Finance Minister Paschal Donohoe was told the “opportune time” had arrived to double betting tax amid ongoing pressure to increase tax on gambling.
Mr Donohoe doubled the rate from 1% to 2% in this year’s budget and was met with fierce opposition from the bookmaking industry.
His officials had warned that alternative proposals to tax punters directly or the profits of bookmakers would not be possible this year.
He approved the rate increase only seeking clarification on what share of betting revenue was accounted for by the greyhound and horse-racing industry.
In the departmental submission, officials said the percentage-point tax increase could yield an extra €50m in tax each year.
On the doubling of the betting tax, the department said the tax had not been increased since 1975 and had consistently been cut over the years.
In a statement, officials said: “Given the increased concerns regarding the social costs of problem gambling, it is now appropriate to increase the rates to better reflect the negative externalities involved.”
The department also committed to a review of the measure in 2019 to see what impact it is having.
Internal department records also reveal how Mr Donohoe considered giving a reprieve to smokers in the budget after seven consecutive years of excise-duty increase.
Asked for his views on a tax rise for tobacco, the minister had written: “Not currently minded to implement a further increase.”
Cigarettes did ultimately take another hit in Budget 2019 with a 50c rise in the price of a box of 20 cigarettes and similar rises for other tobacco products.
The submission says there were “moves” in the market towards the use of lower-price and value-sized packs by smokers. It states: “Surveys conducted by Revenue indicate an increase in the consumption of illicit cigarettes from 10% in 2016 to 13% in 2017.”
Another 9% of the cigarettes consumed in Ireland had been bought legally abroad, it said.
The Revenue Commissioners suggested further tax hikes on tobacco products might not generate extra money for the exchequer.
The submission also states that Ireland’s anti-tobacco drive was working with the number of cigarettes “cleared for consumption” down by 27% between 2008 and 2017.
The documents also show that officials have said there is now a “significant price differential” between how much was paid for booze in Dublin and offers available north of the border in Newry.
A submission for the minister states: “Revenue conducted a cross-border (Dublin & Newry) price survey on excisable goods bi-annually. In its May 2018 survey… it was found that there are significant price differences.”
It highlighted how a bottle of whiskey was €3.57 cheaper and vodka €4.52 cheaper, while common brands of wine were between €1.72 and €2.15 cheaper.
The submission says Brexit poses particular risks to the industry with the possibility of disruption of trading links and supply chains. The Department of Finance said the decision to make no change on alcohol was driven mainly by “concerns [on] cross border trade”.
“An increase combined with the prevailing weakness of sterling could have encouraged cross-border trade and a subsequent reduction in the excise yield.”