Thank you, Mr. Chairman and members of the committee.
I am Michael Van Every. I'm delighted to be here today speaking for the almost 40,000 part-time horse owners and breeders and the close to 100,000 trainers, drivers, jockeys, exercise riders, grooms, hot walkers, blacksmiths, feed and equipment suppliers, racetrack workers, and others who earn their livelihood from this industry.
Some of these work at one of the country's racetracks, while many others are employed at the breeding farms throughout rural Canada. I want to make it clear that I am not representing the few ultra-rich horse owners whose full-time racing operations are not subject to the provisions of section 31 of the Income Tax Act. As you may know, section 31 restricts the deduction of losses incurred by part-time owners and breeders to an amount of $8,750 per year. Today's owners and breeders are middle-class income earners looking to combine their interest in horses with a business investment.
While we are middle-class people, horse breeding and racing remains an expensive investment. The average price of a thoroughbred horse sold this past year to Canadian owners averaged $14,500, plus the additional costs of board, feed, training, and care for the animals. Start-up costs in this industry are significant; profits can't realistically be expected for several years. Horse racing and breeding is a major contributor to the Canadian economy. On an annual basis, the value to the economy is $2.8 billion in sales, $2.3 billion in value added to the country's GDP, $1.8 billion in wages and salaries, $890 million in tax revenue to all levels of government, and 140,000 jobs. We employ twice the number of people as Canada's airlines, petroleum refineries, and investment companies.
Why am I here today? We are seeking to introduce a fair income tax arrangement for horse owners and breeders. The horse-racing industry in Canada cannot compete fairly with other Canadian sport and entertainment industries, or with the U.S. racing industry. Horse racing is not viewed as an attractive business investment because the Income Tax Act imposes on this industry antiquated and severe restrictions related to the deductibility of losses.
We need to keep horse racing and breeding competitive. Losses from every other part-time business in Canada, except horse racing, breeding, or farming, are deductible against other income generated by the taxpayer. Racehorse owners and breeders should be able to deduct losses on their operations against other income sources the same as in any other industry. This sector should be permitted to attract interested investors on a level playing field with other industries. Unlike other businesses and organized sport clubs, such as the mining sector and hockey franchises, Canadian racehorse owners and breeders are subject to these special tax rules. These unique tax rules severely restrict the deductability of losses against other sources of income, limiting investment and threatening the industry's financial future. The current anti-competitive tax regime is putting horse breeders in serious trouble because they cannot afford to breed quality stock. This has created the conditions for major declines in the horse-racing industry.
Here are some facts. There are now 48 racetracks in Canada, down 35%, from 63 tracks, in 1950. The number of races held annually in Canada has declined 38% in 15 years. Owners of standard-bred horses have decreased by 40% over 20 years. The number of registered thoroughbred horses born in Canada this past year fell by 47% from 20 years ago. Most of the horses winning the major Canadian stakes events are American or European. Why? Because they can afford to invest in their stock. These declines have a negative impact on our overall economy because expenditures in horse racing fuel secondary industries such as transportation, travel, tourism, insurance, and construction. It is also worth noting that racehorse owners and breeders in the U.S. are able to deduct their entire losses against other income.
We believe that the removal of horse racing and breeding from the restrictive provisions of section 31 of the Income Tax Act will create an additional 15,000 jobs, add $260 million in wages and salaries, increase taxes for all levels of government by over $135 million annually, and generate capital investment of more than $200 million.
Looking at the facts, it is clear that the best way to rejuvenate Canada's horse racing industry is to remove horse racing and breeding from the provisions of section 31 of the Income Tax Act, which is hindering investment and resulting in a competitive disadvantage for Canada's horse racing industry.