Wednesday, 30 June 1999
Dáil Éireann Debate
I am proposing amendment No. 3 and will oppose amendment No. 4. In amendment No. 4, Deputy Penrose is seeking to put a limit on the levy that could be imposed on lower value animals. I appreciate the point he is making but it would not be possible to calculate precisely the value of every stallion. The value of a stallion is what it fetches at a sale. I have considered the provisions of section 5, however, after the full Committee Stage debate on this issue.
I should emphasise that this section is an enabling provision. No specific or detailed proposals have been put to me as yet. I acknowledge that the Irish Thoroughbred Breeders Association, which first sought such a levy, does not represent all the breeders. The current position represents only a relatively small percentage of the total number of breeders. However, the idea of all breeders contributing to a fund to help promote and develop the thoroughbred horse breeding sector as a whole is a good one. This has worked well on the non-thoroughbred side since the formation of the Irish Horse Board Co-Op in 1993. That co-op now has 7,000 members.
I am not sure a voluntary levy would work. The thoroughbred industry already has a voluntary sales levy. Many do not pay, and many of the more valuable horses are sold privately or at sales outside Ireland. I have some sympathy for the small breeder, however, whom I am anxious should not be over-burdened. What I have in mind is a small levy at the lower end, say, £25 with up to an additional £500 at the upper end. There would be no question of breeders being forced to become members of the Irish Thoroughbred Breeders' Association, although a package including free membership could be devised in the context of introducing the levy. The Irish Horseracing Authority, and not the Irish Thoroughbred Breeders' Association, will collect the levy and I would have to be satisfied that breeders in general would benefit from the  revenue generated. It would be open to small breeders to form a new representative organisation if they did not favour that type of fragmentation. I will be careful to have regard for the interests of small breeders, as I did with the small bookies. I, as much as anyone else in my area, understand and appreciate the position of small breeders and I will ensure they are not over-burdened.
As this is merely an enabling provision, it would not be possible for me to write any further safeguards into legislation. However, in keeping with the idea of taking proportionately more from those who can afford it, and in view of the desirability to provide in legislation for the longer term, I am proposing to increase the maximum levy to £1,000 per foal because, at the upper end, £1,000 is very little whereas at the lower end, £25 would be considered reasonable. While about 4,000 of the approximate 5,000 own only a small number of mares, I have been given estimates that, based on a typical sliding scale of rates ranging from £25 to £500, about 80 per cent of the total levy income would be funded from the top 20 per cent of breeders.
The question of the contribution made by stallion owners to the racing industry arose on Second Stage. The EBF fund was established in 1982 essentially to provide a mechanism whereby stallion owners would contribute directly to the prize fund for Irish racing. In 1999, for example, stallion owners will provide £650,000 towards prize money and since the fund was established in 1982, stallion owners have contributed in excess of £9 million through the EBF system on a voluntary basis to increase prize money. The contributions have been calculated on a sliding scale; those who own the more valuable stallions contribute more, and those who own the less valuable animals pay significantly less.
Mr. Connaughton: We had a good discussion on this matter on Committee Stage in terms of where the levy would fall on thoroughbred foals. On that occasion I pointed out to the Minister that I would be opposed to a levy being imposed on the lower end of the market, on the people who keep one, two or three mares and who, during their lifetime, rarely hit the jackpot. These are the people who stand in the rain for 24 hours at the horse fair in Ballinasloe trying to get a few hundred pounds for their horses. They do not make much money from that, it is simply because of their love of horses. It is important for the industry that there are 3,000 or 4,000 such farmers throughout the country who do their best to upgrade the breed.
I take the Minister's point that the industry wants to get everybody under the one umbrella but there is an enormous difference between the people we are talking about and those at the other end of the scale where the sky is the limit on valuation. Both ends of that scale are  important to the industry, and it is fair to say the people at the upper end of the business experience problems also. They might have a great deal of money but they face enormous problems. They give much employment and it is a spin-off industry as such. I would not forget the contribution they make but financially they have always been able to look after themselves.
I cannot understand the reason for the fee, even at £25. I realise that is not a great deal of money but some small breeders have told me that once they get into the system, it will be £25 this year, £50 next year and they will be on the merry-go-round after that. I realise the fees have not yet been proposed by the thoroughbred association, but perhaps the Minister could give us a commitment that for a number of years, and particularly for a number of mares, farmers at the lower end of the market will not be levied above the £25. It is important for the Minister to say that.
We made some progress on Committee Stage and I compliment the Minister on that. When replying, he should indicate where the cut off point will be between the £25 at one end and the £1,000 at the other. Has the Minister given any thought to the scale and to where the break will be? Will it go from £25 to £700 to £1,000? The industry will want to know.
