Taxes a vexing problem for our classical music scene
“The British ruled Ceylon not by force, but by (the entanglements of) bureaucracy”- Victoria Glendinning in her biography of Leonard Woolf, who was a colonial civil servant in Sri Lanka between 1904 and 1911.
The head of a Colombo-based charity who organised a successful classical music concert fundraiser mid last year, looks back at the exercise as a paper chase that resembled a marathon.
Dealing with local and provincial governments started with requiring a public performance licence that cost LKR 3000. This was followed by having to pay the municipal council a comparable amount for a similar permit. Once the tickets were printed, they needed to be taken to the municipal office and stamped after an advance tax of 8% of the price of all tickets was paid upfront as a de facto withholding tax. The counterfoil of the tickets sold were presented to the government and full accounts submitted within a month of the concert, but a refund of the tax paid on unsold tickets involved a considerable waiting period and multiple visits to the government offices.
“They said you will get the refund, but two months went by,” the charity’s head laments. For dances and plays, there is no entertainment tax, the charity’s head was told: “I asked why. They said, ‘There is a lot of preparation involved (for dance and theatre).’ This makes no sense.”
For the gala concert to benefit the Chamber Music Society of Colombo’s education fund featuring the world-renowned violinist Midori on December 1, 2024, CMSC founder and music director Lakshman Joseph-de Saram was doubly grateful that the Japanese American was performing yet again in Sri Lanka for free. If the CMSC had had to fund the performer’s fee, funding from its principal sponsors Asia Securities and Tokyo Cement Group would have been taxed as well; all donations to classical music not-for-profits are. But for such organisations in Sri Lanka, in addition to the sometimes hefty tax on sponsorships, the proceeds of a concert are inevitably taxed as part of annual returns. There is also the 14% advance tax on all tickets in the case of performances by foreign artistes such as Midori. Says Lakshman, “I am hopeful that the new government will recognise the distinction between classical arts and for profit pop concerts selling thousands of tickets.”
The contrast between the stepmotherly treatment from the government received by classical music organisations in
Sri Lanka and the more encouraging environment of those in the West could not be starker. While organisations such as the New York Philharmonic do not receive direct subsidies, donations to such non-profits are tax deductible. In Europe, the state has long given subsidies to orchestras and opera houses. “I think public support for the arts is critical for the health of performing arts and for those in that field,” Midori said in an interview.
At a time when government budgets the world over seem stretched, tax incentives are also being reassessed to understand whether they might be “regressive and undemocratic”, as an OECD (Organization of Economic Cooperation and Development) report observed. As the report noted, “The democratic argument highlights the concern that, as a tax incentive effectively reallocates tax revenue towards the favoured philanthropic entity, higher income taxpayers that make larger donations benefit from a disproportionate influence in the determination of how tax revenue is spent.” In the aftermath of an economic crisis, this concern might be heightened in Sri Lanka.
Given the strong roots that Western classical music has in Sri Lanka as well as the large number of students of music in the country, the positive multiplier effect of following global convention and allowing tax deductibility for donations would be manifold, however. (Instead, taxes sometimes as high as 30% are levied on sponsorships for classical music events, which recalls the unjust taxes placed on divers for pearls in Leonard Woolf’s time that approached two-thirds of their take).
An alternative approach would encourage donations at a time when corporates have pulled back from philanthropy of all kinds after the economic crisis. But, this would also sensibly delink classical music concerts from those explicitly for profit pop music events for which audiences and revenues are larger by orders of magnitude.
Sharmini Wettimuny, chairperson, Symphony Orchestra of Sri Lanka, said that she had made a request for a waiver of the entertainment tax on tickets to the previous government because other genres had received such a waiver under an earlier government. “Sadly, this request was not responded to,” she says. Sharmini says that she doesn’t think tax treatment “has a significant impact on the challenges of raising funds for classical music.”
The arts and music are a special case as fields in which the Sri Lankan diaspora is making a name for themselves overseas. The director of M +, the huge museum in Hong Kong, and the new director of the National Theatre in London are both of Sri Lankan origin, for instance, as is the choirmaster of the renowned Westminster Abbey choir. The proceeds from Midori’s charity concert will further the education of classical music as well as provide opportunities for more youngsters to attend concerts for free. A series of students’ recitals on November 2, 2024 organised by the CMSC featured music ranging from Vivaldi and Beethoven violin solos to Henry Mancini’s Baby Elephant Walk. A concert on December 3 by the Junior Symphony Orchestra is a reminder of the need to help young musicians develop.
In the absence of tax deductibility for sponsorships, the altruism of sponsors for the Midori charity concert, Asia Securities, Tokyo Cement Group and S.R. Gnanam, is even more admirable. Dumith Fernando, chairman of Asia Securities, and Raja Gnanam and the family behind Tokyo Cement and the Samuel Gnanam Center in Jaffna are thus in many ways, old world patrons of the kind that composers of the 18th century and 19th century often relied on.
The witticism that in this world only two things are certain – death and taxes – has a double edge for classical music. A backward, often absurdly bureaucratic approach to taxing concerts will over time strangulate a vibrant, frequently brilliant classical music ecosystem in Sri Lanka.
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