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UK Video Game Tax Relief Cancelled
Stoobalou writes "UK game developers have just been dealt a financial blow by Chancellor George Osborne in his first budget, which sees the coalition government scrapping the video game tax relief plans promised by Labour. In his speech today, Osborne simply said the 'planned tax relief for the video games industry will be cancelled.' According to the government's budget report, the cancellation of video game tax relief will save the government £40 million in the 2011-2012 financial year, and a further £50 million in each subsequent year."
Because obviously, computer games are unproductive and a waste of time and taxpayers money... try telling that to Blizzard, EA, Rockstar and many other companies with billion dollar + profits.
Actually, an indie game developer in the UK has said that this is not a huge deal (for him at least) because they lowered the business tax rate 1% instead, and this way he doesn't have to fill out any forms for his games business to get a boost.
This game will waste your life. Don't clicky!
I don't get a tax break. My company doesn't either. I thought it was only banks that got the bailouts.
The game industry in the form of TIGA were just trying it on. It played well for the right wing attack dogs as it made the Labour government look like they were anti games. Labour caved in to buy them off when none of their reasons never really stacked up. Now the lame right wing Conservative government has got in the bribe is no longer necessary so it's being chopped. The fat cats have avoided paying for their mistakes while the poor are facing an effective 10% cut in incomes over this parliament as a mimimum. When the real cost of the right wing economic illiteracy hits home TIGA may discover that playing games with peoples lives isn't quite as cost free as a round of Halo.
TIGA CEO Richard Wilson said: "I don't belieeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeve it!"
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
.. is that this is part of an "austerity" budget aimed at cutting £1.3bn of debt, including public sector pay freezes and an increase in VAT to 20% among other measures. In light of that losing £40-50M in "promised" tax cuts (promised by Labour party, recently out of power) for the gaming industry isn't exactly the worst problem the British are facing. Sounds like one of the more sensible cuts in fact.
The economy is bankrupting the UK. Fark puts it succinctly: "Facing a massive budget deficit, the UK to cut welfare, increase the VAT to 20 percent, and impose a new tax on anyone who brings one of those damn vuvuzelas back from the World Cup". Chancellor George Osborne is doing what all countries should do in that situation but are afraid to do, due to the unlikelihood of reelection. The country is damn near bankruptcy, the whole European continent is over-leveraged on debt and Britain is doing their best to make an example by balancing their budget. Tax handouts to the entertainment industry don't help balance the budget. Insert snarky comment about US legislators growing some balls and balancing our budget here...
Here's some more info on the subject:
moox. for a new generation.
They are cutting Corporation Tax, employer contributions to National Insurance and (if I read correctly) new start ups wont have to pay NI on the first ten employees they hire. So rather than provide a boost for that one industry, those breaks are helping out all industries, including the games industry. Makes sense to me.
I work in the games industry too, and I'm not at all bothered by this tax relief being cancelled. It wouldn't have helped the average developer one bit, all it'd have done is give the big cats who run the companies even more money.
The only argument that really holds any weight in this discussion is for the giant multinationals who might decide to relocate their UK studios elsewhere for tax breaks. Even if the big companies move, those people will probably still find jobs elsewhere anyway. If they stay, we're just giving UK government money to a foreign company. Seems a bit daft really.
Bad news for the video games industry but it's not a total disaster. They get to benefit from a drop in corporation tax, and if they are smart, they'll take advantage of the 50K tax break for setting up a business outside of the SE hot zone.
All anyone such as Rockstar needs to do is open a new software house in Bradford, adjacent to and working with Rockstar Leeds for example and they get a reasonable tax break.
So while they've been kicked in the teeth, there are still some workable benefits to be had from the new budget.
It has become appallingly obvious that our technology has exceeded our humanity. --Albert Einstein
Corporation tax is being dropped 1% every year from *25% (*current) down to 24% making it the lowest tax of its kind in the Western world.
Small businesses will also see a 1% drop in the rate of tax (between 300K-1.5M). Small businesses also have to start paying NI at a higher threshold, which means the first few employees are now much cheaper.
So, yes, this is a blow - but it might actually not hurt the small games industry at all and only hurt the big industry for a few years until we get down to that insane 24% corporation tax.
Exactly how is any of this relevant to the UK? No, contrary to what many seem to think the UK is NOT a vassal state of the US. The only thing the two got in common is a language (barely) and a lack of taste buds that allows you guys to eat processed cheese and boiled meat.
