Chancellor George Osborne's Emergency Budget says Labour proposal to aid games was 'poorly targetted'
The new UK coalition Government has axed plans to implement tax breaks for games production, Chancellor George Osborne confirmed today.
As part of his Emergency Budget, Osborne said that subsidies for developers first proposed by the previous Labour government in April will not come into force.
He described the suggestion as 'poorly targeted' as part of a wide-ranging budget that outlined a number of cuts and tweaks to the economy designed to reduce the deficit and facilitate business growth.
And despite saying "I want a sign to go up above the British economy that says 'open for business'," he made it clear that this will not be made by selectively offering tax cuts to specific fields such as games.
Instead, he went for more wide-ranging cuts that would effect all businesses in the UK, such as a cut to corporations tax and a National Insurance cuts.
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He also raised VAT to 20 per cent.
Osborne also said that Ed Vaizey, the new minister for culture - who has actively courted the games industry and boldly claimed to Develop that the Conservative-LibDem government would support the trade - supports the move to not follow through with tax breaks for games developers.
The word comes, ironically, moments after Vaizey confirmed he will speak at the Develop conference next month - it will be interesting to hear him justify to the same industry he so willingly embraced why the decision has been made to drop subsidies.
Both UK games trade associations Tiga and ELSPA had lobbied Government for tax breaks on games production in line with those available in competing markets like Canada - and over the channel in France.
Although the budget suggests that its not a total loss what with the broader tax breaks is it time the games industry started singing:
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Our home and native land!
True patriot love in all thy sons command.
With glowing hearts we see thee rise,
The True North strong and free!
From far and wide,
O Canada, we stand on guard for thee.
God keep our land glorious and free!
O Canada, we stand on guard for thee.
O Canada, we stand on guard for thee.
???
Not surprising they stabbed us in the back. The biggest tax breaks go to the best-connected lobbies, the ones that make the biggest threats to move jobs overseas (and the biggest party donations). The UK games lobby is currently a 3 men-and-a-dog operation.
Compare the GM food industry, which is given huge government handouts to perform ill-understood large-scale experiments on the ecosystem. We could learn a thing or two from Monsanto.
This was always to be expected. At a time of massive public spending cuts and tax rises, the government was always going to struggle to justify this. At least they've cut corporation tax, changed the R&D and NI situations, and increased the personal allowance. It's not much, but it'll help.
Not entirely surprising, given the circumstances, but surely the 'spend money to make money' principle should come into play here if we're going to break out of recession. Two weeks ago, UK Film Council report on The Economic Impact of the UK Film Industry concluded that tax breaks for the film sector cost £110m per year, but yielded an extra £1.4bn per year GDP, meaning an extra £13 generated for every £1 invested. What would these figures look like for the games industry, I wonder?
I read somewhere, the gaming industry was a 44% more profitable industry vs the film sector, which factors in a 2.1bn pie (prior to any tax breaks)
There was a nice write up as well on the Beeb 3 days ago
http://www.bbc.co.uk/blogs/thereporters/rorycellanjones/2010/06/losing_the_game.html
