Cowen says sorry as stallion tax breaks face ban

Harry McGee, Political Editor

Finance Minister Brian Cowen apologised to the Dáil for inadvertently misleading it on Tuesday when he said the commission had not been in contact with Finance since last April. He argued that, because of the lack of communication, the stallion tax issue seemed to be low on the commission’s priorities. Mr Cowen’s correction of the record came after the Irish Examiner contacted the department following the minister’s speech on Tuesday, and pointed out that the commission had indeed written to the department about the stallion tax last month.

This newspaper reported in January that the EU Agriculture Commission had sent a letter to the department of Finance indicating that the stallion tax was an illegal State aid and asked it to supply further information relating to the controversial scheme.

Yesterday, Mr Cowen accepted that the EU had written to his department on January 6 but that the letter had not come to his attention until after his Dáil contribution on Tuesday.

He also acknowledged that far from being a low priority case for the EU, the converse was the case. The commission, he said, “has come to a preliminary conclusion that the stallion tax exemption would seem to constitute an aid scheme which is not compatible with the Common Market”.

He accepted that it gave Ireland one month to submit its comments together with “any concrete proposals” about how the tax exemption could be brought into line with EU law.

The Department of Finance has sought an extension and is taking legal advice on the matter.

In a preliminary assessment last April, the details of which were first reported in the Irish Examiner, the EU Commission found that the stallion tax fulfilled all four tests for determining if a measure constituted a State aid.

The commission didn’t make a final decision then because the Government may have been able to avail of a derogation that allowed a State aid if it was of a minor enough nature that it didn’t distort the market.

However, the commission was unable to make a finding in this regard because there are no reliable figures available to the Government as to the amount the tax exemption costs taxpayers each year.