Extra Life! UK Govt. announces tax breaks for gaming industry

17 Jan

Originally posted 26 March 2010 @ Foviance.com

Alexander Dowling’s Budget speech on Wednesday night turned the mawkish “WTF” of my previous post on tax breaks for the UK gaming industry to a resounding “FTW!” as the Government accepted proposals put forward by the trade association for the UK gaming industry, TIGA, which will introduce support mechanisms similar to those in the film industry to the gaming industry.

The announcement has been widely praised by the industry, and while I salute any support for the industry as a whole, the cynic in me tends to take anything politicians, particularly those fearing a devastating loss at an impending election, say with a pinch of salt. One could argue that Darling’s claims of invigorating the industry and keeping talent in Britain, has less to do with invigoration and more to do with exploitation; further milking an obvious, and up to now neglected, cash cow to prop up a flagging economy.

Details of the scheme are yet to be released but a post on the TIGA website explains the mechanics of it:

“Video games that passed the cultural test would then be entitled to benefit from Games Tax Relief. If the game makes a profit, the development company would then be able to use the Games Tax Relief to reduce the amount of tax payable on that profit.”

TIGA has stated that the scheme will need to be overseen by “an independent organisation with knowledge and experience of video games production”, and rightly so, but given the Government’s vehemence for public spending cuts, I imagine it will most likely be administered by the British Board of Film Classification (BBFC) who currently have responsibility for assigning ratings to games.

One of the phrases that particularly caught my eye states that tax relief would be available for “games that are a success, provided they first pass a test based on cultural relevance”. There’s two things that bother me about this: firstly, financial support in the film industry is largely dependent on creating products which will make money, resulting in the ‘sausage factory’ effect where originality is sacrificed for predictability, quality for guaranteed sales. This then brings on the slow death of indie producers and ensures the continued dominance of the mainstream. Developers who produce unsuccessful games will still be eligible for cash tax credit to offset their losses, but good luck getting funding next time around, chums…assuming you’re even around to apply. With the scale of budgets for hit games nowadays, few but the biggest of the big boys can afford to release two stinkers in a row.

Secondly, the cultural test criteria “looks at European heritage, languages, game locations, innovation, narrative and the location of the development and development staff”. Which is all well and good if the governing body is indeed independent and understands the realities of making games, but how much can you trust people (ie. MPs) who can’t even responsibly manage their own expenses, let alone regulate an entire industry (ie. financial services). Here we have a government mired in debt, lacking in financial credibility, fast disappearing into the gaping maw of a massive deficit…what they need is cash, and lots of it, fast. My fear is that so-called “cultural” values take a back seat to their economic brethren, and the projects that receive the most support will not be those which are truly innovative, but those which generate the most profits.

Of course, all of this is dependent on Labour getting into power at the next election, and we may well find that any new government is too busy applying the financial defibrilator to the flat-lining economy to come good on pre-election promises.

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