Broken British Tax Breaks For Games

By Alec Meer on April 16th, 2013 at 6:00 pm.

Did you know: Osborne keeps his long ago excised soul inside his red box

Urgh, this is no good. The announcement of tax breaks (as explained here) for the UK games industry, bruised and battered as it was by a torrent of studio closures in recent years, was an all too rare instance of George Osborne doing something to stimulate rather than malnourish the UK economy. And there was much rejoicing – until the European Commission decided it wanted to shoot the plans down.

The EU Commission claims that there “is no obvious market failure” in the UK games industry. Black Rock, Sony Liverpool/Psygnosis, BigBig, Monumental, Bright Light, Bizarre, Codemasters Guilford, THQ Warrington, Realtime Worlds and more beg to differ. As perhaps do EA-owned social games makers Playfish, which this week also faces redundancies and potentially even closure as a raft of its admittedly hateful Facebook games, including The Sims Social, are suddenly closed. Whatever we might think of the games these places made and of whose masts they chose to tether themselves too, if only they could have had the chance to try something else rather than face the axe.

While recent numbers do have it that the UK games industry is growing, two factors arguably affecting that are the assistance promised by tax breaks and that so many new, small studios were started by staff made redundant by some of the firms mentioned above. One thing we’re most certainly not over here is out of the woods. The idea of Europe ordering that tax breaks, so beneficial to small studios struggling to establish themselves, is not a pleasant one.

“The market for developing video games is dynamic and commercially promising,” said Joaquin Almunia, EU Commission VP. “It is not clear whether the taxpayer should be subsidising this activity. Such subsidies could even distort competition.” By the latter, he means that UK could wind up with an unfair advantage over other nations, and I suspect that’s the crux of the matter in the eyes of countries which don’t grant games companies the 25% tax relief due to be offered here. And, the commission fears, it could spark a “subsidy race between member states” competing for investment from big games firms.

From a governmental point of view, this isn’t about the effects on indies one way or another – it’s because every nation wants an Activision or EA setting up camp in their back yard, and all the expenditure and recruitment that would entail. And, indeed, anything that might keep the capricious, callous whims of bottom line-obsessed megacorps at bay in the event a game isn’t the big earner they’d hoped.

The commission wants to launch an investigation into the matter, and regardless of outcome one thing it will do is hold things up. Thanks, Europe. Theurope.

The basis for the commission’s dispute goes a little something like this. It’s unconvinced that:

Aid is necessary to stimulate the production of such video games.
Limiting expenditure for the tax relief to goods or services ‘used or consumed’ in the UK would not be discriminatory.
Offering this type of aid would not fuel a subsidy race between Member States.
The proposed cultural test ensures that the aid supports only games with cultural content without leading to undue distortions of competition.

Despite these concerns, it claims the fact this investigation has been announced will not “prejudice its outcome” and has offered “the UK and other interested parties the opportunity to comment.”

What next, then? UKIE, the association for UK interactive entertainment, are trying to gather evidence from the UK games industry to demonstrate how helpful tax relief really would be. Over on their Facebook page, they’re asking for devs to tell them about:

1) games that have been cancelled and that you believe would have happened if the tax credit had been in place
2) games you have made that had to be made “less British” in their look and feel, tone, or narrative in order to get a greenlight
3) What % of your work is currently work for hire and what % would you estimate it to be if the tax credit was in place?

If that’s relevant to you, get over there and throw your two pennies in.

You can read the full text of the European Commission’s announcement here.

, .

181 Comments »

  1. Hazzard65 says:

    Let’s solve problems just like this – once and for all. Leave the f***king EU. Anybody who wants to piggy back there racist, xenophobic bullshit on the back of such a scheme can jog on. This is about common sense and representation, not ignorance.

    • Ultra Superior says:

      Amen, EU is the scourge of state’s democracy.

      Unelected bureaucrats dictate policies and which bank would your tax money BAIL OUT –
      or worse, they’ll just steal from your personal account, Cyprus style, calling it ‘emergency tax’.

      Welcome to the DEBT union.
      The head of the European Commission was a communist – no kidding – that’s actually a fact.

      UK and Germany must leave asap otherwise this political zombie called EU is gonna eat more brains.

      • battles_atlas says:

        Hell yeah, we need to get out of Brussels so our elected leaders are free to take on the bankers! To hell with the EU protecting the banks from meaningful regulation!

        What alternate universe do you live in?

        • Ultra Superior says:

          In universe, where Cyprus banks are forced by the EU to lend money to Greece, and then people, who had money in those banks are taxed (their accounts frozen&money stolen) in order to bail out these banks.

          You don’t have to worry about these things, you probably don’t have money anyways so you’re good.

          • battles_atlas says:

            Please would you be so kind to point me to the reports that the EU forced Cyprus’ oversized private banks to buy up Greek debt? I’m not clear how that would work. I have no wish to defend the EU’s disgraceful bullying of Cyprus*, I’m just trying to filter fact from bullshit.

            * though if the same measure was applied evenly, and forced on all savers in Europe with over £100k in the bank, the crisis would be over, the rich would still be rich, and the rest of us could not have to spend the next decade under zero-growth austerity.

          • Ultra Superior says:

            You would seriously prefer taxing everyone (rich by your standards) to heal the debts of reckless borrowers and lenders on cocaine?

            Then you should be happy, because that’s exactly what’s happening. Money is cheap and central banks are printing day and night, devaluing all (rich people’s fat accounts) money.

            See, the problem is, cheap & excess money no longer effectively stimulate the economy. They’re just symptomatic to markets losing their faith in paper.

            What would help the economy is the opposite – increase the value of money, and keep them in people’s pockets. But that would be painful for certain…. banks, borrowers and lenders.

          • frightlever says:

            @battles_atlas 100k in the bank is more likely to be middle-class or a sole trader. Savers are already seeing what they have eroded by inflation. The actual rich don’t keep significant amounts of money in a bank earning peanuts.

          • CMaster says:

            Pretty sure that €100k in savings places someone comfortably in the top 1% wealthiest.

            In total assets, perhaps less so.

            Edit: Quick read around suggests probably not. Wealthiest 10% more likely.

          • battles_atlas says:

            Sure, make it £500k in the bank then (and an simultaneous investigative regime to track down hidden funds). Either though is fairer than what we have, ‘austerity’, which entails charging exactly those that didn’t benefit from the bubble for its implosion.

          • mickygor says:

            How about we don’t steal people’s life savings?

          • kaishilaidan says:

            That’s a sound idea in principle, but – and correct me if I’m wrong – doesn’t this whole business with the banks fly in the face of that?
            http://www.youtube.com/watch?v=BeNUaYl63jA

          • RaiderJoe says:

            I find it astounding that we’re talking about how much money is enough to steal it straight out of people’s bank accounts with no due warning to give to people who already demonstrated they don’t know how to take care of what they have, rather than condemning the atrocity of stealing (and that’s what this is, government-sanctioned) ANYONE’S money, rich or poor.

            Class warfare, that’s all this is.

        • analydilatedcorporatestyle says:

          Just imagine what the current lot of Etonians would be upto if they didn’t have to answer to europe. No free NHS, gated communities, private security forces, two tier education system, no minimum wage, private redundancy insurance then food stamps……………….. Well actually I think they are shooting for these goals, the EU just apply the brakes a bit!

          Thank fuck for the EU and the European Court of Human Rights!(that Cameron wants to opt out of)

          • Ovno says:

            @ Just imagine what the current lot of Etonians would be upto if they didn’t have to answer to europe.

            - No free NHS – The NHS has got bugger all to do with Europe its an English institution not a European one, plus one of the major pledges is that the NHS will not be touched…

            - gated communities – Like Germany already has, so no EU effect there.

