In a week when what has been described as a B-list Van Gogh painting – sold for $66 million it is perhaps surprising that there has been a call for more regulation to encourage buyers into art.
Skate’s latest Art Fairs Report says art fairs should act as regulators. “There is a strong argument to be made that not unlike stock exchanges, which are private entities with a broad mandate in policing regulation of the securities markets (and adding self-regulation on top of that), art fairs could play the same role: becoming the conduits of potential new legislation that sets the regulatory framework of the off-auction art trade,” says the report.
This is a fascinating idea, but a really difficult one to make happen. It looks easy to set up a stock market (after all they started out in coffee houses) but the risks are enormous. Many companies have failed to create new bourses in far less complicated markets and it is hard to see dealers contributing a margin to a clearing house, knowing their cash could easily be written-off by an unscrupulous competitor.
Skate’s believes that governments could lead this. The report says that because many of the largest art fairs have some local government ownership – such as Art Basel’s owner Swiss MCH – it might be simpler for them to become regulators.
You would feel sorry for a local politician forced to raise taxes because the buyer of a $50 million fake was seeking compensation. And running an exhibition business is very different to being a regulator.
“Should there be a sudden consensus within the tax receipts hungry West to impose art market regulation, art fairs could find it irresistibly attractive to protect their off-auction market dominance by championing the cause, aligning themselves with their government controlled shareholders pushing for more tax income from the global art trade,” states the report.
Sceptics may argue that buyers (and fairs) are more likely to just move to less tax-hungry jurisdictions.