Punters could be set to benefit from tax-free gambling as a result of a planned Government review of the current levy on betting.

Finance minister, Brian Cowen, yesterday announced that he is establishing a working group to examine betting tax that will involve his department, the Revenue Commissioners and the Department of Art, Sport and Tourism.

The Government charges 2 per cent on all bets struck in high street bookies.

In outlets where the charge is passed on to customers, punters have to pay two cent in the euro in addition to their stake.

The money raised by the Government is ultimately used to aid development of the horse and greyhound raising industries.

Bookmakers also charge another 1 per cent to pay for the live broadcast of horse and greyhound racing and other events.

However, some outlets do not charge either levy and absorb the 3 per cent cost themselves.

A Department of Finance statement yesterday said that the Minister wanted the current 79-year-old system reviewed in light of modern days circumstances.

One of the options that the group will review is introducing a gross betting tax (GBT) system. This is a charge on the difference between the bets received by a bookmaker and the amount paid out in winnings.

GBT is likely to mean an end to passing on the charge to consumers.

Yesterday, a spokesman for the State's biggest bookmaker, Paddy Power, said that the company would not object to its introduction here, once the new system was applied across the board equally.

The UK authorities introduced the GBT system four years ago, but at the same allowed high street bookmakers to install a category of slot machine called fixed odds betting terminals.