            - private security forces – not heard about this one so no comment

            - two tier education system – Like the academy system brought in by previous lot? Also no eu effect on this one either…

            - no minimum wage – Minimum wage brought in by the last lot, not EU

            - private redundancy insurance then food stamps – Again no comment due to lack of info

            I understand you either A) dislike the current lot or B) dislike all of them regardless, but either way do try and come up with better arguments for why the EU may or may not be a good thing for our country…

          • harmlos says:

            @Ovno

            Gated communities in Germany ? Where ?

      • Claidheamh says:

        Durão Barroso, communist? AHAHAH, you’re a funny guy! You also need to learn what the word fact means.

        • Premium User Badge

          RedViv says:

          In a world where the UKIP are a sensible middle, he probably is. Or one where you are always what you were decades ago, which would make so many protesters flag-waving crying babies. And surely they are not that.

        • Ultra Superior says:

          I feel that European Commission (not just Barroso) is in many ways dangerously similar to Soviet Union’s Politburo.

        • Imperii says:

          So, just to clarify as Ultra Superiror suggested, Barroso was a communist. Almost 40 years ago, whilst he was a student, but he was still a communist:

          http://www.cafebabel.co.uk/article/2798/when-barroso-was-a-communist.html

          So technically that was a fact….

      • Lanfranc says:

        Ultra Superior: ” The head of the European Commission is a communist – no kidding – that’s actually a fact.”

        Oh hai! Welcome! It’s so nice to see someone visiting from Bizarro World! How long are you planning on staying? ^_^

        Just a little hint to make your stay easier: Here in Normal World, we prefer to limit the use of the word “fact” to things that are actually factually true. In this case, for instance, yes, Barroso was a member of a communist resistance movement, you know, back when Portugal was a dictatorship and everything was really muddy and complicated. But then he became a member of the Conservative party and has been for over 30 years now. So there’s that.

        • Ultra Superior says:

          Oh Hai ! How was your vacation in Bizzaro?

          It must’ve been long if you call a Social Democratic party “Conservative”.

          Once a communist means being – for a fact – a communist. Of course people change.

          He’s not a communist any longer, he’s socialist now.

          • Sheng-ji says:

            I went to a jumble sale this weekend organised by my local mosque, must make me factually a Muslim by your definition.

          • sinister agent says:

            Once an embryo, always an embryo.

          • Eddy9000 says:

            Good, I think the EU could be a little more socialist honestly, it might stop the British government using public service budgets to pay for tax cuts for millionaires.

          • Ultra Superior says:

            @Sheng-ji I’m trying to see your logic but… I just can’t.

            Barroso didn’t just go buy stuff at a maoist organised event, did he?

            Well, if you were a devout muslim at some point in your life, then you could of course, change your religion later. But, I’d speculate that you wouldn’t probably become a chief Rabbi in Israel after that…

          • Claidheamh says:

            Whoever opposed the regime during the dictatorship was called a communist, so yes, Sheng-Ji’s analogy is very apt.

            And indeed, it’s called Social Democratic Party, but names don’t mean much in politics, as people from the Democratic People’s Republic of Korea can tell you. Not even the Socialist Party (you know, the left to the current Social Democratic government’s right) are actually socialists.

            You’re great at spewing nonsense as fact. Have you heard of homeopathy? You could probably make some money on it.

          • Sheng-ji says:

            He associated with the people trying to overthrow the dictatorship. Yes if he had joined the party in a less turbulant time, you may have a point but as he distanced himself from them after the Carnation Revolution, I think all we can honestly say about his association with them is that he was anti-dictatorship.

            Just like I am pro-bargain.

          • Lanfranc says:

            “It must’ve been long if you call a Social Democratic party “Conservative”. “

            It’s called the “Social Democratic Party”. But belongs to a conservative/Christian democratic right-of-centre ideology.

            “He’s not a communist any longer, he’s socialist now.”

            Do you think the EPP members (which the Tory MEPs were a part of at the time) knew that when they approved him for Commission President back in 2004?

            I mean, come on. I’m not a Barroso fan by any means, but could we at least agree that a person who has been a member of a conservative party for three decades, was prime minister in a conservative government, and was backed by the conservtive group in the EP for COM President probably is more or less a conservative himself?

          • Ultra Superior says:

            Sorry, but I can’t. A person who proposes ESM, drowns Europe in debt and imposes rules that override laws of national democracies simply isn’t a CONSERVATIVE, even if he called himself that.

            I have yet to see a Social Democratic Party that’s to the right. “Conservative” parties acting like they’re left wing, that is a much more frequent sight.

          • CMaster says:

            Commission doesn’t impose laws.

            That’s the Council of Ministers – representatives from the government of each member state.

          • mickygor says:

            I mourn the right wing if the federalisation of Europe is to be considered a conservative policy.

        • Ultra Superior says:

          @Sheng-ji

          Pro-bargain non-muslim.

          Anti-dictatorship communist.

          Settled?

          • Sheng-ji says:

            What evidence do you actually have then? What has he actually done that makes him, in your eyes, a communist since the end of the revolution?

            Surely, as the important figure he is, you will easily find plenty of pro communist actions he has taken.

            If you can’t back up your accusations with evidence, you are once again shouting false, ignorant statements designed to convince the herd that your anti-europe agenda has any merit. Which would fit with the “daily mail-esq” pattern of not only your posts but every other person who pushes for Britain to distance itself financially and politically from our neighbours.

          • Ultra Superior says:

            I am pro-Europe. I’m very pro free trade and for a voluntary collaboration between nations. My issues with European Union are that EC’s directives & agendas override national sovereignty. EU is doing the same mistakes president Obama’s doing – saving the few at the expense of many.

            However, the ‘accusation’ is not accusation at all, it is a piquant factoid from Barroso’s CV.

            You might admire him for whatever reasons, I don’t like his call for more centralization of power and more sacrifices of national sovereignty. (Just listen to his 2012 state of the union speech, it’s like listening to Senator Palpatino only with more emphasis on democracy, as it’s often the case with people who perceive democracy as an obstacle for greater good).

          • Sheng-ji says:

            So no evidence then…..

            I don’t admire him or dislike him. I am entirely neutral to him, his existance and the role he performs in European politics.

            I just found it hilarious that you believe he is a Communist – let me ask, did you research beyond the first paragraph of his wikipedia page or did you see the C word and leap to conclusions?

            Also, and this is important. You do know Star Wars is fiction right? Senator Palpatine is a fictional character and his speech was written by the same team that came up with “Oh, no! Ay-yee-yee! Wha! Was’n dat. Hey, wait! Oh, mooie-mooie! I love you! I spake. No, no. Mesa stay. Mesa culled Jar Jar Binks. Mesa your humble servant.” So let’s not leap assume that a real dark lord of the sith – and again I must point out the fiction – would make that very speech.

            I think you have now lost all credibility.

          • Ultra Superior says:

            I don’t understand you. The evidence is pretty clear…. his own admission?

            His proposals for European Union stink of Soviet Union. More power to EC, less sovereignty for member states. Central planning. Nothing hilarious about similarities with communism.

            EDIT to your SW edit:

            Palpatine called for more power to himself in the galactic senate. Barroso called for more power to himself in the European Parliament. Yes, SW is a work of fiction that depicts the loss of galactic freedom if you will. :) That’s why I risked all of my credibility in using that work as an analogy.

          • Sheng-ji says:

            http://web.archive.org/web/20090521074402/http://ec.europa.eu/commission_barroso/president/pdf/cv_2009_president_en.pdf

            The word communist does not appear on this document, his 2009 CV so try again.

            Nice edit, but you did previously claim he wrote that on his CV.

            Now your assertion that his policies “stink of the soviet union” perhaps you could eloborate rather than throwing out yet another meaningless sound byte – name one policy of his which draws parallels with the communist policies of the USSR.

            And just to point out:

            “More power to EC, less sovereignty for member states. Central planning. ”

            “More power to the White House, no sovereignty for member states. Central Planning” Is the USA a communist country too?

