Government Expected To Reject Industry Tax Breaks

08 Dec 2009 at 23:14:25 by

The chancellor, Alistair Darling, is expected to reject government support for tax breaks to the videogames industry in his pre-budget report.

Reported in the Guardian, the news comes after the Digital Britain report in June recommended a "cultural tax break" for the industry. Since then industry trade body TIGA has been lobbying tirelessly to get the government to implement a tax break for the industry. The formation of an All Party Parliamentary Group earlier in the year seemed to boost confidence that the government were starting to pay attention to the industry.

Richard Wilson, CEO of TIGA, said that not backing the industry would be "a colossal mistake and failure of imagination on behalf of the government".

Earlier this year, proposed tax incentives in Ireland revealed that UK based companies would consider moving their operations out of the country in favour of tax incentives that helped support their industry. Speaking then, WIlson said "video game development is an industry of the future. It is export oriented, research intensive, inherently creative and the UK is a world leader. The sector merits investment by Gordon Brown's national investment corporation," after reports of a potential £1 billion GBP of investment from the government into manufacturing and other businesses, including the creative industry.

The recent proposed support would cost around £192m GBP over a five year period and would effectively save up to £415m GBP in tax receipts which would then be re-invested into the industry, creating jobs and providing growth to an industry already bigger than the film or music industry.

Stranger still, and in what could be interpreted as almost inconsistent move, reports earlier today suggested a government cash injection of £2.5m GBP to the Scottish Games Industry, with more money coming from Europe.

This grant will create 400 new jobs, help 80 existing companies and form potentially 30 new companies, as well as aid Dundee-based Scottish Centre for Excellence in Computer Games Education based at Abertay University.

With videogame developers being attracted to countries offering tax breaks such as Canada and France, it seems the government will have to consider its position very carefully to how important the videogame industry is. Parliamentarians and academics are aware that the UK has slipped in the world rankings of videogame development from third to fifth in the last few years, and will need to act fast to secure a potentially huge market.

Richard Wilson has said he will continue to lobby the government with his proposals, and he'll be hoping, as will all in the industry, that the government will pay a little more attention before the final budget report.

Now might be a time for the All Party Parliamentary Group to apply a bit of pressure.

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