Debate: Are tax breaks worth fighting for?

Debate: Are tax breaks worth fighting for?

By Rob Crossley

January 4th 2011 at 10:30AM

Is Bobby Kotick right to blast the Govt's u-turn a 'terrible mistake'?

Tiga’s growling for it, Labour’s lost it, the Coalition cut it, but is tax relief important to UK developers? Here’s what the industry is saying...

YES

Jason Avent
Game Director, Black Rock Studio

"If we gained tax breaks for the UK games industry, we’d be able to compete on more of an even playing field with countries like France and Canada for the investment of large publishing and game development companies.

This will have the effect of directly and indirectly growing the games development industry here.

Directly, of course, there will simply be more jobs available in UK cities.  

Indirectly, high technology outsourcers and contractors will grow around the new studios.

New development companies will spring up as offshoots – benefiting from a confluence of development talent and external investment.

I don’t understand how anyone could argue that more money would harm a business.

Another good use of government funds would be to pay university tuition fees for science and engineering degree subjects. If we’re expanding the business here, we’ll need more high quality graduates."

NO

Nicholas Lovell
Non-executive-director, Ndreams

"Tax breaks distort markets. That much everyone agrees on. Those who support tax breaks for UK video games companies point, quite rightly, to the distorting effects of the Canadian tax breaks, encouraging companies to set up studios in Montreal, Vancouver and elsewhere.

The Canadian government is prepared to spend its taxpayers’ money to improve the profit margin of global multinationals to draw gaming talent into its regions. Should we follow suit?

I don’t believe so (although I deplore the uneven playing field in which British developers are forced to operate).
The games industry is in a state of flux. Look at the emergence of social and casual games,  digital distribution and streaming technologies – these are all massive changes to our way of doing business.

Tax credits move around at government speed when the games industry moves at internet speed.

Tax credits will encourage companies to build businesses and products that are aimed at the credit, not at the consumer market. They will drive a backwards view of the market, not a forward-looking one. They will stifle innovation and encourage companies to cling to outmoded business models, not innovate towards new ones."

YES, BUT

Nina Kristensen
Co-founder, Ninja Theory

"By and large I don’t really approve of tax breaks but, as with everything, there are always exceptions and annoyingly, I think the games industry has become one of them.

It’s not the UK industry’s fault or the Government’s fault that we are in this position. Other nations and regions are subsidising this lucrative industry in order to entice the big players to spend money there. And it’s working. And we are becoming less and less competitive.

If the industry is going to thrive in the UK, we need to be on a level playing field.

It’s counterintuitive to subsidise luxury entertainment when core services are being cut. It’s only when you start thinking longer term – about IP creation and technical innovation bringing investment into the UK leading to more revenue, job creation and so forth – that it starts to make sense."

MAYBE

Paul Farley,
Managing Director, Tag Games

"That the UK games industry is unfairly disadvantaged is not disputed. However I feel we are missing many other opportunities to level the playing field by lobbying purely on the tax break issue.

Government intervention in key industries is a fact of life. There is no such thing as an open market.

You only have to look at the effect of US military spending on technology to see the direct benefit to private technology companies in that country. Is it fair for competitive companies in smaller countries? Of course not, but that doesn’t mean tax breaks are the only solution.

In many ways I feel there are easier and more effective ways to support our industry.

We should not be creating incentives to encourage large traditional retail publishers to set up in the UK. Instead we should look to enable current and future indigenous talent to excel in the new digital markets.

Support could come through greater commissioning from traditional broadcasters (BBC, Channel 4), a new publicly-funded games publisher, matched investment funds similar to the seed and co-investment funds here in Scotland, rate and rent reductions, security for debt funding and many others, including of course tax incentives."