          • Ultra Superior says:

            Enjoy

            EDIT: You’ve asked, is the USA a communist country too?

            - No, but it’s slowly becoming a totalitarian one. Instead of one communist party, we have two parties, so the illusion of choice is better. The agencies like TSA, DHS and the all powerful military industrial complex & banking cartels don’t care which donkelephant is holding the reigns.

            I’d welcome more power to states, less power to Feds.

          • Kaira- says:

            That video just gave me serious case of stupid. With proper wording you could as well compare UK (or Germany or whatever) to USSR. Hell, “self-appointed” might as well go to any parlamentary in a democratic country, since ministers are usually chosen by parties, not people.

            Criticism is a good thing, but criticism founded on fear-mongering and false associations is just bullshit.

          • Sheng-ji says:

            Oh right, because someone made a propaganda video, of Nigel Farage shouting at people it must be true!

            Sigh.

            I saw a video once that claimed to the Teaparty Conservatives deliberately engineered 9-11 and every subsequent terrorist act in order to give themselves more power. Didn’t make it true though.

            Let just examine it’s first claim, shall we:

            The soviet Union was governed by 15 unelected people who appointed each other and were not accountable to anyone.

            The European Union is governed by 24 people who appoint each other, meet in secret and whom we cannot sack.

            Let’s get the outlier out of the way – the meeting in secret – this is quite untrue. Their itineraries are available for ANYONE to see, just phone their PR line and ask. No, they don’t take out advertising in the local papers but it is certainly not a secret.

            Next: They appoint each other. Actually, the 27 representatives, one from each member country is appointed by the elected party. That’s right, when you voted or whoever you voted for at the last elections, you were voting for our representative. It’s David Cameron at the moment.

            Whom we cannot sack: Well, you can sack them by either not electing them next time or forcing their resignation through a vote of no confidence.

            So thanks for the propaganda packed with lies, it proves nothing except that your credibility is still down the toilet.

            EDIT: Holy crap, I just saw that you wrote that the Conservatives and Liberals in America are both Communist parties….. The mind literally boggles. I can’t speak to you any more, I have a cruel streak when it comes to talking to people like you on the internet and I am determined be nicer.

          • Ultra Superior says:

            You’ve conveniently avoided the issue of three NOs in referendums. You’ve avoided the issue of EU creating its own propaganda organ – and just for your information, yes, the soviet leaders were “elected” as well, with 100% consent of the populace. Don’t defend blindly the institution that’s proud of it’s ambition to curb democracy.

            - to your edit: I’m equally mind boggled by you coming to conclusion that I call Liberals and Conservatives communists. I said clearly that my concern in US politics is totalitarianism, not communism. I don’t see much distinction between the two parties when it comes to
            - orwellian homeland security
            - debt
            - spending on pointless wars
            - meddling with personal freedoms

            They differ on cosmetic social issues and taxes.

          • Bremze says:

            As someone living in a post-soviet state, let me tell you that anyone evoking USSR as an argument against social policies is a drooling moron. The USSR was a despotical regime infinitely closer to feudalism than to actual communism. And the “voting” was a huge farce, as voting for anything other than the communist party was a great way to earn a one way trip to a gulag camp for you and your familiy.

            I know you’re already indoctorinated by a grab bag of conspiracy theories, but at least try to *look* like you know what you’re talking about

      • captain nemo says:

        Agreed. The UK should leave the EU, a undemocratic gravy-train for scumbags (to put it politely).

        • Sheng-ji says:

          Is anyone who isn’t English a scumbag or is it just Europeans? Maybe it’s just Europeans with darker skin than yourself?

          • Hazzard65 says:

            That is a strawman argument.

          • Sheng-ji says:

            I was asking, not arguing, notice the question marks. Is there such a thing as a strawman question?

      • Premium User Badge

        Crimsoneer says:

        The EU made the right call on this, like any sensible free market economist will tell you, and it’s exactly why the EU is a good thing.

        Sure, let’s start giving a tax break to the games industry. Then France can compete with us to do the same, then Germany and Italy. Then maybe we can do the same thing for a bunch of other industries. See how that leaves us.

        It’s not the governments job to go around picking winners and giving them preferential treatment. It leads to a lot of competition where nobody wins.

        • Hazzard65 says:

          It’s a good call for Europe, not for Britain. We have a strong games industry and if Brown’s intention to transform us into an online economy is to succeed (whether or not it will or it is realistic is another matter) then things like this can help.

          None of that is the point however, because it should be our say… not theirs.

          • Sheng-ji says:

            Yes, let’s break our promise – or try to exploit a loophole, but expect every other member to keep their right? I bet you would be the first to jump up and down raging if, say France, broke their promise to not act in an anti-competitive way in the industry you are employed in and your job prospects suffered – but hey, despite promising not to do that, it’s Frances calls, right?

          • Ovno says:

            France has done this already with its farmers, spain does it with the smoking ban everywhere else in the EU ignore the rules, we’re just foolish/honourable enough to go along with stupid rules from Brussels…

          • Sheng-ji says:

            http://www.bbc.co.uk/news/world-europe-12104056

            Your information regarding Spain does appear to be incorrect.

            With regards to the French farmers, I’ll be the first to agree that the CAP is unfair – I grew up in an agricultural region on a working farm. However I fail to see how Frances special conditions breach the agreement. Mostly because they have been agreed upon by all members and partially because all other members got concessions of their own in return, especially Germany whose farmers were the most disadvantaged by this.

    • battles_atlas says:

      Eh? Who’s racist or xenophobic in the article above?

      • Sheng-ji says:

        I don’t at all agree with him but I certainly don’t believe that merely wanting to leave the EU makes him racist or a xenophobe.

        EDIT: I misread what you wrote, sorry battle_atlas

        • Lanfranc says:

          But all else being equal, it certainly makes it more likely.

          • Sheng-ji says:

            Sure, but it’s not cool to accuse someone of being racist publicly just because it is quite likely that they are.

            EDIT – which he didn’t do, sorry battle_atlas

        • Mr. Mister says:

          You got it wrong: 65 said “let’s leave these xenophobic dEUdes”, to which Atlas responded “Uh? What’s your source on that xenophobia of them? Becasue it’s not on the article above it seems”.

          Also, I don’t see the xenophobia anywhere either.

          • Sheng-ji says:

            I read battle_atlas’ comment “Eh? Who’s racist or xenophobic in the article above?”

            as saying “Huh, You accuse European Bureaucrats of being racist but you sir are the one being racist and xenophobic because you want to leave the EU”

            Maybe I misinterpreted but I can’t quite see any other way of reading it yet.

            Both Hazzard and Battle called someone xenophobic, I, like you I suspect was pointing out that there was no xenophobia here. Nor racism.

            EDIT, no, you’re quite correct, I’m being a dumbass – sorry battle_atlas!

          • battles_atlas says:

            Multiple apologies accepted :)

            Still don’t understand what the guy was saying…

      • sinister agent says:

        I don’t think the article was in question there. My interpretation is that there is very often (NOT always) a xenophobic tone when people insist that Britain should leave the EU. So much so that if you think Britain should leave the EU, you probably do have to take that into account and take care to distinguish your reasoning from it.

        A bit like how you might have rational and un-racist reasons for having a problem with a country’s government, but as there are so many people who just badmouth that same government simply because they’re foreign, you might have to make your reasoning even more clear to dissociate yourself from it all.

      • Hazzard65 says:

        I wasn’t saying the article or it’s author was racist, rather I was preempting any racists idiots that might want to run with it for some anti-immigration rant or something.

