Martin Mansergh (Fianna Fail)

This section relates to the termination of the stallion tax exemption, which by the time it ends on 31 July 2008 will have been in force for almost 40 years and is probably one of the most successful tax incentives ever introduced here, as the Cheltenham Festival showed where we not merely won the Gold Cup but places one, two and three plus nine other races.

Our equestrian industry is at its peak and it represents the equivalent of multinational firms in counties like Kildare and Tipperary. It gives a good deal of employment, something that was well recognised by the late Labour Deputies, Joe Bermingham and Michael Ferris, when they produced a report on the subject. It can be argued that the relief has existed since 1939 when there was a fairly nominal form of taxation. In 1969 it was introduced in the context of what proved to be a very temporary removal of farm incomes generally from tax but that was reinstated four or five years later.

The Minister and the Government came under a good deal of pressure from Brussels to the effect that this was a state aid although that is a distinctly arguable point because if we abolish it and allow losses in what is a highly speculative business — losses under the current system are not allowed to be set against tax — what is supposed to be a state aid could in fact become a state aid in terms of this State having to allow losses which could be met in any given year. By all accounts the sums of tax due are fairly minimal and the amount of actual tax foregone on the figures available to us is very modest when one considers the support for other industries which do not give as much employment. It must be remembered that the vast majority of the raw materials are bought here.

Perhaps this question has to be seen in more than one context. The Minister spoke earlier under a previous section about everybody paying a certain contribution even though this relates to an activity rather than an individual. One needs to consider seriously the issues on which one should come into confrontation with Brussels. An overly confrontational approach on a number of fronts can have its disadvantages rather than advantages.

The Minister, in his Budget Statement, said he would be entering into discussions — I am paraphrasing his comments — with the industry because this provision leaves a loose end. It indicates what will cease from 31 July 2008 but it does not indicate what will take its place. It is clear that every country has different ways of supporting its horse breeding industry, and that must be done because it is not necessarily an inherently profitable activity. It is a highly-speculative one but it is one that has brought great honour and advantage to Ireland and it provides prosperity in places which otherwise might not enjoy it.

I urge the Minister to bring his discussions with the industry and, inevitably, with Brussels to what I hope will be a satisfactory conclusion because this is not just a national matter. We are now part of the European Union and this is a flagship industry we have developed that is recognised by other countries. It is a flagship for the European Union, not just for Ireland. I am aware the Minister fully appreciates the importance of the industry and I am confident he will work out an appropriate regime to take its place which will consolidate the position that has benefited from 40 years of a fantastic visionary incentive.