? If so, how long? Would the tax be retroactive at all? How
would it affect the income tax laws (e.g. reduce tax receipts by the amount
of this "artist aftermarket resale tax")? The artist would have to declare
the income for taxation purposes. What about GST/HST?? What net value would
the artist receive - after administrative expenses? 

A sidebar is that artists would have to register in a national database (In
English, French, and possibly dozens of native languages) and constantly
update their addresses and bank account information (if they wanted to get
paid). Some artists prefer to work in obscurity so the database would have
to have privacy controls where the newly created "Canadian Artist
Aftermarket Resale Tax Agency" (to give it a name)  would collect and
forward payments.  Otherwise, imagine being a famous artist and having
thousands of people dropping by your studio every week. You would not get
much work done. 

What about International sales? How could one collect this tax? Tax evaders
would start "selling" to a friend outside the country and then buy it back
from them. If the government passed a law saying it applied only to Canadian
artists then what if I bought a work by a Canadian artist in London,
England? What if a Canadian work is sold in London, England to a collector
in Hong Kong? Would such a law only apply to Canadian artists or would it
include international artists? If all artists, then how could one possibly
trace that local artist in Guatemala or Tibet from whom you bought that gold
artwork from 30 years ago and which is now worth 1,000 times the original
price? 

What if the art work goes DOWN in value? Does the artist still get a 5%
premium on a loss for the seller? Wow! If so, what a deal! Win-Win for the
artist.

What if artwork is traded with no cash involved? What if the artwork is
donated to a gallery or museum? Would the people involved have to cough up
the cash to pay the "artist aftermarket resale tax"?

Would such a tax be collected every time an artwork sells during an artist's
lifetime? If it sells 20 times, with each sale garnering 5% of an escalating
value, the artist could make a fortune (I know, that warms the hearts of
artists). Sounds like a Mafia scheme to me. I'm selling (lending) you this
would BUT you have to pay me 200% of the value and if you don't I'll send my
goons after you. I also sounds like an eBay/PayPal scheme where they skim a
little bit off the top every time (e.g. on eBay a seller now pays over 15%
in listing fees/final value fee/currency conversion fees which like the
Mafia are ALWAYS in their favour) Hmmm.... Add an "artist aftermarket resale
tax" % on all art sold on eBay when the artists is alive (IF one can
determine this.) thus bumping some eBay fees to over 20%!

The issue is full of endless complexities. Administering such complexities
would cost the Canadian taxpayers a FORTUNE! Imagine a national or
international database of ALL Canadian artists. Artists joining it would
have to be told to keep the database administrators advised of their changes
of address, to register with the income tax people and to be sure to inform
the database administrator when they died! [I'm only partly joking - there
are many deceased gun owners that the gun registry does not know have died.]

If an artist sells their work then it is SOLD - pure and simple. If it goes
up in value, then so does the artist's prestige and the value of future
works they might choose to create. Good for them. How many struggling
artists have sold works for low value (to eat, clothe their children etc.)
and become famous later? That is life for a successful artist. 

This scheme would appear to be a deterrent for art buyers and would perhaps
encourage them to stick to tax-free American art?

Colin Stevens

Richmond, BC

From: bcma-bounces at lists.vvv.com [mailto:bcma-bounces at lists.vvv.com] On
Behalf Of Moderated BCMA subscriber listserv.
Sent: March 14, 2012 3:59 PM
To: bcma at lists.vvv.com
Subject: Re: [BCMA] CMA Clip Serv: Artists fighting for re-sale rights

There's merit in this idea of 5% to a living artist, (though I don't much
like 50 years after death to the estate)

Ongoing recognition is one thing, of course. So is increasing general
curiosity about the artist and his/her work since it shines a second
spotlight, however brief. But more important is the spur to more work yet on
the originator's part. If a piece sells at auction for, say, $10,000 or
more, then its noteworthy and so is the artist. Why not give them a bit of a
boost - morale, bucks, or inspiration?

