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TIGA hits out at UK tax relief plans

TIGA hits out at UK tax relief plans

TIGA argues that it's unfair for the games industry to receive no help while the film industry gets tax relief.

TIGA, the trade association for the UK's games industry, has hit out against plans for the Government to retain tax relief for the film industry while dropping plans to offer similar incentives to the games industry.

The tax incentives, which were to have included tax relief for profitable development houses, assistance with loss reduction for smaller development houses, and the waiving of National Insurance contributions for companies comprising less than ten employees, had been one of TIGA's biggest campaigning successes.

Sadly, a change of government and a global recession put paid to the plans, with Chancellor George Osbourne announcing the cancellation of the plans to general dismay.

Although it's roundly recognised that spending cuts are necessary in this austere age, TIGA has taken exception to the fact that the UK's film industry is to keep its tax relief package while the games industry's is dropped.

Following the Prime Minister's public declaration of commitment to the Film Tax Credit programme in yesterday's Prime Minister's Questions, TIGA head Dr. Richard Wilson stated 'whilst we are pleased that our friends in the film industry will continue to receive sector specific support, we find it extraordinary that the Government continues to oppose introducing Games Tax Relief.'

Wilson went on to explain that 'Richard Harrington MP made clear in his question [to the PM] that a key contributing factor to Warner Brothers’ decision to continue to invest in the UK, and create 600 more jobs in Watford, was the film tax credit,' and argued that 'If the shoe fits for the film industry why does the Government continue to argue it does not for the video games industry?'

Thus far, there has been no response to Wilson's comments from Government officials.

Do you think that it's important for games and films to be treated as equally valid and worthy of such endeavours as tax relief programmes to encourage UK investment, or is it right that films are treated as superior by the Government? Share your thoughts over in the forums.

15 Comments

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AcidJiles 19th November 2010, 10:50 Quote
I don't think either need tax relief but if the film industry gets it I see no reason why the games industry shouldn't.
battles_atlas 19th November 2010, 11:15 Quote
There should be automatic tax relief for any company that demonstrates that a) it doesn't actively work against the public good (so that rules out the banks, supermarkets, and pretty much all corporate enterprises really), b) it generates good jobs, by which I mean creatively fulfilling, reasonably paid (where the board room pay is connected to the 'shop floor'), and reasonable hours (so the games industry as it is would probably fail, but could adapt.)

Obviously legislating this would be difficult, so the final arbiter in determining company compliance will be me. For which I'll qualify for tax relief of course.

Problem solved.
leveller 19th November 2010, 11:38 Quote
Canada is rocking with great incentives for talent and a booming development industry.

Then there is the UK ...
StoneyMahoney 19th November 2010, 12:33 Quote
Interesting disconnect the current regime seems to have. Provide tax breaks for the film industry and big players like Time Warner open up shop and employ 600 people, generating all kinds of ancillary spending that's good for the economy. Yet the G-men can't connect providing similar tax breaks for a similar industry with a similar increase in jobs in the country. Aren't we supposed to be doing everything we can to stimulate the economy right now?

The inequality between game and film in the eyes of the government doesn't surprise me in the least. As much as they like to say "we're all in this together", many of the Conservative MPs who came to office from industry are happy to channel their business earnings through tax havens while hiking our taxes and dropping our credits. Slogan should be more like "You're all this together, we're lovin' it"

@battles_atlas: Nice idea. Except it's wide open to abuse. And would cost a fortune to run. And it would threaten the jobs of a whole load of lobbyists who would dedicate themselves to blowing it out of the water.
MaverickWill 19th November 2010, 13:34 Quote
I'm sure recent figures showed the gaming industry as more valuable to the UK economy than the film industry. It doesn't make sense to penalise the people doing more to get us out of the mess politicians made.
Flibblebot 19th November 2010, 14:53 Quote
Quote:
Originally Posted by Article
TIGA head Richard Wilson stated 'I don't belieeeeve it'
Fixed for you, Joe :D

Will, I saw something about that too - perhaps it was on this site when the games industry was lobbying before the election?

The difference between the games industry and the film industry is that it's obvious when a film is made in the UK. it's not so obvious when a game is produced here. In addition to this, there are also other more tangible benefits arising from successful British films, such as increased tourism, which wouldn't necessarily be attributable to games companies (I've never heard of people visiting Edinburgh just to go and see Rockstar or going to Guildford to see Criterion).

From the point of view of an MP, giving a tax break to the film industry looks good, because most people know that the UK makes good films; giving a tax break to the games industry wouldn't look as good, because very few people know that the UK even has a successful games industry - and if you're an MP, it's all about how the public perceive you.
Ljs 19th November 2010, 14:56 Quote
...It's also because they are clueless and outdated.
SMIFFYDUDE 19th November 2010, 23:31 Quote
I can remember when UK used to lead the world in game development.
SBS 20th November 2010, 11:34 Quote
Quote:
Originally Posted by MaverickWill
I'm sure recent figures showed the gaming industry as more valuable to the UK economy than the film industry.
This is predominantly down to tax income earned on games produced and often distributed by foreign companies, which is irrelevant in this case.
Quote:
Originally Posted by MaverickWill
It doesn't make sense to penalise the people doing more to get us out of the mess politicians made.
Not receiving tax breaks /= getting penalised.
Quote:
Originally Posted by Most everyone
[Why aren't the things we like getting tax breaks?] [Aren't MPs so hopelessly out of touch, I don't know why we make the massive effort to drag our arses down to the polling station once every five years.]
The ridiculous sense of entitlement displayed by the British when something they enjoy doesn't get love is profoundly irritating.

