European Trade Sanctions Impact Buyers of U.S. Horses

European horse buyers will have to begin paying a 5% excise tax on horses they purchase and bring home from the United States as a result of sanctions imposed against the U.S. on Monday by the European Union.

The tax, effective March 1, is a retaliation against the U.S. for not conforming to a ruling by the World Trade Organization. The tax began March 1 and will increase 1% a month until it reaches 17%. Federal tax legislation currently being considered would cause the EU to lift the sanctions.

The measures are in reaction to the Foreign Sales Corporation federal law that gave tax advantages to U.S. exporters selling their goods in the EU. The WTO called the tax break an illegitimate export subsidy and gave the U.S. two extensions before imposing the tax.

Among the industries affected most is agriculture, said Greg Avioli, chief operating officer of the National Thoroughbred Racing Association and the industry's chief liaison in Washington, D.C. Sen. Charles Grassley, an Iowa Republican, is pushing a bill passed unanimously last fall by the Senate Finance Committee that he chairs. A similar bill has passed the House Ways and Means Committee, but election-year politics and amendments could slow its passage.

"When the legislation was passed by the Senate Finance Committee last year, it also included a provision to eliminate the 30% federal tax on winning bets made outside the U.S.," Avioli said. The tax has been a roadblock for the expansion of international simulcasting.

The NTRA has joined numerous other organizations, including the U.S. Chamber of Commerce, in urging Congress to address the issue quickly.

The tax affects all horses other than breeding stock or horses destined for immediate slaughter.

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