On the other hand, there may be many nagging costs in keeping track of
artists; could be a bureaucratic headache like artists' copyrights risk
becoming.

Let's keep on eye on this initiative, nonetheless.

Dan Gallacher  

----- Original Message ----- 

From: Moderated BCMA subscriber listserv. <mailto:bcma at lists.vvv.com>  

To: bcma at lists.vvv.com 

Sent: Wednesday, March 14, 2012 10:03 AM

Subject: [BCMA] CMA Clip Serv: Artists fighting for re-sale rights

Artists group fighting for re-sale rights 

Murray Whyte, Toronto Star, Sunday, March 11, 2012 

In 2003, Charles Pachter painted a vibrant, poppy-red double image of a
barn, as seen after the springtime thaw had turned the fields near his rural
studio into sodden slicks of melted snow. It was called Red Barn Reflected,
a playful nod both to geometric abstraction and the weighty heritage of
Canadian landscape painting that many artists of his generation labour
beneath ("I called it my Lawren Harris barn," chuckles Pachter, 69, citing
the Group of Seven giant). 

He sold it for $7,500 that year, he remembers, to a couple in Caledon whose
names he can't recall. On Thursday night, it went up for auction with a
presale estimate between $25,000 to $30,000. 

It didn't sell, but Pachter's wound is only to his pride, not his wallet.
Had it sold, he wouldn't have seen a cent of it: resale rights for artists'
works sold in Canada are a non-existent sore point on the to-do list of
CARFAC, which lobbies for artists' rights here, and they've started to gain
traction. 

This month, a joint parliamentary committee of Heritage and Industry
ministry staff are reviewing a CARFACproposed amendment to the Canadian
Copyright Act that would give living artists a five per cent royalty on all
sales of their work after its original sale. Had the royalty been in place
last November, CARFAC notes, 35 living artists would have been paid more
than $98,000 in royalties from three auctions that month. 

The royalty would apply to the "secondary market," and with few exceptions,
it would apply to almost all sales at auction on the country. The proposal
also calls for the five per cent royalty to be paid to artists' estates if
they died within 50 years of the sale. The biggest beneficiary last fall
would have been the estate of Quebec painter 

Jean Paul Lemieux, whose painting 1910 Remembered sold for a record $2.34
million. It would have netted a $117,000 royalty. 

In Pachter's case, the payout Thursday would have been around $1,250. Not
life-changing, perhaps, but worth its weight in respect. 

"Certainly, part of the royalty payment is the principal of it," says April
Britski, CARFAC's executive director. 

The committee is expected to report its recommendations for the amendment by
the end of the month; Britski is hopeful that the CARFAC proposal will be
enshrined in law by the end of the year. 

It's not always just principle, though, even for living Canada artists. In
November 2010, Alex Colville, now in his 90s, saw his 1953 painting Man on
Verandah sell for $1.287 million. The royalty, had it been in effect, would
have netted Colville around $64,000 - likely far more than he received in
the original sale in the first place. 

This is, of course, an extreme example in a post-war and contemporary art
market that's only recently begun to find its feet. 

This week's auction was a case in point. It was the first of its kind: A
bonafide contemporary auction exclusively of Canadian art almost all by
living artists. By any standard, it was a modest affair. Some pieces sold
for less than $1,000, and topped out, after a brief, spirited bidding war,
with the $19,200 (including 20 per cent buyer's premium) sale of a Standing
Nude by Kitchener painter Jeremy Smith. 

"We see this as very much a nascent market," says Stephen Ranger, the vice
president of new business development for Joyner/Waddington's, which hosted
the auction. Ranger dubbed the affair "Concrete Contemporary," meaning to
lend a with-it sheen to the traditional stodginess of the Canadian auction
circuit. It brings both the CARFAC mission, and the struggles of the
Canadian contemporary scene to develop a commercial base, into simultaneous
sharp focus: Of the 69 works offered, all but three were by living artists;
some started as low as $600. 

