Tiga, the UK developer's representative organisation, has offered its opinion on the UK government's pre-budget report, agreeing with steps to solve the immediate problem but warning of long term consequences of tax increases.
The group further commented that fully a third of games developers believe that the tax burden held their businesses back and said that the government's long term plan for the economy would worsen that burden.
"The Government's plan to guarantee bank lending of up to GBP 1 million to small businesses, to allow small companies to spread out their corporation tax, VAT and national insurance payments and to create a GBP 25 million fund to help businesses that are having difficulty accessing finance are all welcome proposals," commented Richard Wilson, CEO of Tiga.
"However, the Government’s intention merely to defer the increase in small business corporation tax from 21p to 22p to 2010/11 is disappointing. Small business corporation tax should not be increased."
"While the Government’s short term approach to the economic downturn – a fiscal stimulus – makes sense, its long term strategy is quite wrong," he added. "Increases in national insurance contributions add to the burden of taxation and deter employment growth because they increase the cost of employment."
"A recent Tiga survey showed that one third of games developers in the UK already believe that the burden of taxation is holding back their businesses. The UK's long term strategy should be foster a low tax economy in order to enable owners and managers to grow their businesses, invest in R&D and spend more on training."