Power Up! Tax Breaks for UK Computer Gaming Industry

17 Jan

Originally posted 01 March 2010 @ Foviance.com

Gordon Brown’s recent leetspeek (mp3 podcast) leading up to the Global Investment Conference (GIC) has sparked renewed calls for tax breaks for the UK computer gaming industry. The PM stated that the UK games industry was “the most important in Europe”, and that UK developers are “by far the biggest producers of computer games in Europe”, going on to promise that there would be “new commitments of investment off the back of [the GIC] conference”. Interesting words, encouraging perhaps for some, but is it just more talk? Considering The Digital Britain report was full of high praise for the industry but so far has yielded few tangible initiatives, and a previous request from the industry for tax breaks failed to get a mention in the Chancellor’s December 2009 pre-Budget report, one could be forgiven for (quite skeptically) thinking “the cake is a lie”.

Thankfully, the industry has its very own Super Mario in Tom Watson, Labour MP for West Bromwich East. Watson, known for his advocacy of the local gaming industry, set up a Facebook group called Gamers’ Voice which attracted 15,000 members in it’s first two weeks. More recently, he has taken the PM at his word by tabling an Early Day Motion (EDM) calling on the Government to implement a tax break for game production in this year’s budget. In an interview with gamebiz.com, he describes how he gathered support from “Labour, the Lib Dems, the Tories and the SNP to support a motion calling on the Chancellor of the Exchequer to introduce tax relief for the video games industry”. Read the full interview at gamesbiz.

The pressure is on the Government to act, with an election looming and an electorate jaded with pretty words and empty promises. The Tory Shadow Arts minister, Ed Vaizey made similar noises at the National Endowment for Science, Technology and the Arts event ‘Playing the Game’, saying his party would “look seriously” at support for the industry should they get in this May. Typically though, this was tempered with warnings that nothing may be possible if they were to inherit an economic mess…which, sadly, seems fairly likely.

The UK currently leads the way in revenue from game sales (£3.3billion in 2009) despite a 20% dip during the recession. But other European countries such as Germany, Portugal, Sweden and The Netherlands weathered the recession far better with software sales staying fairly constant or even increasing, and the gap is narrowing. Clearly the Government relishes the revenue which the gaming industry brings in and are making all the right noises about support, but the economic crisis cut deep and all rational economic models say that the worst way to pay off a deficit is with tax cuts. So from where will the quid pro quo come? Is this simply a case of “You scratch my back, I’ll pat you on yours”? Or perhaps more accurately, “You scratch my back, and I’ll treat you like a cash cow and do nothing while you hemorrhage talent to Canada and the USA”.

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