Racehorse breeding pays '€37m in tax'

The racehorse breeding industry contributes more than €37 million a year to the Exchequer, while the controversial stud fee exemption costs €3 million annually in tax foregone, according to a report released yesterday.

An investigation of the Irish bloodstock industry by economic consultancy Indecon says it is worth €330.5 million to the economy. The report estimates its tax contribution at €37.5 million.

Indecon estimates the total gross income earned by the 390 thoroughbred stallions at stud in this country at €85 million a year. The consultants estimate the taxable income at €7-€16.4 million and, basing their calculation on the higher figure, say the level of tax foregone is €3 million annually.

The average covering fee (charged when a stallion successfully impregnates a mare) in the State is €8,000, the report says.

Horseracing Ireland (HRI), the State agency responsible for racing, the Irish Thoroughbred Breeders' Association, which represents breeders, and the Irish European Breeders' Fund, which represents stallion farms, commissioned the report. Its results are based on returns from stallion farms, breeding operations (which own the mares) and race tracks.

HRI chairman Mr Denis Brosnan said at its launch yesterday that the report was independent and was commissioned to clarify key issues in the debate.

The report estimates that total full-time employment in stallion farming and breeding exceeds 6,140.

Releasing the document yesterday, Mr Brosnan said the industry's own estimate put this figure at closer to 12,000. "Indecon took a conservative approach to some areas," he said.

The consultants found that, between them, breeding and racing accounted for close to 16,600 full-time jobs.

Mr Brosnan said that in the five years to 2002 the value of the bloodstock industry grew 54.4 per cent to €198.7 million. He pointed out that this made it one of only two sectors in the livestock industry to have grown in that period. The other was pigs.

The consultants point out that the value of Irish thoroughbred sales increased from more than €40 million in 1995 to €110 million in 2002. In that year, €68.7 million worth of sales were attributed to exports.

Indecon states that, in its view, the "preferential tax treatment" has facilitated the development of the sector by attracting top-class stallions to the State. It also says it believes that its removal would result in foreign-owned stallions leaving this country.

Last night, Labour leader Mr Pat Rabbitte, one of the critics of the stud fee tax exemption, said he was sceptical of the estimate that it resulted in the Exchequer foregoing just €3 million a year.

"This is an established, competitive and significant industry. I do not accept that a change in the tax regime will result in these stallions leaving the country," he said.

He added that he still favoured imposing the 12.5 per cent corporate rate on stallion fees above a certain threshold.