I do not know if those breeders who are not members of the Irish Thoroughbred Breeders' Association want to set up their own group, but there is a huge gulf between these groups. There are 500 to 600 breeders in the ITBA while there are approximately 5,000 to 6,000 breeders who are not in the ITBA. We are the only people who can speak for the breeders who are not in that organisation and I would be grateful if, when the fees are decided and struck, the fee at the lower end of the market is in place for some time so that there will not be a danger of getting breeders into the web, whereupon the fee could be increased dramatically.
Mr. Penrose: On Second and Committee Stages I expressed reservations about the mandatory nature of the thoroughbred levy introduced by section 5. It appears that this mandatory levy has been sought by the Irish Thoroughbred Breeders' Association to replace the existing voluntary levy. The Minister referred to collection at the point of sale and it is probable that nobody will rush with open arms to pay anything voluntary or discretionary. The amount collected by the voluntary levy reflected the industry's good and bad times. The mandatory levy will be collected at foal registration stage, when the animal is a few months old and will be on a scaled basis, as the Minister said. However the 'ability to pay' principle will not be taken into account, which is where the voluntary nature of the previous sales levy was so important. It is important, as previous speakers said, that the industry is funded in such a way as to help it grow and prosper as a very important national asset, given its ability to earn income, particularly in the export field. However,  we are concerned with the situation of the farmer with a few mares, some of whom have bred horses which have become household names. Some winners of Gold Cups and Grand Nationals have been bred by breeders with only four or five mares. That is a once off occurrence, but many on the national hunt scene would be lucky to receive £500 for a foal after hours of waiting at a horse fair. These are the types of people we are worried about.
The Minister says that the levy for these people will be £25, which is fair enough. That will not be the straw that breaks the camel's back, but how long will it remain in place? Is it the thin end of the wedge? Will it be raised to £100 in no time? What is the cut off point? Even £1,000 is nothing to those prepared to pay £100,000 for a stallion's covering fee, as they hope the progeny will be so valuable that the £1,000 will be a mere drop in the ocean. We must ensure that these people continue but the small breeders may well suffer. How will this be graded or introduced so that it does not become a punitive imposition on small farmers with two or three mares, who are not making a living from this?
There are 6,500 breeders in total, but the ITBA only has 500 to 600 members. The Minister said it would not be mandatory to join the association and this is important, as it is a principle laid down in trade union law if nowhere else. Nevertheless, how will this be operated? Will a foal for which a levy is not paid be able to race when it is of racing age? If its owner is not a member of this association will it be allowed to race? Much thought must be given to this. I appreciate that this is an enabling provision and that the Minister cannot sit down and set out all the steps to be taken in black and white, but legal problems may be caused down the line. Those might not be amenable to the resolution the Minister has in mind, as he wants to ensure the survival of the maximum number of small breeders we have referred to. We are aiming at collecting between £500,000 and £600,000, which is a considerable sum, but if small breeders must pay the levy we must ensure they are getting value for money. Has the Minister given any thought as to how this might operate?
Mr. Walsh: I note Deputies' contributions. We want to improve the horse industry at the upper end of the scale and there is no great difficulty on that. To give an idea of my thinking on this, I have increased the amount at the upper end from £600 to £1,000. The covering fees for stallions varies from several hundred pounds to £150,000. The £25 fee would apply to foals from stallions with a nomination fee of £500 and there would be a proportionate scaling up from £25 for such stallions up to the top end of the market and £100,000 stallions. However, a £50 fee for a stallion worth £1000 or £1,500 would be proportionate and would ensure that those with one or two mares are not overly burdened. In relation to the mechanism for making best use of this, it would  be the Irish Horseracing Authority and not the Irish Thoroughbred Breeders' Association. The IHA would come to the Minister of the day with a proposal to which the Minister could agree if it was fair and equitable. The ITBA would not have responsibility for the collection or distribution of this levy; it would be a matter for the IHA. The sport horse co-operative has 7,000 members. At the early stages Irish horses were doing well internationally, in show jumping and so on, but they had no passports and nobody knew where they came from. This matter has now improved greatly. All beginnings are a bit tentative, but I think all sides want the approach to be inclusive and not to overburden any sector of the industry.
and different charges may be made in respect of different locations or greyhound race meetings held at greyhound race tracks having regard to the potential value of the location or meeting for the business of bookmaking.”.
This amendment clarifies the original intention that, if flat rate charges are introduced for bookmakers at greyhound tracks, different rates may be applied to different locations or in respect of different race meetings, depending on the potential value of the location or race meeting for the business of bookmaking. A similar clarification was inserted in section 4, on Committee Stage, in respect of horse racing and it was due to an oversight that section 11 was not amended at that stage.
