The Irish film industry is perfectly placed for rapid expansion, but uncertainty over tax incentives could squander the opportunity, driving investors away, a report published yesterday suggests.

"The Bigger Picture", written by economist Mr David McWilliams and commissioned by Film Makers Ireland, says that, since 1992, the film sector has outpaced all others except software, and concludes that the industry is already generating more revenue for the Exchequer than all tax foregone under the Section 481 scheme.

"There can be few other industries that make more economic sense for a literate, high income, English-speaking country than film and television production," Mr McWilliams said.

The report argues that seismic changes lie ahead with the arrival of digital and interactive television, and a multiplicity of specialist channels is likely to fuel demand for fresh "content" - new films and programmes.

"The question is how to ensure that we get a bigger slice of what I believe will be a growing pie," Mr McWilliams said.

The document also suggests that, in the next century, intellectual property rights will be as important as mineral rights were at the start of the 20th century.

"Profit is in ideas, high value-added sectors and the so-called knowledge-based industries. The film and TV business is one of those industries. It is not good enough to have talent alone; it's all about owning the profits associated with the talent," the report says. "Well-capitalised companies hold the key. Therefore a sound financing structure is as important as the creative talent base."

Fine Gael's junior spokesman on finance, Mr Jimmy Deenihan, last night called on the government to extend the Section 481 provision for at least three years to reassure film industry concerns about long-term projects.