OPINION: The most compelling case for game tax breaks

OPINION: The most compelling case for game tax breaks

By Tom Watson MP

January 26th 2011 at 10:49AM

Read MP Tom Watsonâ??s foreword in Tigaâ??s new Investing in the Future report

“Since the inception of home computer gaming in the 1980s, the UK has effectively built an impressive reputation for delivering quality, innovative and inimitable video game titles.

This had led to the development of a highly successful video games development sector that has revolutionised global interactive entertainment, which until recently had been consistently the third largest centre for video games development in the world.

The industry and talented people that drive it have forged successful businesses, careers and products with little Government support.

However, the evidence in TIGA’s new report reveals that between July of 2008 and September 2010 the UK’s studio headcount fell by 9 per cent.

During the same period the global industry’s software sales grew by 16 per cent. Whilst we prevaricate at home, other countries are surging forward, leaving the acclaimed British industry paralysed.

As TIGA’s report is published, the sector faces unprecedented pressures that affect its future competitiveness.

UK video games producers face competition from overseas, particularly from countries such as Canada, France, USA and South Korea, all of whose Governments offer favourable tax incentives, investment and support.

The case for Government support has never been more compelling.

The Labour Government brought forward proposals in the March 2010 Budget to legislate for a Games Tax Relief. The Coalition, despite promises from both partners before the election, pulled the plug. They urgently need to reconsider this decision.

The phenomenon the video games industry is suffering is reminiscent of the film industry’s problems in the early 1990s. The UK Film Tax Relief that was introduced has since led to increased investment, productivity and employment.

The Film Council estimates that without the Film Tax Relief there would have been 75 per cent less production in the UK.

The global video games industry will continue to grow; if the UK wants to remain as a serious player then it needs to have the competitive conditions that attract new investment, companies and highly skilled staff.

The solution is introducing Games Tax Relief.”

Tom Watson MP

Co-Chairman of the All Party Parliamentary Group on the Computer and Video Games Industry.