Mari Peegel: Government could also see pop concerts as economic drivers
The state recognizes the economic impact of major sporting events and backs them with subsidies worth hundreds of thousands of euros. Concert organizers, whose ability to bring foreign money into Estonia is no less significant, deserve the same kind of support.
August is here, summer is winding down and with it the season of cultural events. Last weekend, Ironman took over Tallinn as one of the final big markers of the summer.
I didn't attend Ironman myself, but I've certainly heard about it. For someone who doesn't follow sports closely, the event is most often associated with the large state subsidies it receives, even during times when the cultural sector has faced cutbacks. This year, Ironman received nearly €800,000 from the Ministry of Culture.
That doesn't mean it's undeserving of support. Far from it. The numbers speak for themselves. The state expects a return on its investment in the form of tax revenue, and if the revenue doesn't measure up, part of the subsidy is reclaimed, as happened with Ironman four years ago.
Last year was a success. Ironman received €720,000 in support and brought an estimated €5.6 to €7.3 million into the country from abroad, which generated substantial VAT revenue according to the Ministry of Culture. This year's figures are not yet in, but the hope is that the event once again justified the state's confidence.
Concert organizers, meanwhile, already have results to show. Imagine Dragons, Justin Timberlake, AC/DC and others filled the Song Festival Grounds with tens of thousands of fans from Estonia and beyond.
The hotel and restaurant sector, which is now subject to a higher VAT rate, reported that big concerts and festivals were the main drivers behind the increase in visitors at the start of the summer, helping soften what had otherwise been a slump. Even Minister of Economic Affairs Erkki Keldo was quick to highlight how well things were going in the sector, until hoteliers reminded him to cool his jets.
True, a Timberlake or AC/DC tour won't keep hotels in profit year-round. But the influx of foreign fans was visible across the city, with people in concert T-shirts arriving days before and lingering days afterward. All of them, of course, stayed somewhere and ate somewhere.
Still, organizing concerts in Estonia is a daunting task given the country's high tax burden. To book international stars, promoters have to compete with venues in neighboring countries where the conditions, including tax policy, are often far more favorable. In Finland, VAT on concert tickets is 14 percent. In Sweden it is six, in Lithuania nine and in Latvia zero. Estonia's rate now stands at 24 percent, said to be the highest in the world. And since even lowering VAT on food has been politically out of reach, it seems unlikely that concert promoters will see any tax relief anytime soon.
Then again, show business is risky in its own right. The head of Live Nation Estonia compared it to gambling: whether an event succeeds or fails is not always a matter of skill or effort, but luck. Kylie Minogue's canceled concert was a case in point: she fell ill with a cough and then, even after recovering, decided not to come after all. It can be argued that private enterprise is inherently risky, but if Estonia doesn't want to remain on the margins of global pop culture, its live music scene needs to be strong.
Unfortunately, unlike Ironman or Rally Estonia, large-scale concerts receive no state support. They could, and arguably should. This is not only a matter of tourism or cultural enrichment. Like major sporting events, concerts employ hundreds of people, from stage crews and engineers to caterers. It is high time the state started recognizing the pop concert industry with support on par with film and sports, in both funding and conditions.
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Editor: Marcus Turovski
