The thoroughbred horse breeding industry contributes €330 million to the economy each year despite its controversial tax-free earnings from stallion fees, a report revealed today.
The breeders of racing stock pay around €37.5 million tax and some €3 million in benefits from stallion stud fees into the Government coffers, the Indecon Report found.
Mr Denis Brosnan, the chairman of Horse Racing Ireland, said he was presenting the Minister for Sports, Mr O'Donoghue, with a copy of the report on the contributions the industry makes.
Mr Brosnan said the report provides "independent verification that the Irish racing and breeding sectors are significant net contributors to the Irish exchequer and forms a substantial part of Irish economic life and employment, particularly in rural areas.
"This report provides facts where we have had opinion, analysis where we have had speculation and clarity where we have had misunderstanding."
The stallion fee income was estimated in the report at around €85 million a year, while the costs for the Government in lost revenue were placed at €3 million.
In 1969, the then finance minister Mr Charles Haughey gave the industry a boost by making profits earned from lucrative stallion stud fees tax-free.
Political pressure has been growing to remove this exemption and an amendment to the 2003 Finance Bill has required breeders' claiming exemption to declare their income from 2004 onwards.
Though the earnings are still not subject to tax.
The stud-fee earnings from some of the leading Irish stallions could be bringing in between €3 million and €8 million a year.
The progeny of stallion Sadler's Wells, owned by John Magnier, are now so established that the stud-fees could be bringing in up to €25 million a year.
The cost of mating a mare with Coolmore stallion Rock of Gibraltar, who was at the centre of a dispute between Mr Magnier and Manchester United manager Sir Alex Ferguson, stands at €65,000.
The horse racing and thoroughbred breeding sector have said stallion fees are only a small portion of the industry and it was argued that introducing taxes would not benefit the exchequer to a huge extent.
There were 390 thoroughbred stallions in Ireland last year and 10,574 live foals were born.
Mr Brosnan said the approach governments have followed in keeping the tax-free exemption was positive.