Cowen to discuss stallion tax at EU level
Finance Minister Brian Cowen will meet Agriculture Commissioner Mariann Fischer Boel on May 12 to argue for its retention.
The Department of Finance, meanwhile, has said that Mr Cowen still plans to review the controversial exemption as part of an overall review of tax breaks in next December’s Budget.
The minister has brought in consultants to conduct a thorough review and assessment of the property-based tax exemptions.
However, his review of the tax exemption for stallion fees is likely to be based on early tax returns and an assessment of an industry-backed consultants’ report.
Until last year, stallion owners were not required to file returns and neither the department nor the Revenue Commissioners were in a position to determine the overall amount of tax foregone by the Exchequer.
With the returns due to be filed at the end of October, Revenue will be in a position to make preliminary estimates of the amounts involved.
However, public statements by the minister - and his announcement that he will meet the commissioner personally to discuss the matter - suggest that Mr Cowen favours retaining the exemption.
At his meeting with the commissioner, Mr Cowen will claim it does not contravene state subsidies rules and that Ireland had instituted the practice before becoming a member of the EU over 30 years ago.
However, a commission spokesperson confirmed yesterday the Government did not include the stallion tax in the list of exempted items before joining the union.
The commission, in an initial report, found that not requiring the tax - which should be 12.5% - to be paid is a form of state aid to the horse breeding sector.
It gave the Irish Government until the end of February to reply and has had to extend this several times at the request of the Government.
The latest extension is to allow Mr Cowen to meet Ms Fischer Boel on May 12 next.
A spokesperson for the Agriculture Commission said yesterday they will see what Mr Cowen has to say and will analyse before coming to a final conclusion on the state aid issue.
Had its existence been on the list notified to the EU on Ireland’s membership in 1973, they would probably have been given a deadline by which to phase it out.
Now the Government must argue that it does not contravene state aid rules, when other countries are arguing that it offers unfair competition to the industry in other countries.