Ranger wants the auction, now and in future, to act as a bridge between
contemporary Canadian artists and potential buyers they might never
otherwise see. "We're tapping into what I think is an underserved area of
the art market in Canada," he says. "We have such a great, vibrant gallery
scene, but that hasn't necessarily translated into sales. What we're hoping
is that people who don't necessarily go to some of these galleries might be
within the reach of Waddington's, and be interested in what we're doing." 

On those terms, Concrete Contemporary was a modest affair that could be
cautiously termed a mild success. 

Even though less than half the works sold, the room was full, and the
bidding was brisk and lively. Smith almost doubled his low estimate of
$10,000, Ottawa painter painter Carol Waino's Structures of Memory nearly
tripled hers, selling for $16,800 (including premium) and Toronto painter
Kim Dorland's Northern Light, Saskatchewan, which topped the high end of its
estimate by $600, going for $15,600 (including premium). 

But there were some notable disappointments, too, serving as a nagging
reminder of a market still struggling to establish itself. The high end
suffered: Along with Pachter, a large scale work by Vancouver
photoconceptualist Ian Wallace, made for the Power Plant, didn't sell when
bidding stalled at $50,000, short of its reserve price. Bids on a small
drawing by the late Betty Goodwin topped out at $22,000, short of its
$24,000 low estimate. 

Still, it's a modest first step towards a larger goal. "Part of what we're
trying to do is make sure there is a secondary market for Canadian
contemporary art, period, and that it does appreciate," Ranger says. 

If the royalty is implemented, Rangers says abruptly, "we'll comply." 

To this point, he says, the auction houses have not been consulted, by
CARFAC or the committee, Ranger says. "There's a misconception, I think,
that auction houses make significant money on the backs of artists, and
that's not the case. In many cases, auction houses have made artists'
careers, and that's what we're trying to do here," he says. 

"In this arena, a royalty payment is little more than the pure principle
Britski mentions (Smith would have been the kingpin of the evening, taking
home a little less than $1000), and some artists aren't sure if it might
cause more harm than good. 

"Maybe this is the kind of conversation we might want to have after the
10th, or 15th of these," says Jay Isaac, a Toronto painter whose work was
bid up to $2,600 Thursday night, short of its low estimate of $4,500. "I'd
love to get a few hundred bucks - I wouldn't say no," he says. "But I'm 100
per cent in support of this auction, just 

as it is, because I think it's something that can help build a whole new
market for contemporary art in Canada." 

Royalty payments along the lines of what CARFAC is proposing are legislated
throughout the European Union and in California, though a parallel U.S.
federal effort is also underway. Why Canada has been slow to adopt the same
measures seem vague to CARFAC's Britski. 

"Dealers and auction houses are concerned that the market is too fragile to
support it," she says, while pointing out that over the past several years,
auctions of traditional Canadian art have set new sales records virtually
every year. 

This is mostly due to unquashable interest in Canadian historical works,
particularly by iconic Canadian painters like Tom Thomson, Harris and Emily
Carr. 

But in this realm, appreciation in value is far from a sure thing. Pachter
wonders at the potential predicament: "What happens if the price goes down -
would I have to give the collector a rebate?" he laughs. When asked about
the modest royalty payout for Red Barn Reflected, Pachter sighs. "Well, it
would be better than nothing," he says. He learned long ago to let go. 

In 1981, he opened The Flag Show in Toronto. It was what it sounds like: The
Canadian flag, painted in various stages of unfurling against a bright blue
sky. 

He sold one of them, The Painted Flag, to Neil Vosburgh for $3,500, who then
owned the Duncan Street Grill in Toronto, where it hung for years. Vosburgh
sold it years later to a mining magnate in the Yukon, after which Pachter
promptly lost track of it, until it turned up at a Joyner's auction in 2009.

It sold for just under $38,000 - more than triple its low estimate of
$12,000 - to the McMichael Canadian Art Collection, where it now hangs with
pride of place. "I didn't get a thing for it," he laughs. "But was I proud?
You bet I was." 

---   30   --- 

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