The Countryside Alliance has warned plans to slap a flat-rate tax on betting risks unintended harmful consequences for rural communities.

The warning comes after outcry from industry leaders, who argue Treasury proposals to raise online betting taxes, added to existing concerns around affordability checks and a failure to deliver a more sustainable central funding model, pose an "existential threat" to British horse racing.

The proposed changes would see horse racing bets taxed at the same rate as online slots and gaming, despite fundamental differences between the two forms of gambling.

It is feared such a move would discourage bookmakers from promoting the sport, leading to fewer bets and lower revenues for racing.

The racing sector contributes £4.1billion to the economy and supports more than 85,000 jobs, many of which are found in the countryside, including farriers, vets, feed suppliers and transport companies.

In a new report out this week, the All Party Parliamentary Group for Racing and Bloodstock claimed the tax would bring big job losses and inflict economic hardship for towns such as Doncaster, Cheltenham and Newmarket.

The Alliance argue that the damage would also spill over into the countryside, which has a “deep connection” with the racing industry.

Mo Metcalf-Fisher, director of external affairs at the Countryside Alliance, said:

“The racing and breeding industry makes a very significant economic and cultural contribution to rural communities and is a social hub for many. An attack on racing is an attack on the countryside and the livelihoods of thousands of people. In reforming gambling legislation, it is essential the Government listens to industry leaders and avoids disproportionately impacting the sector to negligible benefit. It is vital  the future of horse racing is secured.”

Conservative and Labour MPs also expressed their concern.

West Suffolk MP Nick Timothy (Con), whose constituency includes Newmarket, said:

“Horse racing is one of the crown jewels of British sport and culture. Newmarket, in my constituency, is the centre of racing and breeding in Britain. Some of the most important racing operations in the world are based in Suffolk, and these businesses invest huge sums of money into the local economy.

“This is a story we could tell across the country, from rural villages to towns like Cheltenham and Doncaster, where horse racing is part of the social fabric and has been for centuries.

“The public recognise this. Nobody will forgive ministers if their decisions lead to the decline of the nation’s second-biggest spectator sport. The time for warm words has ended – we now demand action.”

His fellow co-chair of the Racing and Bloodstock APPG, Dan Carden MP (Lab), who counts Aintree in his Liverpool Walton constituency, said:

“The message from this report is clear: British racing needs this Labour Government to be on its side.

“Racing is part of our national story, and its enjoyment and support extends all the way from rural to urban working class communities.

“I’m calling on the government to listen and to act in order to secure a fair funding model, protect jobs and allow horse racing to thrive for future generations.”