That headline is called a 'grabber' in the field of journalism. The reality of that statement is more than a 'grabber' for the 30-plus thousand who directly depend on the racing industry for their livelihood.

The farriers, the veterinarians, the jockeys, the grooms and stable hands, the trainers, the breeders and a host of others who look to this industry, not only for a living but also the important opportunities for career development. Add to that list those who indirectly benefit and one begins to understand the importance of this industry.

Recent announcements of benefits to the manufacturing sector and another round of redundancy payments to sugar workers (this must be the fifth time that these workers have received redundancy payments - in contravention of the relevant law since none of them have lost their job!) has served to bring into focus the dilemma facing the racing industry. The industry as currently structured is not viable. This has been so ever since the move to Caymanas Park and the legalising of the off-track bookmaking activities back in the '60s.

We have written and spoken about the problems of the industry time and again. We have offered solutions and the situation remains unchanged. It is within this environment of hopelessness that the various associations have with a single voice said "enough is enough".

It makes no sense to continue when each day brings additional debt. The promoters face increasing financial problems, the regulators are underfunded so the logical argument is: why continue?

This industry cannot be run as a department of the Ministry of Finance. Immediate plans must be put in place to return the industry to private entrepreneurs. To do this a number of important changes have to be made.

Taxation

This remains a perpetual problem. It is beyond my understanding why the Betting Gaming and Lotteries Commission has not sought to intervene in a situation where the promoting companies over the years have been unable to pay the tax levied. Each year they report a shortfall in the tax payable and that actually paid, yet they have never sought to investigate the reasons why and make recommendations for a more equitable system. The tax payments over the last five years show the following as it relates to the promoting company. (Table 1)

There have been a number of changes in the tax structure, with the most recent change being in September 2007 when the rate was changed to 7.5 per cent of gross profit where this is defined as sales less payout less purses paid. It should be noted that there is an outstanding payment due of J$297 million which is tax withheld during negotiations for a revised structure.

It is this sum which the president of the trainers association keeps referring to as being available to pay additional purses. This is not so, since no formal approval has been given for this sum to be distributed. The president knows this and he should therefore cease inciting malcontent in an area which he knows to be incorrect.

A committee under the leadership of Raphael Gordon, a former partner at Peat Marwick, has recently been set up to advise the minister on an equitable distribution of the tax dollar. The outcome of the deliberations of this committee is anxiously awaited. We feel strongly that the racing industry should be treated no differently from the entertainment, amusement and tourist sectors. The same incentives offered to them should be offered to the racing sector - 10-15 years moratorium on all taxes paid, duty-free imports on all material used in the industry, and a host of others geared to stimulating new development and expansion.

When I think of what has been done for the sugar industry over the years I shudder to think of the impact that the racing industry would be making today if only a tenth of that money had been made available to the racing industry.

The other area which needs urgent attention is the level of turnover.

Turnover

This is the only source of revenue to a promoting company, and unless this grows at a faster rate than expenses, then the business is on the road to bankruptcy. The largest recurring expenditure which the promoting company has is the weekly payment to the participants that are essential to the industry, i.e., jockeys, trainers, owners, breeders, etc. This is covered through purse payments. It is the current inadequacy of this payment which has brought things to a head.

Next week, we will look at this aspect of the business and make recommendations for improvement.

Howard L. Hamilton, CD, JP, is a former chairman of Caymanas Track Limited. He is the current president of the Thoroughbred Owners and Breeders' Association. He can be contacted at howham@cwjamaica.com.