Super-rich businessmen such as John Magnier and JP McManus are earning millions of euro tax-free in breeding fees thanks to the laws which subsidise the bloodstock industry.
The money that goes into the pockets of bloodstock millionaires annually would, if taxed, be enough to create almost 1,000 extra hospital beds.
But the secretive way the tax breaks operate mean the Revenue Commissioners have no records of how much money is being made through the system as beneficiaries do not have to declare their income.
Labour's finance spokesman Pat Rabbitte yesterday called for the tax-free status to be scrapped and a modest tax rate to be placed on the industry.
"A tax system ought to be a just one. Under this exemption, enormous benefits have been conferred on a few people in the industry. That's not right. At a time when tax receipts are down, we need to review the entire area," he said.
But Finance Minister Charlie McCreevy said there were no plans to review the tax breaks.
"There will be no change we're quite definitive about that," a spokesman for the Minister said.
Industry sources estimate that tax breaks on breeding fees and the sale of horses are worth around 100m euro.
But the bloodstock industry says these measures are vital to prevent a flight of capital out of the country.
Economist Paul Tansey, who conducted a study into the viability of the industry in 1995, said taxing breeding fees could prove disastrous.
"France introduced tax on the industry in the early 1970s and it's still recovering. The industry involves mobile capital which will move to wherever the best benefits are to be had, just like corporation tax," he said.
Michael O'Hagan of Irish Thoroughbred Marketing defended the benefits and said virtually all other industries in the country were helped by the Government.
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.
Sadler's Wells, the legendary stallion based at John Magnier's Coolmore Stud, earns around 30m tax-free every year in breeding fees. The horse is just one of 350 top breeding thoroughbreds in the country.