The current UK government is facing a debt crisis not dis-similar to the one in Greece but where that one was caused by typical garlic incompetence and blatant fraud, the UK one is caused because the country hasn't actually produced anything in years but still thinks it rules an Empire. US made might be rare but not as rare as UK made. Their economy is going down the drain and the basic message is "there is no money". 40 million might sound like not much but if you got nothing it about a gazillion times to much.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
That is up for debate. The initial reaction the global recession was to spend instead. Spending keeps businesses running, keep people earning wages and paying taxes and from that you can spend again.
Stop spending and business stops, people stop collecting wages and stop paying taxes and then you can't spend.
The UK is however not just facing the global recession but the fact that the UK has been slipping for decades. The recession has just made it clear just how rotten the UK economy is. It has/had a huge financial sector but suddenly after the banking crisis it has become clear just how much hot air that was. Meanwhile production has fallen to an all time low, the UK produces even less then the US, it is a consumer/service based economy and that economy is prone to bubbles.
The UK government might have no other choice but to cut spending but these cuts are only going to hurt the economy more and more. Consumer spending will drop like a rock as people save instead for the downpour that they now know is going to come. I predict fore-closures of small businesses will sky-rocket and medium business will soon follow.
Just ask any rich person. In time of prosperity, save. In times of recession, spend. Sadly, right wingers want to spend (on tax cuts) when time is good and then when times are bad they got nothing left to spend.
Just how is the economy going to recover if nobody has any money to spend?
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
The UK has a huge public debt (and growing) at the moment because of lack of fiscal probity in the last years of the previous government and because a lot taxpayer's money was used to "saved the banks" (the same banks that in the years before that payed billions in bonuses to traders).
The Chancellor (i.e. the Government Minister that takes care of Finances) has just announced a new budged where cuts are all over the place and Value Added Tax (i.e. Sales Tax) has gone up, all this to try and control the public debt.
Let's get some perspective - there have been cuts in spending in things like Education and Social Services: as a tax payer in the UK, no mater how much I like gaming, I don't care that a meaningless, non-strategic industry is not getting a hand-over of taxpayer's money anymore. (In fact, why should they be given taxpayer's money at all even in the good years?)
So this story is:
a) Not really news, since everybody is getting cuts
b) Really just saying that a wrong (giving my money to a special interest group) has been righted.
A list of some of the things the UK apparently hasn't produced in years, which is relevant to both the OP and your post: http://www.giantbomb.com/united-kingdom/95-492/list-of-video-games-made-in-uk/35-9288/
It should be noted that similar investment in games companies in Canada showed that every $1 invested in the industry by government got them a $13 return.
You have to spend money to make money.
Anon because I'm at work in a AAA games company. :p
But what if that cancellation got overruled? Then the headline would say:
Tax relief cancellation overruled.
tax. Oh no. ...relief. Oh yes. ...cancellation. Noooo. ...overruled. Yessss.
A list which doesn't include Pitbull Syndicate (makers of Test Drive 4,5,6,Overdrive and LA:Rush, among others) or Midway Newcastle (who bought them out, made Wheelman, then went bankrupt).
There are probably a few others missing too.
Hmm... it doesn't roll off the tongue very well...
"Action without philosophy is a lethal weapon; philosophy without action is worthless."
Ed Vaisey, now the Creative Industries Minister in the Department of Culture Media and Sport was a keynote speaker, and actually took time out of election campaining to be there.
The general gist of what he was saying was that should the Conservatives get elected, then he would be pressing for tax breaks for UK game developers (he also claimed the idea of tax breaks was partly his idea, but that Labour had taken the credit).
Also, at a Playing The Game panel session (http://www.gamesindustry.biz/articles/industry-support-is-number-one-priority-vaizey), he claimed
You are competing against countries that are giving active fiscal support to the videogames industry, and I think it's a given that you have to put something in place to, quite frankly, level the playing field - so it is my absolutely number one priority, should we win the general election."
O rly?
http://www.phasiclabs.com/
The British elected the Conservative Party to office, and they began by cutting expenses and raising taxes in a time in great need. How novel. Here in the United States, we gave the Republicans 8 years in control of the government, at least 5 of which were spent owning both houses of Congress as well as the Presidency---and we ended up with a big deficit. We even had a surplus to begin with! In fairness to Bush, he did try to reduce costs on Social Security, but on every other issue it was clear that the deficit was the last thing on his mind. Obama is no better, but at least no one expected better of him.
Entitlement programs and the military are the two largest costs to the federal government, and neither can be touched without erupting violently on whoever had the nerve to try to cut them down to size. And until they go, young people across the country will be robbed to pay for the retirements of those responsible for this deficit---a payment for which they will never receive compensation, as these entitlement programs will have collapsed by the time they grow old themselves.