If this idea was worth implementing it wouldn't have been scrapped at a point where much of the work has been done. Evidently the decision made was that the income from any new enterprise this would encourage is unlikely to outweigh the income lost by allowing existing firms to drop out of the tax system.

Given the circumstances it seems both a reasonable and sensible decision.
Phil Rhodes 20th November 2010, 13:16 Quote
I work in, or at least on the periphery of, the film industry - only I don't, because we don't really have a film industry. For years, film funding has gone to the most appalling upper-middle-class Sloaney types to make unwatchable kitchen-sink bilge and as a result we don't really make anything anyone wants to watch anymore. One of the best decisions this government has made is the disbanding of the UK Film Council, which was the root of this old-boy's-act grapevine and dedicated itself with amazing despatch to ensuring this state of affairs continued - they really were, in fact for a while still are, the most galactically useless organisation.

Yes we make Harry Potter and James Bond but that's all American financed and the money goes straight back out of the country - which is a real head-desk considering they're both British-initiated franchises.

So you can't really fund the film industry because we don't have one. If you want to contend that what we do have is a "film industry" then there is very little point giving it tax breaks because it makes almost no money - in fact it probably makes less money than the arts funding given to it. There is no point subsidising a film industry that exists only in rhetorical political speeches.

The games industry on the other hand is well worth supporting.
MaverickWill 20th November 2010, 16:09 Quote
Quote:
Originally Posted by SBS
This is predominantly down to tax income earned on games produced and often distributed by foreign companies, which is irrelevant in this case.

There's some blokes here from Codemasters, Rockstar, Rare... they'd like a quiet word in your shell-like.
Quote:
Not receiving tax breaks /= getting penalised.

Being told the industry would receive tax breaks, just like a less profitable industry in this country, then having them taken away at the last second = getting penalised.
Quote:
The ridiculous sense of entitlement displayed by the British when something they enjoy doesn't get love is profoundly irritating.

If this idea was worth implementing it wouldn't have been scrapped at a point where much of the work has been done. Evidently the decision made was that the income from any new enterprise this would encourage is unlikely to outweigh the income lost by allowing existing firms to drop out of the tax system.

Given the circumstances it seems both a reasonable and sensible decision.

Oh yeah, because nobody's ever seen some other developed country where its voters can get p***ed off. Whoever heard of people mouthing off against the government in America because something they love didn't get its own way? /sarcasm

The UK is set to lose all its developers to other nations (Codemasters have said they're happy to up sticks to Canada), and we're going to stand idly by while the best of our talent goes off to pastures anew. Why shouldn't I be annoyed?
thehippoz 20th November 2010, 16:57 Quote
saw the new harrys potter and he gets his awkward groove on when the locket opens.. it was hard to watch

tax relief wouldn't be a bad idea if business is leaving the country.. see here it's more a state tax thing.. each state is different in how it taxes- then we swallow whatever washington does in federal

so when we have a fallout like that.. where business is leaving the state, people usually roid rage and impeach or elect a new governor to bring things back to reality.. imo politicians do not live in reality- more along the line of professional liars a lot of them.. there are some good people out there but they'll get pushed out of the race with no sponsorship from the puppetmasters

we finally had meg whitman (old ceo of ebay) who spent 160 million of her own money to campaign for governor and lost to a career politician here.. so hard to win and change things when the toolbags vote for anybody who 'hates rich people' and shafts everybody
pimlicosound 21st November 2010, 10:26 Quote
Surely the logical answer is that we should have lower taxes all round: for all industries, and for employees. So many studies have shown that lower taxes result in economic growth, meaning that even governments addicted to spending other people's money end up all right. And personally, I'd appreciate being allowed to take responsibility for spending my own money instead of being forced to hand it over to the state, which for some reason thinks it can spend it better than I can.
Valinor 21st November 2010, 20:56 Quote
Well, Aggregate Demand is linked to consumption (people going out any buying stuff), but is also linked to government expenditure (the government going out and buying stuff). Therefore, if you lower taxes to increase consumption you'll decrease government expenditure, meaning that Aggregate Demand and therefore Economic Growth will not change by much.

In fact, AD would go down as people would be more likely to save the extra money which they had got from lower taxes rather than spending it, meaning that AD would go down and so would Economic Growth.

(Finally, a "use" of the stuff which I learnt in Economics!)
Dreaming 22nd November 2010, 22:23 Quote
It really depends. If you tax high income people more, and the government spends it, you get a net boost in demand as it is likely many high income people would not have spent all their money - instead saved. If you tax low income people, who are likely to spend 100% of what they get in, then you are getting a net loss, because despite you are still spending the same amount of money, the government deciding what to spend it on is far less efficient than people deciding what they need.

Fundamentally, it's a complex question with no single answer for no single economy, because there are so many different factors involved. As for the games thing, I would say I disagree with the government based on the long term potential to lose good developers. We are in a new global economy of goods and services - and games is one of the things we can kinda do well. Not as good as America perhaps, but give it a little bit of a nudge, and British Games may become a standard of quality up there with British Aeronautical Research or something else we do well, lol.

Imagine one day where 1 in 2 people in the UK knew about programming, or games development, or something along the lines of creative media. Imagine what a hotbed the UK would be for international investment in the creative industries. And I am certain that the global trend will be an increase in how much creative works people want as economies like China, India and Brazil really start to turn into middle class credit-card-wielding consumers (a bit like us :D).

Problem is, governments are only in power for 4 years. Why pay money out that wont get anything back in votes / economic confidence / economic growth at the next election?
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