    • sinister agent says:

      “Common sense” is an utterly meaningless phrase. Cutting itself out of the EU just to wave our idiotic patriotism flag around would fuck the country over far more than staying in it. We’d be shut out of the European market, companies with manufacturing sites here would relocate to the continent, and we’d become a lot less useful to the US, who are a major reason we still have such a high diplomatic profile. We’d have to renegotiate trade deals with most of the world, who’d have far less interest in us than they would with Europe, and they’d know how badly we needed them too, so the deals would not be the best for us). We’d become even more dependent on the financial sector (the main reason our economy is so fucked to begin with), and even more vulnerable to the inevitable burst bubbles that our PUT IT ALL ON BLACK system runs on.

      The benefits? About £8 billion per year that we spend on subsidies (about a third of which we get back immediately in farming, before even considering what the remaining 5 billion buys us), which sounds amazing, but is in fact barely 2% of our government expenditure. The other benefit is that employers would be able to ditch legislation that protects workers’ rights, and suddenly the reason the coalition government is interested in leaving the EU becomes clear. Help our rich friends screw over their workers even more? Don’t mind if we do!

      WOO YEAH BRITAIN WOO. Screw that. The EU has problems and is sometimes a pain in the arse, but it’s 2013, not 1813. We can throw our lot in with Europe, become even more chained to the US, or make some idiotic show of independence and watch ourselves fade into irrelevance.

      • PatrickSwayze says:

        So you’re okay with slavery to Brussels?

        Cool.

        • sinister agent says:

          It must be so much easier to live in your world. I don’t like olives, therefore olives ARE SATAN. Not-olives are therefore not-satan! I shall eat not-olives tonight!

          I envy you, I honestly do.

          • PatrickSwayze says:

            And I too wish I could be a blind slave to it all as you are, at times

          • Kaira- says:

            … blind slave? Where did I drop into, and where is my tinfoil-hat? Are those reptilians over there?

          • Droopy The Dog says:

            No, those are martians. The reptillians are- behind you!

            …Also inside you, because probing. Shouldn’t have lost your tinfoil hat.

        • CMaster says:

          Out of curiosity, who is it you think decides on EU law?

          • ulix says:

            Since the (evil!) Lisbon Treaty it’s the democratically elected European Parliament. Or at least since then they can veto everything the Comission puts in front of them.
            Before that it was only the indirectly-elected Commission.

            Is David Cameron an undemocratically elected leader?
            If you say “yes” (and you don’t say “yes” on the basis of a criticism of first-past-the-post voting), then basically every head of state (except in presidential democracies, which we don’t have many of in Europe) is elected undemocratically.
            If you say “no”, then the EU Commissioners aren’t undemocratically elected, or unelected, or whatever you want to call it, either.

          • Lanfranc says:

            It’s a little bit more complicated than that. The Commission has the right to propose new legislation, which must be agreed to by both the Council of the EU (not to be confused with the European Council) and the European Parliament. The Commission can also legislate independently on certain areas where the treaties give it the authority, such as regarding implementation of laws.

          • CMaster says:

            The primary legislative division of the EU is the council of ministers.
            This is composed of ministers from each of the EU governments.
            The exact system used to reach agreement varies, but most issues need either unaminity or the backing of all major EU states (ie including the UK)

            On some (increasing number) of issues, parliament also gets to vote yea or nay on a law.

            However the primary decision making and law making body of the EU is the national governments themselves, not “Brussels Bureaucrats” as you seem to be making out. Every EU law that a british minister whinges about, they (or their predecessor) was involved in passing in the first place.

          • harmlos says:

            To add to what CMaster said: it seems to me that the EU council of ministers is used by national governments to pass unpopular laws that they know full well they could never get away with domestically, but want anyway, so they pass them via the EU, and can then shrug and say “but Brussels forced us !” when the truth is that they could have just vetoed the proposal if they really didn’t want it. As an example, see the data retention laws. The EU would be much better off if we transferred all the real power away from the national governments to the EU parliament, which seems to be much more concerned about the issues of its constituents (probably because the lobbyist figure that without any real power, there is not much point in bribing MEPs).

      • Ultra Superior says:

        Wow, you’ve got it so wrong, it’s almost amazing. Why would you be “cut from european markets” ? Why would employers turn against their employees? EU is not European markets, EU is not a labor union.

        EU is a fancy name for taking away state’s sovereignty. Not good for anyone, except those, who benefit from EU’s redistribution of wealth.

        • battles_atlas says:

          I’m confused. Weren’t you just getting pissed off that the EU (ie Germany) isn’t redistributing its wealth to Cyprus to save its status as a tax haven?

          • Ultra Superior says:

            No. The opposite. You have to understand, there’s nothing like EU’s money. EU’s money = your debt, your future taxes.

            Cyprus example – a clear violation of private property, otherwise known as THEFT (forcibly taking someone else’s money deposited in bank) just shows the creeping totalitarianism of EU.

            Oh don’t worry, you’re safe. It’s just those filthy tax haven tax evaders.
            For now.

          • battles_atlas says:

            Oh I agreed about the debt. That’s why we should all default tomorrow. The problem with the world economy is far too much of the wealth is concentrated in the hands of a few, and all the money that should be flowing around the system, creating jobs and value and whatnot, is sitting in tax havens doing nothing. I don’t see how the proposed solution – impoverishing ourselves to give money to the “debtors” (ie those with all the offshore money already) – is going solve anything. Quite the opposite.

            This to me is not an argument about tearing up the EU. In fact being in the EU gives some ability to actually implement such a measure – if any one country defaults, the markets would destroy it. If the Western world defaults (ok I’m shoving in US with EU there) what are the money men going to do about it? Nothing. Crisis adverted. And they’ll still be rich, its just western democracies wont look like North Korea.

          • Premium User Badge

            DeVadder says:

            ‘Cyprus example – a clear violation of private property, otherwise known as THEFT (forcibly taking someone else’s money deposited in bank) just shows the creeping totalitarianism of EU. ‘

            No. The EU does not say: ‘Hey, give us your money in the bank!’ The EU says: ‘Hey, so you are bankrupt? Okay, we might help you out. But if you want all these billions and billions of tax money from our member states, than you will have to give something as well. What about that money in the bank there?’
            That is absolutely no theft. Cyprus elected leaders and through them the cyprian people could say ‘No!’. They just would have to live with the consequence of not recieving the insane amount of money from the EU and their banks would go bankrupt. Costing the people who have their money there a whole lot more. And not just the richest few percent but all of them.
            If you want to flame against the EU here and use some weak analogies, at least call it blackmail not theft.
            Allthough only very few criminal blackmails go by: ‘Give me some money or i will not give you a few hundred times more money!’

          • Ultra Superior says:

            So you wouldn’t mind if someone came to your flat, took your stuff and said it’s ok, because he’ll lend money to the landlord.

            This problem has been created by the banksters – they should be held responsible, not saved by the depositors and bailed out by loan imposed on Cypriot taxpayers. See Iceland for reference.

          • Premium User Badge

            DeVadder says:

            To keep with that analogy: I have a very fancy appartment and the guy coming by would not take my furniture but just a painting from the wall or a vase. And if he would not lend my landlord (the bank) money, than me and everybody in the landlords appartments would instead sleep on the streets (loose their money as the bank is bankrupt and the country collapses). Yes, i would be okay with that.
            Just to be clear we are talking of loans at interest rates far far lower than my landlord would normally get, so it is a sort of donation to him.
            Of course, however, i would want my landlord to be punished and i would want my next landlord to be controlled more tightly, so that this does not happen again.
            But neither solves the immediate problem of everybody loosing their appartments tonight!
            So yes, if the council of appartment owners (the government) decides to accept the offer of taking some paintings of the walls of the most fancy appartments to keep everyone from sleeping on the streets, i would not object. I would not be happy either, but i would blame the landlord and the council for letting him taking such a sloppy care of his money and not the guy asking for some contribution if he is to burn billions of money on saving my and everyones appartment.

