Vol. 507 No. 1
10 Mr. M. Higgins asked the Minister for Finance the number of people or bodies which would otherwise be liable for tax who have claimed exemption by virtue of the provision exempting the proceeds of studs and stallions from tax; if he will give an estimate of this tax; the proposals, if any, he has to consider any amendment to the law in this matter; and if he will make a statement on the matter. [16140/99]
Section 231 of the Taxes Consolidation Act, 1997, exempts from income tax the profits or gains arising to the owner or part-owner of a stallion from the sale of services of mares by the stallion, but only if the stallion is ordinarily kept on land in the State and if the servicing of the mares takes place in the State. Taxpayers are not required to include income arising from tax exempt stallion fees in their tax returns. I am informed by the Revenue Commissioners that there is, therefore, no basis on which to provide an estimate of the cost to the Exchequer of the tax exemption or of the numbers involved.
I am a bit bemused by this because my experience of the Department of Finance and the Revenue Commissioners is that one thing of which they usually can produce estimates is the likely loss or gain from abolishing an exemption. This has been part of tax law for some time and I do not know why. It is an enormously profitable business and I do not see why it needs a tax exemption to stimulate it.
There are no statistics available in this area because tax law provides that the profits arising to the owner of certain stallions shall not be taken into account for the purposes of the Tax Acts. The return taxpayers are required to make to Revenue is a return of income liable to tax. Therefore, if an activity is exempt from tax, it does not have to be included in the return. The same applies in the case of woodlands and forestry. Therefore, we cannot compose figures in this regard.
Even the commission on taxation, which proposed the abolition of a large number of reliefs specifically recommended that this exemption be maintained. Successive Governments have not taken up most of the recommendations of the commission for the abolition of a large number of reliefs but this is one area where it said the exemption should be maintained. This initiative in the Finance Act, 1969, has resulted in Ireland acquiring an international reputation as the best place to stand a stallion and has brought enormous benefits to rural areas. Those facts are recognised by the Commission on Taxation. No administration, including the one of which the Deputy's party was a member, has considered the abolition of this relief and neither do I. It has worked tremendously well and made us a world leader. It would be very foolish to damage it and I have no intention of so doing.
This is a tax exemption of enormous benefit to a relatively small number of people and the need for it is not obvious in so far as the business to which it relates is a profitable activity.
This relief has been of benefit to the country. It has been of more benefit to rural areas than anything else in this area of activity. The horse breeding industry is estimated to employ about 4,500 people and has brought enormous benefits to the country. The tax exemption relates to fees on stallions. Many people think stud farms do not pay tax, but that is incorrect. Only stallion fees are exempt. Most studs do not employ a stallion in any event.
Why does the industry need to be artificially stimulated?
This relief has made Ireland a place where people want to stand their stallions. The Deputy's argument can be made regarding the tax relief for artists. Both reliefs have been worthwhile and the Deputy's colleague, the esteemed Deputy from Galway West, has been most vociferous in arguing that Ireland should be the place for artists to come and live. The tax relief for stallion fees introduced in 1969 has resulted in Ireland's recognititon internationally as the best place for horse breeding and, therefore, I do not contemplate making any change.
