Corporation tax cut is fairer and more cost-effective, department says
The Treasury has told Develop it axed plans for game tax breaks because it wasn’t convinced the policy was fair in relation to other industries.
"The Government believes that lower rates for all, rather than attempting to pick winners through sector specific reliefs, will usually be the fairest and most cost-effective way to support economic growth and minimise distortions,” the department said.
The official line comes as Develop investigates why some game industry bodies actively opposed game tax breaks.
The Treasury points out that it has reduced corporation tax from 28 per cent to 24 per cent over the next four years – a wide-ranging measure that gives Britain a comparatively low rate compared to most leading economies.
Bobby Kotick – the CEO of the world’s largest third-party publisher – didn’t appear to have corporation tax rates on his mind when suggesting the UK is becoming too expensive to invest in.
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“For us to continue to invest in the UK there needs to be an incentive provided for us to do so,” he recently said.
“The talent pool in the UK is among the best in the world for what we do. But we really need to see some more incentives. We are seeing great incentives in Canada, Singapore and eastern bloc countries.”
Lol...oh well. Unfortunately, tax breaks don't help start up a games developing studio, they only help you once you get into profit (release a game).
This means all start up developers will have to start small, which will tend to mean their profits are also small (small title, small marketing, probably limited appeal), making it hard for them to expand.
It makes starting up a company to make games with a budget of £1m (bearing in mind the average budget is now £10m) almost impossible. This company would have to pitch to publishers with its limited funds, and compete to get signed against the bigger studios with bigger budgets, which is doubly hard being new.
Big studios create lots of jobs, but how do we get to big studios from tiny ones? I guess with alot of hard work, and a fair amount of luck.
But will those studios, having worked on small projects be able to cope with scaling up, both their staff, and their ideas?
The other payout for developers was being acquired, which mainly happens for IP, and that usually means a big budget again.
I just struggle to see the small independents being the future of the UK industry, and if they are, I worry we will have become developers for a niche market, while the big bucks and big projects will be made elsewhere.
Maybe the I-Phone apps community will save us...
