Report: Horse breeding boosting economy, despite tax breaks
The thoroughbred horse breeding industry contributes €330m to the economy each year despite its controversial tax-free earnings from stallion fees, a report showed today.
The breeders of Ireland’s racing stock pay around €37.5m tax and some €3m in benefits from stallion stud fees into the Government coffers, the Indecon Report found.
Denis Brosnan, the chairman of Horse Racing Ireland, said he was presenting Sports Minister John O’Donoghue with a copy of the report on the contributions the industry makes.
Mr Brosnan said the report provides “independent verification that the Irish racing and breeding sectors are significant net contributors to the exchequer and forms a substantial part of Irish economic life and employment, particularly in rural areas.
“This report provides facts where we have had opinion, analysis where we have had speculation and clarity where we have had misunderstanding.”
The stallion-fee income was estimated in the report at around €85m a year, while the costs for the Government in lost revenue were placed at €3m.
In 1969, then Finance Minister Charles Haughey gave the industry a boost by making profits earned from lucrative stallion stud fees tax-free.
Political pressure has been growing to remove this exemption and an amendment to the 2003 Finance Bill has required breeders’ claiming exemption to declare their income from 2004 onwards, though the earnings are still not subject to tax.
The stud-fee earnings from some of the leading Irish stallions could be bringing in between €3m and €8m a year.
The progeny of stallion Sadler’s Wells, owned by John Magnier, are now so established that the stud-fees could be bringing in up to €25m a year.
The cost of mating a mare with Coolmore stallion Rock of Gibraltar, who was at the centre of a dispute between Mr Magnier and Manchester United manager Alex Ferguson, stands at €65,000.
The horse racing and thoroughbred breeding sector have said stallion fees are only a small portion of the industry and it was argued that introducing taxes would not benefit the exchequer to a huge extent.
There were 390 thoroughbred stallions in Ireland last year and 10,574 live foals were born.
Mr Brosnan said the approach governments have followed in keeping the tax-free exemption was positive.
He said it provided a signal that Ireland is a serious player in international terms.
The independent Indecon Report, commissioned by Horse Racing Ireland, the Irish Thoroughbred Breeders’ Association and the Irish European Breeders Fund, said Ireland was now Europe’s largest producer of thoroughbreds.
The industry accounts for 42% of total output and was the third-largest producer world-wide after America and Australia.
The report showed punters spent over €227m placing bets at race meetings each year and the entry-fees run to €23m.
Around 16,500 people are employed by racing, breeding or linked industries each year.
