It prompted Lochlann Quinn, one of Ireland's wealthiest businessmen, to donate 5m worth of art to the state and convinced once-booming businesses such as Bank of Ireland to hand over paintings by Jack B Yeats and Louis le Brocquy. But an art tax-rebate scheme is in danger of collapse after 15 years.
The scheme, officially known as Section 1003, was introduced in 1995 to encourage the donation of important artworks to state museums. Wealthy collectors and businesses were allowed to give works of cultural importance and reclaim 100% of their value against tax.
Despite critics claiming the system publicly thanked the wealthy for paying their taxes, while also allowing them to decide how the money should be spent, it was instrumental in securing valuable pieces of art for the state.
But not this year. At the end of 2008 the tax relief was cut from 100% to 80% of the item's market value and, with less than a month to go, there have been no gifts offered in 2009. Martin Cullen, the arts minister, said he had not been told of any proposed donations this year.
Since the introduction of Section 1003, works such as the Jack B Yeats archive and three Francis Bacon paintings have been donated. Quinn, whose brother Ruairi conceived the scheme when he was finance minister, gifted A Family by le Brocquy, valued at 2.8m in 2002, and A Musical Party by Gerrit van Honthorst, worth 720,000.
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Last year almost 5m in tax rebates were exchanged for Pádraig Pearse's last letter, Harry Clarke illustrations for Hans Christian Andersen's Fairy Tales, as well as paintings by John Lavery, Giorgio de Chirico and Philip Taaffe.
The 2008 donations also included a 25-piece collection from Bank of Ireland which featured Eileen Aroon, a Jack B Yeats painting valued at 800,000. In 2006, AIB donated the manuscripts for James Joyce's Finnegans Wake, valued at 1.17m.
According to those involved in Section 1003, the reduction in tax relief was bound to have a detrimental effect, with wealthy philanthropists more likely to sell works to meet their tax bill than to give them to the state.
Hugh Maguire, museums and archives officer for the Heritage Council, said the change was a disincentive for donors. He said while items have been discussed throughout 2009, nothing has been advanced.
"The scheme has been of tremendous benefit to the national collection," he said. "It's a shame the momentum behind it has weakened because there have been some very good things donated."
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He cited the Benjamin Iveagh library - 3.5m worth of rare books, manuscripts and bindings given by the Guinness family and the Hans Christian Andersen illustrations, worth 322,000, given by Quinn to the National Gallery.
Cullen was unhappy at the reduction in the value applied to donations when it was suggested last year and warned that it could render the scheme unviable. "I am concerned that the proposed reduction to 80% in the tax relief could represent a death-blow to the scheme as donations could be very significantly reduced or could even cease completely," he wrote to Brian Lenihan, the finance minister, in October 2008.
Cullen told Lenihan that he was "so strongly of the view that a reduction to 80% in tax relief would cause serious damage" that despite previously looking for an increase in the programme's annual ceiling of 6m, he proposed cutting it to 5m as an alternative saving.
Cullen said recently that his view on the importance of the scheme remained the same and that the current relief level should not be altered further.
Quinn, who is also chairman of the National Gallery, said the lack of donations this year was not necessarily down to the change in tax relief, citing the downturn in the art market as a disincentive. "It's hard to say if [the tax relief reduction] has any impact. The market is frozen in terms of prominent Irish works," he said. "Little of consequence has been put up for sale. I think that, because of the recession, people feel they are only likely to get half what they would have got a year ago."
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Maguire does not agree that a slow down in the market caused the fall in donations. "There are always great pieces and riches out there. As the scheme has changed it has negated the benefit," he said.
David Craig, director of the National Archives, said: "It's inherently less likely that certain people will donate again if they are going to lose money. It doesn't necessarily mean there'll be no more donations, but there might only be a certain kind of donations."
He said the practice of galleries approaching people with high tax bills to buy pieces at auction and then give them to the state was now less viable.
"Even if they get credit by having their name attached, now they are certain to lose out by 20% financially," he said.
Most valuable donations
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1) The Benjamin Iveagh Library, Farmleigh House
3.5m Donated by the Guinness family to Archbishop Marsh's library in 2007
2) Selected items from the Joyce/Léon collection
3m Donated by AIB to the National Library in 2003
3) Joyce Papers; items 4, 12, 13
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2.8m Donated by AIB to the National Library in 2004
4) A Family by Louis le Brocquy
2.8m Donated by Lochlann Quinn to the National Gallery in 2002
5) 89 artworks from the McClelland Collection
2.1m Works by Colin Middleton were donated by George and Maura McClelland to the Irish Museum of Modern Art in 2004