          • mickygor says:

            You’re welcome to lend/gift the state your money, DeVadder. I’d sooner see the state go to shit than see them dip into my savings account willy nilly. Doesn’t matter if it was the EU or Cyprus, it’s still theft. Not to mention, the Cypriot parliament did say no but was made to review the policy until they said yes.

          • Lanfranc says:

            So would it be better if we just let the banks go broke? Then everybody’s money would be lost regardless, since the money in your account is something you lend to the bank. (Except, of course, that private accounts up to €100,000 are insured due to EU legislation. So there’s that.)

        • sinister agent says:

          Tax. If Britain were no longer an EU member, its exports would be taxed at non-member rates. Leaving the EU would not mean everyone agrees to let us be special wonderful Britain with special treatment and none of the restrictions of EU membership. We’d be out on our ear, and they’d treat us no better than any other arsehole who comes to them wanting special treatment just because they really really want it. Probably worse.

          If you really think that the EU exists only to redistribute wealth, you’re basically saying that you think the politicians in just about every wealthy European country care more about giving their wealth away to those in need than they do about their own economic wellbeing. Think about that for a minute.

          • CMaster says:

            I think that’s unlikely Sinister.
            Just as the EU is a major trading partner for Britain, the opposite also applies. The UK is one of the richest and most populus nations in the EU. Would the UK outside of the EU enjoy all the benefits of the Single Market as experienced as a full EU member? Unlikely. Would the EU want to not have various trading agreements to make doing business in the UK easy – seems improbable.

          • sinister agent says:

            True, there’d probably be a good push for some kind of alternative deal, like what Switzerland has (although they’re doing their best to change that with Switzerland, as I understand it). It would still likely be a downgrade at best, though.

            I suppose we might also try to “be” Norway, but I doubt that would work if we were on the way out rather than on the way in.

          • Ultra Superior says:

            UK and Germany could afford this, after their leave, the EU would finally dissolve. – Trade agreements would emerge, because states need to trade with each other, besides there is EFTA etc.

            EDIT: For UK and Germany it would be an upgrade.

          • sinister agent says:

            I’d rate Germany’s chances as a lot higher, and to be honest am a little surprised to see you mention them in the same context. Although their political entanglements might be even more complicated than ours – I don’t really know a great deal about what they’re tied into these days.

            I’m not at all convinced that having the EU fall apart would be a good thing for Europe in the long run. We came together precisely because everyone doing their own thing wasn’t working out all that well, and today it’s not just the US who would capitalise on a fragmenting EU – everyone would want to get in on that. They might be our allies, but let’s not be naive – one of the driving forces behind a united Europe was to make us all capable of competing. Leaving that behind would be a colossal gamble for just about everyone, and I don’t think anyone could predict the political consequences over the next few decades.

          • Ultra Superior says:

            I wouldn’t see the dissolution of EU so dire – states could remain in trade unions, free movement in Shengen, collaborative programs – no one says that every state should isolate and close borders – on the contrary, the competition between EU states would most likely improve this state of decay, where failing economies are being kept in limbo at the cost of european middle class.

          • Lanfranc says:

            The only thing we know is that nobody know what the hell will happen if the UK leaves the EU, because 1) nothing like it has ever happened before, and 2) any outcome will have to be engotiated between the then European Council and UK government. The result of such negotiations are so complex that it is impossible to predict. And I would say that this uncertainty is in itself a very powerful argument against taking that path.

          • Premium User Badge

            DeVadder says:

            I can hardly believe that i let myself get dragged into a thread with an OP like that but here goes:
            You say:
            ‘the competition between EU states’ in a positive context.
            But in a mercantile context ‘the competition between EU states’ just means taking less taxes than the other ones. Because that will attract the big companies. Obviously. So if the member states of the current EU would suddenly drop their co-operation on economic issues (like, for example non of them giving tax cuts to entire industries) they would have to compete about who takes the least taxes. This is because for most companies, it does not matter in which middle-european country they work.
            This might very well end in a downward spiral with all countries undercutting each other tax-wise. Or at least that is the tendency that is supposed to be stopped by an enforceable co-operation what the EU basically is.
            Of course there are differences in attractiveness and countries like primarly germany and to a lesser extend france and UK would not be hit as hard as the smaller and more interchangeable ones. But still, working together is required if we want nations and their elected leaders (and this is also true for the EU, just not elected directly) to continue to be the defining factor of life instead of ever-growing mega-corporations.
            And loose treatys will do no good either. They have to be enforceable to work. And enforceable treatys basically IS giving away some sovereignity.

        • solidsquid says:

          Britain is good for manufacturing businesses because it has good conditions and has access to inter-EU trade agreements which prevent member states putting barriers to entry (legislation blocking imports, import taxes, etc) in the way of other member states. Without being members of the EU we would lose those trade agreements, manufacturers would have to pay import tax to sell to the EU and would most likely just move to another country which was still a member of the EU

      • Vorphalack says:

        If we ever do end up with a referendum on Europe, I sincerely hope it is this view that prevails, and not the flag waving crowd who want the good old days of British Empire back.

        • Sheng-ji says:

          It won’t because that is not the view that sells papers!

        • Ultra Superior says:

          European Commission Empire is better then?

          What about a coalition of free sovereign states, just like the EU used to be, before it’s imperial ambitions?

          • Sheng-ji says:

            You do sound like the daily mail if Rebekah Brookes became Editor in Chief, them soundbites are better than facts right!

      • SpectralThundr says:

        Common sense doesn’t exist much these days, too many years of liberal/progressive brainwashing at the elementary school level has done a pretty good job of eliminating that.

    • Lemming says:

      I’m actually pretty surprised the EU got a say in this, which shows my ignorance of how far it goes. This has got bugger all to do with big universal things like human rights and everything to do with holding an economy back because ‘then you’d get something we didn’t’.

      Any reason the British government can’t just tell the EU to go F*** themselves on this? What exactly could they do, realistically?

      • Lanfranc says:

        Here’s the thing, very briefly: One of the core principles of EU law is that trade and competition amongst the member states should be as free and open as possible, and in particular free of any forms of intervention by the member states that could could create competitive imbalances between them.

        To take a simple example, member states are not allowed to impose import taxes on products from other member states, because this would benefit their domestic producers, while at the same time hurting producers from other member states.

        Tax reliefs are another form of such government intervention, because it gives the (in this case British) developers a competitive advantage over developers in the other member states that do not have access to similar tax reliefs. And that’s why the entire EU, including the British government, have agreed through the treaties not to use such measures, and why the Commission are now enforcing that rule as they have a duty to do.

        We all like games here, obviously, and like to see more of them, but ultimately, game development is an industry just like any other, and subject to the same general rules as the rest of the economy.

        As for what the Commission can actually do about it, the normal procedure would be to sue the UK government in the EU Court of Justice. And if the gov’t is found guilty of a treaty violation, it would most lilkely have to pay fines until the offending measure is removed.

        • Premium User Badge

          DeVadder says:

          This, dammit, had i read your post earlier, i would not have had to throw my rubbish english at comment box myself, probably causing more confusion than anything else.

        • Lemming says:

          That’s a sound idea in principle, but – and correct me if I’m wrong – doesn’t this whole business with the banks fly in the face of that?

          • Lanfranc says:

            Sure, to an extent. You certainly can argue that helping out failing banks is unfair to those other banks that have their affairs in order, and distorts the competition. But whether we like it or not, banks do have a very special role in the economy unlike most other types of business, and letting even one go broke can have very serious consequences for the entire system.

            So here the principle of equal competition steps aside in favour of a more important principle of not letting everything fall to pieces. Or put in another way, there are several legitimate and legal reasons for government intervention, such as preventing economic disasters or promoting culture etc., but just wanting to support an industry sector in general is not one of them.

