The racing industry needs a stimulus package

The global economic fallout has forced countries to implement packages directed at stimulating the economy. The important consideration is reduced unemployment. What is important is the need to do something. We are caught in a situation where years of deficit financing have forced the introduction of oppressive taxation packages which are proving counterproductive to growth and stimulation of the economy.

The concept of 'less meaning more' has been lost on the decision makers and we are now in a situation where taxation levels are proving to be counterproductive. People will simply smoke less and drink less since they are either unemployed or have had to take a reduction in their pay.

The racing industry is facing imminent collapse and something has to be done. No one seems to appreciate the value of this industry. It is still perceived as the activity of vagabonds and scoundrels. Nothing could be further from the truth. The industry is a very large and important part of our economy. It is diverse, involving agriculture, business, sport, entertainment and recreation, and supports a wide variety of activities in all parts of the country. It combines the primarily rural activities of breeding, training, maintaining and riding horses with the more urban activity of a racetrack, off-track betting parlours, horse shows, polo games and public sales.

We need to have a study done similar to that done by Deloitte Consulting for the American Horse Council in the United States. The study done in 2005 validates what the industry has known for years, that the horse industry is a highly diverse, serious and economically significant industry that deserves the attention of the general public, the media and government. We need to have verifiable figures on a number of the areas in the industry:

What is the total horse population - Racing (1200?), Breeding (2000?), Show-jumping (300?), Recreation (200?), Polo (300?), Other (???).

How many people are involved in the industry as owners, service providers, employees and volunteers? Thousands participate as spectators.

What are the direct economic effect and the added multiplier effect of spending by industry suppliers and employees and spectators?

How many people are employed full-time?

How much taxes would the Government lose from all areas should the industry close down?

How many jobs are generated because of the spending with service providers suppliers etc?

Dispel the misconception

What is the income profile of owners? These facts will dispel the misconception that the horse industry is an activity only for wealthy individuals.

What is the economic impact of the industry in terms of jobs and contribution to the gross domestic product?

What are the career opportunities and how can these be formally structured with internationally approved training programmes that can develop the marketability of farriers, grooms, jockeys, veterinarians etc?

Such a study is urgently needed if we are to address the restructuring of the industry in a manner that will sustain its viability.

Some recommendations that come to mind include:

a) Restructuring the income tax regulations to bring all participants within the tax net. Investment in the owning of horses for racing or breeding is a serious business and must be treated as such. There must be clear distinction between what a hobby is and what a commercial activity is. It is interesting to note that the recent stimulus package introduced in the USA had as part of the Farm Bill special treatment for the depreciation of the capital cost of horses.

Beginning in 2009, all race horses can be written off over three years regardless of the age when the horse is acquired and placed in service. The previous ruling called for depreciation over seven years. Depreciation begins when the horse is put in service as a race horse. The date when a horse is 'placed in service' in the horse-racing industry is normally when the horse begins its training to race. A horse that has already raced when purchased would be deemed 'placed in service' on the day it is purchased if the new owner continues to race it. This has provided an added incentive to those investing in the industry.

b) Concomitant with the restructuring of the income tax regulations, there should be introduced a sales tax on the purchase of all horses included those claimed every week. General Consumption Tax should be charged on all goods and services provided. These taxation measures should only be implemented after a thorough revision of the tax structure for the industry.

c) The industry needs massive investment in new and modern facilities. There is currently a revision of all incentives and it is hoped that there will be full recognition of the need to attract capital in the industry, and that the appropriate incentives will be put in place.

I wish you all a very peaceful and holy Christmas. May the New Year bring opportunities of a better life for all of us.

Howard L. Hamilton CD. JP. is a former Chairman of Caymanas Track Limited and is the current President of the Thoroughbred Owners & Breeders Association. He can be contacted at howham23@yahoo.com