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Cecil: Publishers did lobby against tax breaks

Fri 25 Jun 2010 4:21pm GMT / 12:21pm EDT / 9:21am PDT
PoliticsPublishing

Foreign-owned publishing companies allegedly concerned by cultural tests for tax relief

Revolution Software's Charles Cecil has told GamesIndustry.biz that foreign-owned publishing companies have lobbied against tax breaks for the UK industry, fuelling Chancellor George Osborne's decision to axe proposed relief for the games sector.

While TIGA, with the help of the games development community, has lobbied tirelessly for tax breaks for over two years, publishers outside of the country have been against such help, confusing the message to MPs and the Treasury, said Cecil.

"When I met a number of MPs back in March, I was advised that they were receiving mixed messages from certain quarters of the industry, that foreign-owned publisher(s) were lobbying against a tax break," offered Cecil.

"These publishers were, I was told, concerned by the implications of a cultural test (i.e. supporting games developed in the UK / featuring UK subject matter over those from abroad) that would accompany a tax break regime."

While Cecil stopped short of calling the lobbying 'sabotage', he said that such a move certainly fuelled the decision to scrap a scheme that would have introduced tax breaks in the UK.

"The word 'sabotage' is emotive - but there is no doubt that the effect of this lobbying gave ammunition to those in government who opposed the initiative and frustrated those MPs who supported it," he said.

Earlier today, TIGA's Richard Wilson told GamesIndustry.biz that he believed it was the Treasury, and not the hand of a publishing company, that put a stop to relief plans, while ELSPA's Michael Rawlinson suggested there should not be a witch hunt to out those opposed to tax breaks.

13 Comments

John Bye
Senior Game Designer

477 434 0.9
If that is why foreign publishers were lobbying against Games Tax Relief, it's absolutely ridiculous. Look at how many big budget Hollywood movies get filmed in Britain and receive tax breaks for it, encouraging billions of dollars of investment in our film industry.

Hell, apparently CAPTAIN AMERICA is getting UK tax breaks. That's funded by an American studio, stars American actors, is based on an American comic book character, and even has America in its title. If *that* can meet the cultural criteria for tax credits, what makes publishers think tax credits won't be available for a pretty wide range of foreign funded but British developed videogames?

I fail to see how tax breaks for games developed in Britain is in any way bad for publishers, as it just serves to drive down development costs and make the industry more competitive.

Edited 1 times. Last edit by John Bye on 25th June 2010 6:08pm

Posted:3 years ago

#1
I think, perhaps it was something to do with having to pass a cultural Britishness test . i.e how significant was product X developed in UK, promoting UK Britishness (to qualify for a UK game tax break), as opposed to any product developed in UK (which would be a fairer incentive)

Posted:3 years ago

#2

John Bye
Senior Game Designer

477 434 0.9
Games Tax Relief was modelled on the tax breaks for the film industry though, no? So if Captain America can be considered British enough to receive tax breaks, surely Fable or House of the Dead or Goldeneye could be? For example, in the film industry you only need 16 of 31 possible points to qualify for tax breaks, and you score 4 of those just for having your dialogue in English, plus another 8 if most of the key staff are based in the UK, and another 3 for sourcing your audio, music and visual effects in the UK. Assuming games industry criteria were similar, that would mean most British developed games would only need to pick up a couple of points from other areas to get over the barrier.

I'd be interested to see the exact criteria that were going to be applied to Games Tax Relief, but given that big industry bodies like TIGA and ELSPA were involved in lobbying for it and it was supposedly an extension of the existing film tax credits system, I imagine the criteria would be pretty lax to allow as many games as possible to be eligible for it.

Posted:3 years ago

#3

Arash Mohebbi
Designer and Professor

1 0 0.0
There is an immediate and obvious reason why big US/Canadian players would want this tax-break dead - and that is to maintain their stranglehold on the smaller indie players (who have made the UK games industry what it is today). They want to stop smaller companies opting out of going cap in hand to these bloated bastards, begging to crumbs of funding and promises of distribution. They want to curtail the Indie Dev's ability to self-fund, to negotiate distribution through Steam XBL or PSN without their taking a cut. Best comparison I can think of is the desperation the big labels would feel in the music industry if bands ALL decided to self-promote, surviving on gigs and merch rather than go to them looking for a record deal.

Posted:3 years ago

#4
This all sounds very conspiracy theory to me and is, I suspect, mostly unfounded. It doesn't make any economic sense for companies to lobby against tax breaks in any region, nor that companies that have no staff in a region can somehow wield political influence in that region (they'd have no bargaining chips). More likely is the government simply axed the scheme along with many others to save money in the emergency budget.

Posted:3 years ago

#5

John Bye
Senior Game Designer

477 434 0.9
Regardless of how much influence this had on the decision, the fact is that one or more major foreign publishers were campaigning against tax breaks when the rest of the games industry was pushing for them. As Charles Cecil says in the equivalent Develop story about this, "without a uniform voice, we were, I was told, highly unlikely to get a tax break".

The chancellor might have axed Games Tax Relief anyway, but the fact is that games companies WERE briefing against tax breaks, and that DID put a serious dent in efforts to get them introduced, which in itself is scandalous. And the fact that Osbourne specifically said in the budget that the tax credits (which his party had previously backed) were "poorly targeted" is certainly suggestive that this might have had some impact on the decision. After all, if finances are tight, why would the government support a measure that even the industry it's supposed to help can't unite on.

I for one would like to know who was briefing against tax breaks, and why.

Posted:3 years ago

#6
John bye makes a strong point there on the matter of principle involved

Posted:3 years ago

#7

Paul Sinnett
Programmer

7 7 1.0
John you're absolutely right. And I think the fact that this was done in secret and without the knowledge of either TIGA or ELSPA makes it that much worse.

Posted:3 years ago

#8
Tadhg said "More likely is the government simply axed the scheme along with many others to save money in the emergency budget."

I think this is spot on.

Posted:3 years ago

#9

Kingman Cheng
Illustrator and Animator

929 150 0.2
"After all, if finances are tight, why would the government support a measure that even the industry it's supposed to help can't unite on."

Well said John.

Posted:3 years ago

#10

Paul Sinnett
Programmer

7 7 1.0
It doesn't really make sense to cut this to save money. It was projected to generate money. The chancellor's claim of saving 190 million by making this cut is a pure error on his part. A question has already been asked in the house of commons over that.

Posted:3 years ago

#11

Darren Adams
Managing Director

188 332 1.8
Someone owes me a tenner :D

Posted:3 years ago

#12

Paul Sinnett
Programmer

7 7 1.0
Has anyone asked the ISFE? They previously opposed French state aid on the same grounds. And they have many big publishers and ELPSA as members.

Posted:3 years ago

#13

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