            And for that matter, the aid to the banks is also accompanied by stricter regulation in terms of e.g. higher capital requirements, salary and bonus caps, sharper separation between savings and investment banking and so on – perhaps even a banking union in the long run. So here the state aid can be seen as a temporary measure to stabilise the system whilst introducing measures to (hopefully) prevent the same situation happening in the future.

    • GenBanks says:

      Yes, let’s solve a problem requiring a chisel with a sledgehammer.

    • Berious says:

      The EU is the best chance British workers have for reasonable employment laws. While the Tories are gagging to roll back employment protections so we can compete with China the Social chapter provides a backstop with basic and humane rules like rest breaks, holidays and a fair deal for part timers.

      • mike2R says:

        You seriously want to replace UK democratic politics by having your own personal view imposed by diktat from Brussles? Wow.

        For the record, I think leaving the EU at this point would be nuts, but jeez.

  2. YogSo says:

    “The proposed cultural test ensures that the aid supports only games with cultural content without leading to undue distortions of competition.”

    This cultural test?

    Yeah, it’s all Europe’s fault. /rolling_eyes

    • Hazzard65 says:

      Of course this is ridiculous, but can you not see that these are two different issue?

  3. battles_atlas says:

    Could Alec take a moment to connect the dots here a minute? We’re talking about tax breaks for multinationals as well as bedroom developers here. Why shouldn’t the EU do what it can to prevent a race to the bottom? We give them a tax cut to match the Canadians, so Australia goes 5% better, Canada responds, the Cayman Islands announce games development there is tax free… hooray! We’re back where we started, except the corps are paying zero tax on their profits.

    • Mr. Mister says:

      Gotta agree with this.

    • Risingson says:

      This is like saying that if you give benefits to people with children, everyone is going to claim to have children even when it is not true.

      • battles_atlas says:

        Yes it is, unless you think there is a distinction between the motivations of a commercial business and an individual human. Then its completely different.

    • Ultra Superior says:

      Oh good grief.

    • Premium User Badge

      darkChozo says:

      Slippery slope argument aside, isn’t this the crux of the issue? National government-driven competitive advantages lead to artificial trade imbalances, which leads to less efficient practices, etc. etc. Part of what the EU does is to arbitrate these kinds of issues between the European nations. Imagine if this was, say, a tariff on non-British video games instead of a tax cut for British games (not equivalent, I know, but just for the sake of comparison). Would it help the British games industry? Barring counter-tariffs, probably. Would it be good overall? No.

      I mean, it’s bad for British developers, sure, but that’s a rather simplified way to look at the issue. This seems to be the type of thing that’s justifiable to complain about.

      (disclaimer: not european, not an economist, not a british game dev) [EDIT: shit, technically a Dutch citizen. Don't tell anyone.]

      • Ultra Superior says:

        Seeing a tax competition as a bad thing is short sighted.

        • Premium User Badge

          darkChozo says:

          A tax competition means lowered taxes, which means less revenue for the government (Laffer curve aside, though Wikipedia places the theoretical peak of the Laffer curve at about 70% taxation; not too familiar with EU corporate taxes but I’d imagine it’s a bit lower than that), which means either reduced budget for government services or increased debt. Whether that’s good or bad depends on your stance on big vs. small government, but regardless, it can’t be absolutely stated as shortsighted (arguments can easily be made on both sides, as a matter of short-term economic/government gain vs. long-term economic/government losses).

          Regardless, the issue isn’t so much one of taxation as it is of unequal taxation. Uneven competition across national (or even industry) lines results in a distortion of supply and demand, which some economic theory suggests will result in reduced efficiency and a net loss for all parties involved. Politics aside, focusing on the effect this has on British developers is the wrong way to go about it; of course it’s good for British developers, at least in the short term. What’s more important is the effect it has on the industry and the economy internationally speaking. And that appears to be what the EU is looking at.

        • Premium User Badge

          Crimsoneer says:

          Tax competition in cases like this – where the government is picking “champion industries” and bestowing them with preferential treatment – is not good. It’s not the government’s job to pick winners and losers in the market, because it inevitably does a shit job of it, and eventually people get fucked.

        • SkittleDiddler says:

          And seeing it as nothing but a good thing isn’t?

          • Ultra Superior says:

            Tax competition is slightly better. It has been proven in Switzerland and also during Reagan/Thatcher era. It makes tax havens less appealing, it limits the growth of government spending and promotes efficiency.

          • SominiTheCommenter says:

            That solves it, Ultra Superior was infused by Thatcher’s spirit.

  4. Risingson says:

    Almunia, of course it should be Almunia. After doing nothing to defend his mother country – but the opposite – he is doing the opposite of defending Europe. Why is it no surprise.

    Man, I hate this guy.

  5. Rosveen says:

    Oh for fuck’s sake. Another one from people who decided that snails are fish and carrots are fruit. Don’t the EU officials have anything better to do with their time?

    • PatrickSwayze says:

      They’ve been holding the UK back as long as they can…

    • DrGonzo says:

      Except they didn’t decide those things, you are just incredibly gullible.

      • Premium User Badge

        RedViv says:

        I find the persistence of these myths about the EU, or truly most political myths in general, to be quite intriguing in the time of the internet.
        Then again, one can probably just sum it up as most people being incredibly lazy. Almost all collected knowledge and research of humanity at your fingertips, and you just repeat what some other blokes came up with.

        • DrollRemark says:

          Funny, I was thinking almost the exact same thing the other day. It’s like, with even more possible knowledge at our fingertips, we’ve become even more gullible. Bizarre.

        • Hazzard65 says:

          The issue is people trying to shoe horn their political leanings into things that amount to problems of principle. If someone is doing something criminal, you don’t need to extrapolate the consequences of their actions to determine whether or not it’s worth stopping them committing the crime.

          People don’t like immigration, or they don’t like taxes, or they hate this or that policy. The fact is it’s about the core principle. I don’t like being a member of the EU because in principle it robs British people (whatever their race or creed) of representation and that is what’s important here.

          People who try to justify their reasons with “Foreigners taking our jobs” or “Brussels taking our money!” these are just symptoms of the principle issue… that we are a vassal state of an imperial power. Any semblance of democratic process is lost in a wash of bureaucracy.

  6. Shiri says:

    I understand why they’re doing this, but it’s kinda sad, we were hoping to take advantage of it…oh well.

  7. PatrickSwayze says:

    Imagine if the £53,000,000 per day we send to the EU was instead spent on tax breaks for larger video game companies and initiatives for startups and indie studios.

    With that amount of money Britain could start a glorious gaming empire, upgrade its tele infrastructure in months, and even develop, manufacture and sell its own console… The Britbong Box. It could even chime in your room on the hour.

    BONG! Time to play!

    • Brun says:

      And at 4PM (or whenever Tea is in Britain) it would say “BONG! Time for tea!” and dispense fresh Jaffa Cakes from the disk drive.

  8. Caenorhabditis says:

    I think the concerns of the EC are perfectly reasonable. Launching an investigation instead of shooting the plans down immediately was perhaps always the best deal the UK was going to get. You have to admit that the whole ‘Britishness’ questionnaire to get out of EU restrictions was very sketchy to begin with.

    • PatrickSwayze says:

      Whats wrong with Britishness?

      • Caenorhabditis says:

        Britishness is great, it’s just that the only reason this requirement was part of tax cuts is because it can then be qualified as a measure to preserve the national culture, instead of the subsidising of an industry. And the implementation was just silly as well. I remember a piece here on RPS that described in detail how easy it was to get any game to conform to the requirements, and how great that was!

      • CMaster says:

        Nothing.

        The point is that EU rules (the EU primarily being a trade union, even if it has crept into additional areas now) says that member states are restricted in subsidies they can offer, to ensure a fair market and prevent a “race to the bottom” situation.

        The cultural test was being used as a loop hole, as it was so vauge, but the EC are saying “yes, we can see what you are trying to do there and NO”.

        • DrollRemark says:

          Have you, at any point within the last three years, posed with your friends for a photo in front of a London Underground sign?

