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Economist backs argument for UK tax breaks

By David Jenkins

Tue 17 Nov 2009 8:46am GMT / 3:46am EST / 12:46am PST

Nobel prize winner calls for government help "innovation hotspots"


TIGA is the trade association representing the UK’s games industry. The majority of our members are...

New York Times columnist and Nobel Prize winner Paul Krugman has spoken up in favour of tax breaks for the UK games industry, as campaigned for by trade association TIGA.

Writing in the latest issue of Esquire magazine, Krugman stated that: "Innovation hotspots that occur accidentally – as has happened in Dundee, where Abertay University’s unorthodox technology courses spawned a booming video games industry – can fizzle out if they are not incubated."

"By spotting the spill over elements that give rise to such sectors, and helping them with tax breaks and targeted funding, the British government could seed many industrial communities for relatively little outlay," he added.

TIGA has long campaigned for tax breaks in the UK, similar to those available in Canada and other countries. Most recently it was claimed that the UK industry could face a 5 per cent decline without appropriate government aid.

"The government needs to promote economic sectors with the potential to create highly skilled, well paid jobs, which have the capacity to support an export led economic revival. The UK video games sector fits this bill," said TGA CEO Richard Wilson.

"TIGA’s proposed Games Tax Relief is expected to create or save 3,550 graduate level jobs (or the vocational equivalent), increase or safeguard GBP 457 million in development expenditure and secure GBP 415 million in new and saved tax receipts over five years," he added.

"The outlay for the government is anticipated to be GBP 192 million over the same period. It is not necessary to have a Nobel Prize in economics to know that this policy makes sense,” he concluded.

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