Opening Address by Brendan Smith T.D., Minister for Agriculture, Fisheries and Food Draft Horse and Greyhound Racing Fund (No. 2) Regulations 2010 Joint Committee on Agriculture, Fisheries and Food 15 December 2010
Chairman, Members of the Joint Committee,
The horse and greyhound racing industries receive financial support from the State through the Horse and Greyhound Racing Fund (the Fund) under Section 12 of the Horse and Greyhound Racing Act, 2001 (the Act). Payments are made from the Fund to Horse Racing Ireland and to Bord na gCon. In the period 2001 to date a total of €673.2m has been paid from the Fund to the horse and greyhound racing industries in accordance with the provisions of the Act.
State funding provided through the Fund is pivotal to the survival of the horse and greyhound racing industries.
The current ceiling on the Fund (€673.2m) has been reached. In order for my Department to continue to make payments from the Fund to these industries in 2011, the aggregate limit on the Fund must be increased from the current limit of €673.2m to €730.5m so as to allow for the provision of €57.3m to Horse Racing Ireland and Bord na gCon, which is the amount allocated for this purpose in Budget 2011. The €57.3m will be allocated 80% to HRI (€45.8m) and 20% to Bord nag Con (€11.5m) in accordance with Secion 12 (6) of the Act. To give effect to this Estimates allocation it is necessary, under the relevant provisions of the Act, to have the increase in the Horse and Greyhound Fund specified in a regulation. The aggregate limit of the Fund has been increased in this manner in 2004, 2009 and earlier in 2010.
Funding of both of these agencies - Horse Racing Ireland (HRI) and Bord na gCon (BNG) - supports two very important productive industries and helps to sustain the role of the thoroughbred horse and greyhound breeding and training enterprises in the development of the rural economy. These industries, together, account for an estimated 27,500 direct jobs, generate very substantial economic activity and make a vital contribution to the rural economy including farm incomes.
The Fund has allowed Ireland to develop into a world centre of excellence for horseracing and has allowed Horse Racing Ireland to undertake a capital investment programme that has underpinned growth in the sector.
The funding being provided to the greyhound racing sector helps sustain a long standing tradition. This funding underpins the economic activity in what are in many instances, less affluent regions of the country. It has also contributed significantly to the improved facilities now available at greyhound tracks around Ireland.
When the Fund was established back in 2001 it was expected that it would be fully financed from the revenue from Excise duty on off-course betting. However this has not proved to be the case. When the Fund commenced the rate of duty was 5%, but this rate was subsequently reduced over time to 1%. This coupled with the increase in on-line, remote betting and betting exchanges (which are currently outside the tax net) has led to a severe decline in revenue from duty collected on off-course betting. This is an issue of great concern to the Government and one I will return to presently.
The amount collected from excise duty on off-course betting has declined from a peak of €58.9m in 2000 to an amount of €31m in 2009 with a similar yield estimated in 2010. Since 2002 the amount paid into the Horse and Greyhound Racing Fund has been a combination of the amount collected in excise duty from off-course betting plus direct Exchequer subvention. The draft regulation before you today provides for an amount totaling €57.3m to be allocated to the horse and greyhound industries in 2011. This will be comprised of approximately €31m from Excise duty on off-course betting and the remaining €26.3m in for form of a subvention from the Exchequer.
The 2011 allocation of €57.3m compares to €59.3m in 2010 - a reduction of 3.3%. The allocations for the Fund in 2009 and 2008 were €68.1m and €76.3m respectively.
Taoiseach's Announcement on taxation
The Taoiseach stated the Governments view on 13 May 2010 that on-line and telephone betting should pay their fair share of betting duty. Accordingly, officials from the Department of Justice, together with officials from the Department of Finance, the Revenue Commissioners, the Office of the Attorney General and my own Department have been meeting to see how best to introduce necessary changes to achieve this objective.
Budget 2011 announcement by the Minister for Finance
My colleague, the Minister for Finance, announced in Budget 2011 that he was "making the necessary arrangements to ensure bets placed on the internet by domestic punters are subject to the same level of betting duty as applies in the high street betting shops".
The Minister for Finance noted that Betting Duty has to date only applied to bets placed in betting shops with bets placed by Irish punters either online or remotely, by whatever means, falling outside the tax net.
The Government intends to include provisions in the Finance Bill and to revise the Betting Act 1931 to ensure that all bookmakers taking bets from Ireland will pay 1% betting duty on those bets in the same way that betting shops currently do. The Minister for Finance has also indicated Betting Exchanges will also be subject to tax under the new arrangements.
It is hoped that by including the high-growth area of the betting sector (i.e. remote, on-line betting and betting exchanges) the tax base from betting will be boosted significantly. In a full year it is expected that the tax yield could grow by up to €20m depending on the prevailing market conditions. The details will be contained in the Finance Bill and the proposed amendments to the Betting Act 1931.
Conclusion
As I stated at the outset State funding provided through the Horse and Greyhound Racing Fund is pivotal to the survival of the horse and greyhound racing industries. These very important industries require this funding for their survival and in order to facilitate growth and development into the future. The Government has made provision in Budget 2011 to allocate €57.3m to the Horse and Greyhound Racing Fund. In order for my Department to distribute €57.3m to HRI and Bord na gCon in 2011 the aggregate limit of the Fund to date must be increased by €57.3m pursuant to the provisions of Section 12(5) of the Horse and Greyhound Racing Act 2001. On that basis the draft regulation which is being considered by the Committee here today provides for an increase in the current aggregate limit from €673,171,713 to an aggregate figure of €730,461,713 - the cumulative provision in the Fund since 2001.
I am circulating a copy of the draft regulation to the members of the Joint Committee.
Section 12(13) of the Horse and Greyhound Racing Act, 2001 provides that a draft of these regulations be laid before both Houses of the Oireachtas and a resolution approving the draft be passed by each House before the regulations are made by the Minister.
I ask you for your support so as to ensure that Horse Racing Ireland and Bord na gCon receive the funding provided for in Budget 2011 and that the very important role of these industries, and the employment supported and economic activity generated, is sustained.
I commend this regulation to the Committee and I look forward to discussing any matters arising with you.
Thank you.