          Yes – Congratulations, here is your tax relief!

          No – Sorry, do try again.

  9. Hroppa says:

    It’s a fair point. Tax cuts more generally might be a good idea, but why target video games specifically? The only justification is something along the lines of “Video games companies are more geographically flexible than most companies, so lower taxes mean they’ll move to the UK”. Not really fair to everyone else.

  10. Demiath says:

    Never understood the gaming community’s uncritical embrace of tax breaks. There are countries in the world for which it makes perfect sense to lower barriers to entry and provide cheap opportunities, but an advanced industrialized nation like the United Kingdom cannot possibly make low costs one of its primary competitive advantages – and it’s downright foolish to gamble tax revenue and its public sector in the process.

    • CMaster says:

      “Industry excitedly encourages tax breaks to itself” isn’t really much of a news story.

      I’d agree that it’s not necessarily a good thing mind.

    • Lemming says:

      It gives the country an economic boost in an industry we still actually have a chance of being part of, given that we’ve fluffed manufacturing and we don’t have any resources worth exporting. It doesn’t have to be absolute. No one is saying “TAX BREAKS FOREVER!!11″. It can (and should) be removed once a thriving game industry is present.

      Unless, you’d prefer us to remain as a nation where the most realistic thing to aspire to is working in the finance industry? Whoopdie doo.

  11. Lanfranc says:

    As always, it’s necessary to keep in mind that all the EU Commission is doing here is enforce treaty provisions that all of the member states, including the United Kingdom, have previously agreed to abide by.

    “Unelected bureaucrats”, “Brussels dictates” or any of the other inane UKIP-isms are just demagogic bullshit.

    • BTAxis says:

      Ssshh. Don’t confuse people with facts when they are letting their gut feelings do the talking.

    • Ultra Superior says:

      I think you’re a bit naive. EU is growing and the rules are changing. There are talks about European tax, european army, debt union is a done deal in the eurozone etc. all the things that people who once welcomed the EU project didn’t sign up for.

      EP style democracy is mostly a theater – a fight for bigger chunk of money from the collective pot if anything. Honestly. It’s far removed from democracy in the traditional sense of people voting for a certain political program (party). EP is for most part a confirmation body for EC laws. (And arguably a very corrupted body with very little oversight)

      These are legitimate concerns – EU is not all evil, but it’s becoming too big and too pervasive.

      • jalf says:

        I think you’re a bit naive.

        There’s always been talk about all of those things.
        But don’t underestimate how much your country (and any other European country) has benefited from the EU.

        The scapegoating is kind of cute, but honestly, most European countries have bigger problems than their EU membership.

        • Ultra Superior says:

          I would agree with you, if the EU membership wasn’t in many cases preventing the implementation of the solutions to these, indeed bigger, problems.

          I’m not scapegoating EU – it is not the cause of these problems, but I don’t see its current direction as a solution either.

          • derbefrier says:

            i’ll never understand how people blindly trust any government entity. Its like history doesn’t exist for these people. This is why i cant understand why anyone would want big bloated overreaching government yet you can see in these very comments people advocating just that. I am not going to pretend i know anything about the EU but it always bothers me when I see people blindly trusting government when it fails over and over and over again for the same damn reasons. what was the definition of insanity again?

          • Ultra Superior says:

            Thank you for this post, I agree wholeheartedly.

            The trust in big governments is the cornerstone of this crisis. Bold borrowing, bold planning, laying this burden on future generations of taxpayers. Now the debts are unpayable, economy is halted and big governments continue to do what they do best: borrow more money.

            It is insane, but everyone’s doing it, so it must be ok.

          • SominiTheCommenter says:

            The alternative to a big government is a government that’s weaker than the private companies.
            Apple has already more cash in the bank than the US Government.
            I think we should strive to a global government, perhaps akin to a federation of some sort. In practice not much would change, but at least there was some checks and balances.

          • mickygor says:

            A big government is precisely one that is weak to big companies. A state that doesn’t get involved in anything more than enforcing rights and liberties is one that cannot be bribed by vested interests. A state which provides frontline services, benefits, and gets to dictate tax breaks and tarrifs, is exactly the kind of government corporations will try to buy favour with.

        • Lemming says:

          I think you’re right, but for a nation such as ours (Britain) there is a lot to be said for being outside that. There’s every possibility there is more money to be made and more benefit to us as a nation by being outside that club.

      • Lanfranc says:

        I certainy hope it’s going to grow, the more the better in fact!

        But I do agree that there are serious issues with transparency and democratic process. The solution to that, however, is not to say “Sod it” to it all and going home, it is to strengthen the European democracy along a federal model – including giving the Parliament more of a say, fostering political communities across the member states, and curbing the power of the European Council.

  12. Premium User Badge

    theodacourt says:

    I want to be the only sensible one here and thank Alec for his Look Around You reference.

    Thanks Alec,

    Thalec.

  13. Advanced Assault Hippo says:

    “George Osborne doing something to stimulate rather than malnourish the UK economy”

    Ooooh….meow!!!

    Alas, it isn’t as simple as that, Alec. Not by a long shot.

    “Stimulate” can mean two entirely different things, depending on how you choose to break down how the UK economy works…

    • Premium User Badge

      Crimsoneer says:

      I know, right? Seriously, replace “video games industry” with “financial services industry”, and it would go down entirely differently, despite the economic case being very similar.

  14. Blackseraph says:

    Wow Alec this is great, you’re moaning that UK has to abide by our common treaty provisions. That is just great.

    Seriously now.

  15. BurningPet says:

    I am really ignorant in UK laws and tax rates.

    doesn’t small companies barely notice that tax reduction?

    I mean, when a bedroom developer wanna pay rent, he will still have to pool the money out of the company as a dividend and match the overall taxes he would have paid regardless no?

    if he has 25% tax of his company profits and then 30% off his dividend, its like paying the 45-50% regular tax+dividend.

    • Premium User Badge

      JamesTheNumberless says:

      You sound more clued up on the general case than I am, but when this was first announced and I still worked for a UK studio, I had a good look through the documents on how to quality for, and how to receive the benefits and it looked like there were two options for how to receive the tax cuts. One that would have suited established studios where most of the relief came later and was revenue based, and one that would have better suited startups where I think there was a much larger let-off in terms of what you had to pay on development related tax but not so much relief on the tax of your eventual profits. It was also RIDICULOUSLY easy to tick all the cultural boxes without having to make the game overly culturally British. If your game was set anywhere in Europe and featured a central character who players could identify as European, you made the game in the UK and had a British bank account you were basically there. For some reason I’m a bit too lazy to look this up right now.

  16. Captain Joyless says:

    “The EU Commission claims that there “is no obvious market failure” in the UK games industry. Black Rock, Sony Liverpool/Psygnosis, BigBig, Monumental, Bright Light, Bizarre, Codemasters Guilford, THQ Warrington, Realtime Worlds and more beg to differ.”

    I am going to posit that you do not know that “market failure” is an economic term of art. It does not mean “business is bad” or “companies are closing operations.”

    You are hereby required to read “The Anatomy of Market Failure” by Francis Bator, The Quarterly Journal of Economics, Volume 72, Issue 3 (Aug., 1958), 351-79. Afterwards please write 250 words summarizing your understanding, with citations to the article where appropriate.

  17. nitehawk says:

    I read that as “European Commission decided it wanted to shoot the planes down”.

  18. Moraven says:

    Interesting how different this works on a federal scale than a state/province scale.

    Canada provinces and USA states are constantly fighting each other with subsidies.

    Vancouver’s developer has been shrinking as they cut back subsidies. So did they really help, or are they like Ethanol and need that gov’t cut to exist? I think part of the problem is these companies are given subsidies long term where it should be short term, gradually decreasing each year starting your first game release.

