THE GOVERNMENT should double betting tax to 2 per cent of bookmakers’ turnover and expand the charge to online gambling, a report by economist Colm McCarthy states.

The report, commissioned by organisations representing the racehorse breeding and racing industries, states that both generate €1.1 billion a year for the economy and employ around 14,000 people.

The racing and breeding industries are lobbying to have the 1 per cent levied on all bets in bookie shops increased and extended to online and telephone wagers, which are not subject to the charge, so the revenues raised can be used to fund the two activities.

The report, written by Mr McCarthy, the UCD economist who is reviewing State assets for the Government and who previously chaired a group that recommended widespread public service cuts, says the tax should be doubled to 2 per cent, the rate charged up to 2005. He says this would raise around €70 million.

Mr McCarthy also recommends that it should be extended to internet gambling and include bets placed by Irish customers with overseas-based online operators. The report points out that over the past 30 years, the Republic has become a world leader in racehorse breeding. Last year, this was worth €175 million in exports. At the same time, racing generated €275 million in training fees and other activities.

Mr McCarthy says there is a critical link between the two. “All of the countries which have strong breeding industries also support top-class flat racing,” he says. “There appear to be no exceptions.”

His report argues that this cannot survive without high levels of prize money. It points out that most jurisdictions provide this by operating state gambling monopolies and do not have a free market for betting like Ireland and Britain. He states that in proportion to other jurisdictions, Irish off-course bookmakers pay low turnover tax.