The British Art Market Federation (BAMF) is calling for global fairness on transaction levies. Its latest report warns that the EU levy on the resale of original artworks by dead contemporary artists such as Picasso, Dalí and Moore will have a serious effect on the UK market when it comes into effect in January 2012. The Artist’s Resale Right, which only applies in the EU, means that a percentage of the resale price is payable to the artist or, for up to 70 years after their death, to their relatives.

Until now, the UK has staved off the latter clause, which would mean a fourfold increase in sales eligible for the levy, which can be claimed up to six years after the sale. A report by Arts Economics for the BAMF says international agreement is essential to ensure fair competition: ‘As efforts are made to secure international accord, the present arrangements limiting the levy to the work of living artists should be maintained. Without this, Britain’s entrepôt [import-export] art trade is destined to decline.’

BAMF chairman Anthony Browne draws parallels with the decline due to fiscal deciions of Paris’s art market in the 1950s: ‘It never got its [supremacy] back, and that gave a shot in the arm to London.’ He warns: ‘The EU has failed dismally to secure international agreement and, unless our Government is prepared to fight for what is the biggest art market in Europe, we’ll lose out, too.

Labour fought hard to get the derogation and made a commitment to push for an indefinite extension, but, to our disappointment, the current Department of Business has made no attempt to make a positive case as to why it should be extended. Our global share of the market is already in decline and we’re now hurtling towards 2012 with an air of huge uncertainty.’

Currently, the main beneficiaries are the heirs of famous artists-only 6% of beneficiaries in 2010 were living artists, according to an economist’s report for BAMF. The levy applies to artworks priced above €1.000, on a sliding scale up to 4% or a ceiling of €12,500. ‘The buck stops with the auctioneer or dealer, who has to work out if there will be a claim-the heirs have to be of EU nationality and be prudent,’ says Mr Browne.

‘It will hit the middle and lower ends of the market hardest, as they may find the levy eliminates any profit.’ The prospect of the levy was a factor in John Robertson giving up the Bourne Gallery in Reigate to operate online. ‘It’s like a slow-motion car crash,’ he says. ‘The burden on my business would have been exponential. The effect of it will be to gradually wipe out free spirits and independent galleries up and down the country-there will be more internet dealers than bricks and mortar.’

The value of our art market

Britain has 29% of the global art and antiques market and is the second-largest market behind the USA (30%) and above China (19%)

Modern and contemporary art accounts for nearly 40% of the UK market

Most of the UK’s 10,000 art businesses employ fewer than 20 people

In 2009, the UK market generated £7.7 billion in sales, supported 60,000-plus jobs, spent £1.3 billion on support services and contributed tax of at least £911 million

In 2009, UK prices were 4½ times those of the EU as a whole; in the past seven years, prices in France averaged 24% of UK ones, Italy 26% and Germany 12%

* Subscribe to Country Life and save 30%