Bloodstock tax-free status under review, says Ahern

TAOISEACH Bertie Ahern yesterday said the bloodstock industry’s controversial tax-free status, which makes millions of euro for breeders every year, is under review.

Mr Ahern’s comments came as it emerged Manchester United manager Alex Ferguson could make up to €5m a year tax-free after his horse, Rock of Gibraltar, was retired to stud in Coolmore, Co Tipperary this week.

Top stallion owners make a fortune thanks to a tax exemption on breeding fees introduced over 30 years ago to help the then fledgling industry.

In the Dáil yesterday Mr Ahern said the provision was being reviewed by the Department of Finance, along with other tax shelters and allowances.

But Labour leader Pat Rabbitte said it was now time to place a modest tax on the industry.

“Hundreds of millions are being made at a time when community employment schemes are being cut, college registration fees are going up by 69% and when Meals on Wheels aren’t able to maintain their services,” he said.

Mr Ahern, however, said the bloodstock industry was a mobile one which could easily move to another country depending on the tax regime.

“Horses can move around the place, and so can the industry, so the taxes foregone are only foregone when the animals are in this country. When they’re not, not only do you not have fees, but you don’t have the employment.

“I have no problem having an assessment, but I do not want to write off all of the staff in one fell swoop which is what you’d do if you changed it totally,” he said.

There is no way of accurately estimating exactly how much money is foregone as the Revenue Commissioners are not obliged to monitor this.

However, experts estimate that in the region of €100m is made each year.

Ireland’s most famous stallion, Sadlier’s Wells, makes around €30m tax-free annually. The horse is just one of 350 thoroughbreds in the country.

Those in the bloodstock industry, which employs around 30,000 people, say tax incentives are vital to keeping the industry afloat.

Irish Thoroughbred Marketing says virtually all other industries are helped by the Government and the bloodstock industry is no different.

Economist Paul Tansey, who conducted a study into the viability of taxes in 1995, said taxing breeding fees could prove disastrous and prompt a flight of capital out of the country.

He pointed out that France introduced a tax on the industry in the early 1970s but its industry had not yet recovered.

Finance Minister Charlie McCreevy has said there are no plans to review the tax breaks.

A spokesman for the Minister earlier this year definitely ruled out any changes to the tax regime.

Bloodstock giants

The estimated personal wealth of the big players in the bloodstock industry:

JP McManus: €411m.

John Magnier: €274m.

Michael Tabor: €630m.

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