Dáil debates

Wednesday, 17 February 2010

1:00 pm

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
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Question 64: To ask the Minister for Arts, Sport and Tourism his views on the future funding of the horse and greyhound sectors; and if he will make a statement on the matter. [8340/10]

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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Government support for the horse and greyhound racing industries is provided under the Horse and Greyhound Racing Fund, which was established under section 12 of the Horse and Greyhound Racing Act 2001. Funding of both Horseracing Ireland and Bord na gCon supports two important productive industries and helps to sustain the important role of horse and greyhound breeding and training enterprises in the development of the rural economy. These industries directly account for approximately 27,500 jobs, generate substantial economic activity and make a vital contribution to the rural economy including, as is often forgotten, farm incomes.

The funding given to the greyhound racing sector helps to sustain a tradition that has existed for hundreds of years and underpins economic activity in what are, in many instances, less affluent regions. The funding has also contributed significantly to the almost €90 million invested in the improved facilities now available at greyhound tracks around Ireland. The funding has allowed Horse Racing Ireland to undertake a capital investment programme that has underpinned growth in the sector. The funding has allowed Ireland to develop into a world centre of excellence for horse racing.

A total of €59.3 million has been allocated to the fund for 2010. To give effect to this Estimates allocation it was necessary, under the relevant provisions of the Horse and Greyhound Act 2001, to have the increase in the horse and greyhound fund specified in a regulation. The Horse and Greyhound Fund Regulation 2010 was approved in the Dáil and Seanad on 4 February 2010.

A review of the horse and greyhound racing fund has been completed. The report states that while not all aspects of the total contribution of the sector can be definitively quantified, there is adequate direct and indirect evidence to support a strong argument that the horse and greyhound racing industries constitute a major source of direct and indirect employment, give rise to considerable domestic and export earnings and are a key driver of substantial economic activity, especially in rural areas.

The report maintains that any sharp withdrawal or curtailment of funding in the short-term would likely have major detrimental impacts on the industries involved with the consequent risk of undoing much of what has been achieved since the fund came into existence in 2001. Additional information not given on the floor of the House

At least in the medium term these industries need secure State support. If this was not available, employment would fall, infrastructural development would not take place, the product would deteriorate, integrity would become compromised and the industries would be seriously undermined.

When the fund was established it was estimated that it would be fully financed from the excise duty on off-course betting. When the fund commenced the rate of duty was 5%, but the rate was subsequently reduced to 1%. Any shortfall in the amount generated by the excise duty is made up by direct Exchequer subvention.

Excise duty on off-course betting has been 1% since 1 July 2006. I have already stated that the gap between what is raised through the off-course betting duty and the amount to be provided for the Fund under the provisions of the Horse and Greyhound Racing Act 2001 continues to be met directly from the Exchequer. The Minister for Finance has stated that it is his intention to widen, if possible, the tax base on which betting duty would be applied. Bets placed either on-line or over the telephone are generally with out-of-State companies so applying betting duty is therefore problematic. However, officials from the Department of Finance, in conjunction with the Office of the Attorney General, the Office of the Revenue Commissioners and the Department of Justice, Equality and Law Reform, are looking at the scope to overcome legal and operational difficulties in this area. In addition, the Department of Finance is working closely with the Department of Justice, Equality and Law Reform which has initiated a review in order to provide the Government with options for a new and comprehensive legal and organisational framework governing gambling architecture in the State.

Given the current budgetary situation it is reasonable to concede that multi-annual funding cannot be agreed at this time. Instead, a provision was made in the Estimates for the industries in 2010. Other options, however, may require amending the existing legislation. My officials are currently considering the future funding options for these two industries.

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
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We would all agree on the importance of horse racing and the greyhound industries for employment here and with all their other positive benefits outlined by the Minister, about which there is no argument. The issue that arises is around the methodology for funding. The review, to which the Minister referred, is out of date and inaccurate. For instance, it states that excise duty on off-course betting will be increased in 2009 from 1% to 2%, but that did not happen. The excise duty on it is still 1%. More importantly, there is no indication in that report as to how any additional revenue might be generated. The point is made in the report that the value of on-line betting in 2007 was approximately €1.5 billion. That is a huge amount of money that is available to be taken on board and to be taxed in some way. I want the Minister to set out how he plans to capture the taxation of on-line betting as a method of supporting the horse and greyhound fund.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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If I am correct the figure the Deputy gave of €1.5 billion covers specifically the horse racing element because the figure for off-shore betting is more substantial, being in the region of €3.5 billion. It covers many areas, not least of which is on-line poker and all the other such activities that are taking place. The Minister for Finance is specifically engaged in this matter with the Revenue Commissioners, as it is a taxation issue. There are two ways to address this. One way, which would be direct and easy to operate - which would overcome the problem that arose last year when we said we would raise the tax from 1% to 2% - would be to make it compulsory for all those involved in the betting industry to pass on the tax to the punter. The difficulty for the smaller bookmakers last year, which was a reasonable point, was that the bigger players could afford to pay 2% and not pass it on whereas the small bookies could not and that would have damaged them substantially and put many of them out of business. That was not my intention, nor the intention of the Minister of Finance in terms of increasing the tax. That is one side of the matter.

The other side of the matter is how we will find a mechanism of taxing companies which are largely located offshore. That is the problem, namely, that there do not come within the Irish taxation system. It is hard to tax a company in another jurisdiction. My view is that if a company is doing a substantial amount of business in any given country, there will have to be agreement, even if it has to be at EU level, that this business can be forthcoming in terms of delivering tax in the jurisdiction from which it is making a great deal of money. The Minister for Finance and the Revenue Commissioners are trying to resolve this matter legally at present.

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
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Is it not the case that bets placed in Ireland should be taxed in Ireland and that such tax revenue accruing should come back into this country?

While it might be difficult technically to address the activities of Internet service providers, it appears no effort has been made to tackle that aspect. That is another support mechanism that could and should be in place to deal with this matter.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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I do not disagree with the Deputy but, clearly, we cannot do anything that would be illegal.

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
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I am not proposing that.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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I am not suggesting the Deputy is but that is where the complexity of the issue arises. Clearly, we want to do something that will work, which is our primary objective, and that will increase the tax revenue accruing to the State in order that we can make sure that the horse and greyhound fund, effectively, is entirely funded from the industries. That, essentially, is the Deputy's point, namely, that we cannot continue to use revenue accrued from taxpayers to fund the horse and greyhound industries.

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
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I take it that before the end of the current year some moves will be made to ensure that the industries will be self-funding. It is unsustainable to continue to use general Exchequer funding when there are so many more calls on that money.

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
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It is my intention that we will have a solution prior to the budget that will be introduced at the end of this year and that such a solution will be included in the provisions of that budget. I know that is also the intention of the Minister for Finance.