UK video game tax relief cancelled

The UK government announced on Tuesday that a planned tax relief for the gaming industry will be cancelled.

A couple parts of the Digital Britain report was geared towards gamers. One was a small tax break for game developers in the UK similar to ones already in place in Canada and South Korea. The UK was the third largest developer of games, two years ago, now they rank fourth. The tax break was supposed to help keep talented developers in Britain. According to the Guardian, British game talent is "considered some of the most creative, best-trained and highly skilled in the world." The other item in the report said the government would back the Pan European Game Information (PEGI) system rather than the current system run by the British Board of Film Classification (BBFC) for game ratings.

Now the government has decided that the planned tax relief for the gaming industry will be cancelled. By removing the tax break for the developers the government will save "£40 million in the 2011-2012 financial year, and a further £50 million in each subsequent year," according to Thinq. TIGA, a trade association representing the UK gaming industry, condemned the decision saying, "the Coalition Government has broken pre-election pledges made by the Conservative Party and by the Liberal Democrats to support and introduce games tax relief."

The UK government did include a tax break for corporations which will benefit all businesses including development studios but TIGA CEO Richard Wilson says the corporation tax break "does not address the specific needs of the video games sector."

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24 Comments

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If the UK wants to save 40 million pounds a year why don't they just throw out the queen? Im sure she sucks out way more than 40 million a year from the hard working UK tax payer who actually has to work for money. Plus she was never elected, must be nice to just be born into royalty. She doesn't even do jack sh%t except give medals out. Then other members of the royal family go make them work for a living to like the rest of us. Could probably save another 40 million pounds a year. If the UK would of thrown out the royal family years ago could of had a nice nest egg of money saved up and wouldn't be in the bad situation the UK is now. It all adds up.

When people are getting pay freezes and increased tax why should the video games industry be given special treatement? An obvious cost saving meassure if you ask me.

Jedimark said,
When people are getting pay freezes and increased tax why should the video games industry be given special treatement? An obvious cost saving meassure if you ask me.

because giving them tax breaks stimulates growth in that industry and thus generates the jobs the country desperately needs, and if done properly that 50m would have been make from the taxation of the products that sell/etc

Midgetman said,
because giving them tax breaks stimulates growth in that industry and thus generates the jobs the country desperately needs, and if done properly that 50m would have been make from the taxation of the products that sell/etc

I know it would cost more money but it would be interesting to note whether the tax break has actually resulted in downstream increases in indirect tax takes, jobs and so forth. All very easy talking what it is meant to do, the big question has it actually delivered?

amon91 said,
And here we go again: the newly-elected government already breaking promises, what's new?

Exactly. Lib Dems promised NOT to increase VAT, and what happened yesterday - VAT is going up to 20% from 2011. IMO the Lib Dems have sold out so they can have a taste of power - something they should enjoy, as it'll be the one and only time they have it!

bbfc_uk said,

Exactly. Lib Dems promised NOT to increase VAT, and what happened yesterday - VAT is going up to 20% from 2011. IMO the Lib Dems have sold out so they can have a taste of power - something they should enjoy, as it'll be the one and only time they have it!

Have you been living under a rock lately? The government NEEDS to raise taxes. Look at the economic struggle the ENTIRE EU is in right now... They need every penny they can get from taxes. If they don't raise taxes, bad things happen and they get replaced by a different party. They raise taxes, life goes on, and they get replaced by a different party cause no one likes the higher taxes. Not much of a decision there.

bbfc_uk said,

Exactly. Lib Dems promised NOT to increase VAT, and what happened yesterday - VAT is going up to 20% from 2011. IMO the Lib Dems have sold out so they can have a taste of power - something they should enjoy, as it'll be the one and only time they have it!

That's simply not true. The Lib Dems said they didn't have any plans for a VAT rise should they get in power, and pointed out that the Tories were very likely to increase VAT if they got in power. They never said they weren't going to.

Remember, the Lib Dems are a MINORITY in the Goverment. They never said they wouldn't raise VAT, and a number of measures from Lib Dem policy have been implemented in the 2010 / 2011 Budget - namely the £1,000 raise in the tax threshold, giving the lowest paid workers more cash in their pockets and more insentive to work rather than live off the dole (a policy that is due to go further - up to £10k tax free - over the course of the parliment), a tax on banks, increase in Capital Gains Tax, increase in tax credits, regional growth funds, increase in tax credits for the poorest households whilst reducing them for the well-off...

And on top of all of this, you need to remember what the alternatives are... we overspend by £160 billion every year..! That's STRUCTUAL debt - nothing to do with banks and recessions. When Labour came into power the balance sheets had the UK deficit at ZERO. By 2007 it was over £100 billion.

What choice is there?!

Neb Okla said,
Taxation is theft.

Two simple rebuttals to this take widely different approaches.

The first is that property is theft. The notion behind property is that A declares something to be property, and threatens anybody who still wants to use it. Where does A get the right to forcibly stop others from using it? Arguments about "mixing of labor" with the resource as a basis for ownership boil down to "first-come-first-served". This criticism is even accepted by some libertarians, and is favorably viewed by David Friedman. This justifies property taxes or extraction taxes on land or extractable resources if you presume that the government is a holder in trust for natural resources. (However, most people who question the creation of property would agree that after the creation of property, a person is entitled to his earnings. Thus the second argument)

The second is that taxation is part of a social contract. Essentially, tax is payment in exchange for services from government. This kind of argument is suitable for defending almost any tax as part of a contract. Many libertarians accept social contract (for example, essentially all minarchists must to insist on a monopoly of government.) Of course they differ as to what should be IN the contract.

Neb Okla said,

If only it were so easy. If I don't respond to the tax man he will imprison me.

This is not initiation of force. It is enforcement of contract, in this case an explicit social contract. Many libertarians make a big deal of "men with guns" enforcing laws, yet try to overlook the fact that "men with guns" are the basis of enforcement of any complete social system. Even if libertarians reduced all law to "don't commit fraud or initiate force", they would still enforce with guns.

Conjor said,
Not surprised - definitely linked to all the financial issues in the EU right now...

Wouldn't that be one of the reasond not to cancell this?