Mr. Connaughton: Does the amendment refer to the level of turnover in a betting shop or the value of the location of the shop? Would a betting shop in Dublin be rated more highly than one in Mountbellew, if we had one, or does the amendment refer to the turnover of the shop, irrespective of location?
Mr. Walsh: A small bookmaker in a small town would pay a certain amount for a stand at Ballinrobe while the same bookmaker would pay considerably more for a stand for the Derby at the Curragh. The legislation allows for a variation in charges, depending on location.
It was originally intended to increase all fines in the greyhound industry to present day levels. Due to an oversight, the four fines referred to in these amendments were omitted from the Schedule in the table in section 12 of the Bill.
Minister for Agriculture and Food (Mr. Walsh): I thank colleagues on all sides of the House for their interesting and valuable contributions to the debate on all Stages of this Bill. The debate reflects the keen interest in horse and greyhound breeding, rearing and racing. The nature of much of the debate showed clearly the earnest wish on all sides of the House to ensure that our legislation will treat everyone affected by it fairly, proportionately and equitably.
We do not wish to be too burdensome in the application of taxes and levies and, above all, we wish to ensure that the interests of small farmers and breeders, who represent the cornerstone of many rural communities, are not adversely affected. The charges we are introducing are desirable and are in the overall interest of the industry.
The main amendments agreed on Committee Stage concern the reduction in the ceiling of the new turnover charges from 5 to 2.5 per cent and the introduction of a three tier scale of rates for the flat rate charges on off-course betting shops, starting with a special low rate of £500. The case for the small bookmaker was made repeatedly during the debate.
I appreciate the concerns expressed about the foal levy. While it is not possible to satisfy these  concerns in the Bill, the IHA, when deciding on the levy with the consent of the Minister for Agriculture and Food, will do so in the overall interest of breeders. My proposal to increase the maximum levy to £1,000, coupled with the assurances I gave to the House on the terms I will accept before I give my consent under section 5(1) of the Act, should reassure all those concerned.
The horse and greyhound industries are very important and make a significant contribution to the economy. Approximately 25,000 people are employed in the horse breeding and racing industry and between 5,000 and 10,000 in the greyhound breeding and racing industry. They are important in terms of our tourism and leisure industries, the international image they provide for the country, their role in, and impact on, rural and local community life and their financial contribution to the economy. Both industries have moved forward in a proactive and progressive fashion over the past few years. I thank all those in the private and public sectors who contributed to that progress, particularly the boards of Bord na gCon and the IHA and the staff of those organisations. They have done an outstanding job. Much of their work is done at weekends. People travel the country to work at the totalisator and the various facilities which are provided for Saturday and Sunday meetings. Greyhound meetings are often held in the late evening and people in both industries are required to work unsocial hours.
I acknowledge the contribution of the leaders and representatives of various industry organisations, the executives of State and private sector bodies and the chairmen and members of the boards of Bord na gCon and the IHA. They have served in a voluntary capacity during these critical and often trying years.
I pay tribute to the staff of the Department of Agriculture and Food and of the parliamentary draftsmans's office, some of whom worked until 4 a.m. to prepare the legislation. Despite this excellent work, controversy has arisen concerning the date of the introduction of the provisions of the Bill. On-course bookmakers say they are aggrieved that while excise duty on off-course betting is being cut from 10 to 5 per cent with effect from 1 July, the reduction in IHA and Bord na gCon on-course levies will not take place until later in July. There is a perfectly reasonable explanation for this. The reduction in excise duty was given effect in a simple section in the Finance Act which has already passed. The provisions of this Bill needed extensive drafting and careful consideration by the Government and it is now being processed expeditiously in the Oireachtas. The Irish Horseracing Authority cannot prejudge a decision of the Oireachtas. Therefore, no action can be taken until the legislation has passed Dáil Éireann and Seanad Éireann and has been signed by the President.
When the Bill has been enacted I will sign the Commencement Order to bring its provisions  into effect for the first date that is practicably and administratively possible. In deference to the people of the west, I hope the provision will be in place in time for the Galway races.
Mr. Walsh: Deputy Ring will mark our cards for us. When the legislation is enacted, the same rate of tax or levy will apply to off-course and on-course betting. It simply means the same rate of tax or levy will apply off course as applies on course for a couple of weeks. I think the controversy is unnecessary and I look forward to meeting everybody in Galway where the provision will, I hope, come into effect.
|Last Updated: 20/05/2011 17:20:05||Page of 192|