Forgive the terrible heading, but I just couldn’t think of anything wittier on a Monday morning, especially when it concerns the Emergency Budget 2010 and the scrapping of videogame tax relief. It’s an interesting subject, this one, with people both defending and vilifying the decision.
So what’s the issue exactly? Well, George Osborne has scrapped the tax relief scheme for the video games industry introduced by Alistair Darling. Instead he has gone for a broader approach by cutting Corporation Tax to 27%, with a further cut of 1% over the following three years.
The videogame sector had spent a lot of time petitioning the government on the issue, with the TIGA CEO, Richard Wilson, presenting a petition to 10 Downing street the day before the budget was announced. Signed by 37 senior figures in the industry, and supported by ELSPA, the petition was, obviously, unsuccessful.
Richard Wilson was quoted as saying, “TIGA ‘s research shows that over a five year period Games Tax Relief would protect or create 3,550 graduate level jobs, secure £457 million in investment and enhance innovation in that sector.” (Source)
Of course, this wouldn’t be the games industry if there wasn’t some sort of mystery and drama, and that was provided by the news that one of the biggest game companies in the world lobbied the UK government to abandon the tax break. (Source)
Secrecy and governmental manipulation aside for the moment, another point of view offered by James Thomas at 7 out of Ten was that with cuts being made to housing and children, now was not the right time to have the videogame industry showered with special attention.
As a parent, and a friend of single parents about to be severely affected by the Budget, I must confess that a part of me completely agrees with him. Yes, the tax relief for the videogames industry is a pretty awful loss, but if it had not been cut from the budget would the gaming industry not suffered from bad PR. The potential backlash from other groups that were more affected could have been enormous, and detrimental.
With videogames constantly in the spotlight for damaging children and creating mass murderers (as used by whichever political human that wants to attract a specific demographic), could this have tipped the industry further into the negative spotlight and had an even greater impact on sales?
I guess we’ll never know, but the point is worth noting.
On the other hand, the rest of the gaming world is disappointed and angry. All About The Games think it’s a “bloody shame and a stupid decision” thanks to the impact it will have on emerging developers.
Deloitte said that, “It was hoped that the success achieved by similar reliefs in parts of Canada and France could be replicated in the UK and would stem the flow of talent, investment and IP development overseas,” Although they did point out that there may have been other issues should the bill have remained standing.
As I mentioned earlier, the responses to this issue are mixed and there really isn’t much information as to how this change is going to filter down to the consumer. Will we have to pay more than we are now for already overpriced games (COD: Modern Warfare 2 anyone?), or will there be only the increase that the new VAT imposes? I guess we’ll just have to wait and see.
