Horse breeders campaign to keep tax-free status

THE bloodstock industry has launched a major lobbying campaign to protect its tax-free status, warning 2,600 jobs will be lost if it is taxed.

Industry officials met with Agriculture Minister Joe Walsh yesterday and also lobbied a number of deputies in a bid to gather support.

The flurry of activity was sparked by the Department of Finance’s confirmation that it is reviewing the tax exemption along with other tax shelters and allowances in advance of next month’s Budget.

The Irish Thoroughbred Breeders’ Association (ITBA) warned yesterday that a change in the tax regime would deal a bigger blow to small breeders than the industry giants who are making millions of euro every year.

Declan MacPartlin, a spokesman for the ITBA, said the group wanted a study to be carried out in advance of any change to the tax system to assess its likely impact. The group claims a change would affect 10% of the 25,000 people directly employed by the bloodstock sector, which would have totally taxable earnings of 50m.

The status of the bloodstock industry has long been a contentious issue as it allows super-rich businessmen such as John Magnier and JP McManus earn millions of euro tax-free in breeding fees.

Manchester United manager Alex Ferguson, for example, stands to make 5m a year tax-free after his horse, Rock of Gibraltar, was retired to stud in Coolmore, Co Tipperary earlier this month.

Profits from horse breeding have been exempt from tax since Charles Haughey introduced the legislation as finance minister in 1969. The legislation makes it the most generous tax regime in the world for breeders.

There have been suggestions that the industry could be subject to a tax rate of 12.5%, the same as corporation tax, but the Department of Finance has declined to comment on the issue.

A move to tax the industry would surprise political opponents of Finance Minister Charlie McCreevy, as the horse-racing fan has been one of the most vocal defenders of the tax break.

Labour leader Pat Rabbitte has called for a modest tax to be placed on the industry, and has accused the Government of allowing the Exchequer to be deprived of hundreds of millions of euro at a time when community employment schemes are being cut.

The ITBA, however, says stallion fees in other markets are considerably higher and that within five years, around 75% of the top stallions based here may have moved out of the country. Mr McPartlin also said all other parts of the bloodstock industry were taxed normally, such as the exportation of 140m of yearlings and foals each year.