  19. trjp says:

    All I know about the whole ‘Britain in the EU’ thing is that the smartest economists, business leaders and other notables cannot say whether it’s a good thing for Britain to be part of it or not – because, like almost everything, it has swings and roundabouts.

    For decades our position has been to be far enough in to matter but far enough out to not get too tangled-up in it – which whilst it’s a compromise, is the essence of the thing because EVERYTHING about the EU is a compromise.

    What worries me is that any referendum on the topic will be voted on by people who are 100% totally and utterly uninformed on the issue and who will vote based on their own ignorance of the thing. They’ll vote over things like this or the shape of bananas or other pointless (and utterly made-up) shit – thinking their opinion (actually the opinion of the Daily Mail in most cases) matters.

    THAT worries me quite a bit – i don’t really care if we’re a nation on the verge of pointlessness in or out of the EU but I don’t want that decision made by people who are so ignorant I’d amazed they don’t shit out their own brains.

    • jama says:

      Thank you for this comment. I would’ve tried expressing exactly these thoughts (because I 100% agree with you) had I not seen your post, but I probably wouldn’t have found such a nice way of saying it (except for the last bit of the last sentence maybe).

    • Salix says:

      Pretty much summed up my own thoughts and fears.

    • sinister agent says:

      This is my concern also. I’m happy for people to be having the debate about it, but 9 times out of 10 it’s not a debate, rather just a regurgitating of fabricated horseshit from a certain newspaper-themed comic. Finding an informed analysis of the EU among the general population can feel like digging for oil in a sandpit.

    • Hmm-Hmm. says:

      The main reason I voted against the ‘European Constitution’ back in the day was that most of our politicians were (and are) firmly in the yes-camp. That, while that document signed away several rather important rights away from countries. We were kept in the dark and simply expected to vote ‘yes’, simply because ‘the EU is good for us’. Our politicians simply didn’t (and most probably still don’t) understand or, at least, buy in enough that they consider it necessary without explaining why to the rest of us. Oh and after the dutch voted ‘no’ not only did they all rush to come up with their own reasons why that was, in the end they decided they could simply rename it, change a few minor bits and bobs and accept it without a new referendum (although they’d promised one).

      Not that I am opposed to the EU, mind. It’s more that I am opposed to the eurocratic way of doing things. Like the idiotic idea of inviting new states the EU without looking at what would make sense. Or, say, the way that while one could theoretically oppose or withdraw from certain EU treaties and regulations, the eurocrats simply won’t stand for it. It’s going blindly forward without the understanding of the possibility of needing to take a step back. Or, say, inviting Greece into the EMU. Even with solid plans for economic growth that would have beena risky proposition for Greece and they did it anyway.

  20. Tuggy Tug says:

    “Once an embryo, always an embryo.”

    One of the best comments I’ve read on RPS in a while…

  21. stkaye says:

    Everything else aside, the idea of the same people who promote and administrate the Common Agricultural Policy referring to a small, sector-specific tax break as a ‘subsidy’, a ‘market distortion’ and a ‘burden on the taxpayer’ is completely laughable.

  22. Binho says:

    I’m going to joining in the chorus saying the subsidy isn’t a good idea. Check out what’s been going on with the VFX industry, for example. Lot’s of studios are closing down because of the subsidy fighting between states and governemnts and the resulting race to the bottom (Rythm & Hues being a huge one). Plus, a studio moving in doesn’t provide nearly as many jobs as to be worth it.

    In any case, wouldn’t it be better to bring back things like regional development funds, which have recently been axed all around the UK? I’d say start-ups need more intial cash injection then tax-breaks (You only need to pay corporation tax once you start trading, iirc.).

    Also, the games industry isn’t doing terribly in the North East of the UK. Eutechnyx, Ubisoft Reflections and CCP are still doing ‘alreet’ up in Newcastle. So are lots of smaller studios and start-ups.

    Plus, why should games get a tax break when a lot of arguably more important sectors are getting crippling cuts? Like libraries, education, arts & culture, etc.

  23. Premium User Badge

    Lacero says:

    So, is there a market failure in movies? They get these tax breaks right?

  24. Universal Quitter says:

    This is the kind of thing that makes Americans hate globalism so much. We want to be free to ruin OUR country the way we see fit, Canada and Mexico be damned.

    • SpectralThundr says:

      That’s because using common sense most people with half a brain realize that globalization is doomed for failure before it even starts. Don’t tell that to the Marxist progressives though, they’ve been pushing towards a glorified nanny global state forever now anyway, no matter who it bankrupts or how worse it makes day to day life.

  25. Megakoresh says:

    You overestimate your readers, RPS. Look at the comments this has spurred! Clearly your viewers (or at least most of those who comment) don’t have the brains to properly interpret info like that.

    Also all these studios are actually dead. Would a tax really help? And where, more to the point, does UK get the tax money? Games Industry in UK is the largest in the EU region, subsidising it is extremely expensive. Where would UK, already struggling for money as it is, get all the funding anyway?

    I live in Finland, and here are a huge number of small studios mostly due to Nokia’s layoffs. Small business is subsidised very well simply by having a well-designed progressive taxation. Removing tax based on the type of products the company makes, is only going to kill smaller studios, because the bigger ones will be far better off.

    Don’t forget that the bigger the studio, the bigger it’s gain from a taxation subsidy will be, unless it’s progressive. Do you have progressive tax in UK?

  26. Beefeater1980 says:

    I’m not responding to specific posts here, just to a few general points that I wanted to address.

    1. This decision isn’t part of the political rules of the EU, it’s part of the single market structure. In fact, it’s pretty much at the heart of what the single market *is*.

    The basic concept is this: we agree not to use taxes to make your country’s stuff more expensive than our country’s stuff, in exchange for you agreeing the same. Stuff, in this case, being games. Subsidizing your own industries is one way of cheating, because If your games are cheaper because of tax breaks, other countries’ games are made comparatively more expensive – since the RPS readership is generally pretty savvy, this is probably old news to most people here but it bears repeating.

    One thing that would justify a tax break would be to correct a market failure (in this sense: http://en.wikipedia.org/wiki/Market_failure has a nice easily digestible overview), but the commission has decided that it is not cut and dried that this is the case.

    2. In any case, all that’s happening now is an investigation to figure out whether or not the measure is effectively using a tax subsidy to make British games cheaper than other EU games. The answer may well be ‘no’ when the detail and effects are considered.

    Britain’s EU commissioners will have the job of persuading the rest of the commission that this is not an unfair subsidy.

    3. Info available to the general public in the UK about the EU is shitty. The EU isn’t some fair-minded and impartial administration that has the best interests of all Europeans in mind, any more than it is some pointless or sinister bureaucratic institution that e.g. bans the British sausage because it’s Wednesday (or as part of a devious plot to crush countries’ independence). The EU is best understood as a framework for European countries to do their bickering and horse trading over politics, economics and laws behind closed doors, so that there can be a unified front to show to other foreign countries. In theory this is supposed to make it harder for eg Russia, China or the US to play different European countries off against each other. Sometimes it sort of works.

    4. There is a legitimate argument to be made that the net practical effects of parts or all of the EU project are bad. It’s not the argument we’ve seen here and I personally disagree, but it’s a reasonable point of view.

    EDIT: To address Binho’s point, the sectors you mentioned are public goods and are paid for out of taxation. Games aren’t. The question is whether there is a good reason for giving video games a government subsidy, either as cash up front or by making them pay less tax on their profits than would otherwise be the case.

    • Megakoresh says:

      I just wanted to reply to you so people don’t receive false information.

      Number 3 is wrong info.

      For those who don’t know EU is the first and only successful trading bloc (NAFTA doesn’t really function the same way, it’s not really trading bloc per se). It was and is designed to prevent the likes of World War I or II via creating a very deep economic dependency between a set of countries. This is the reason why EU is so subsidy-happy and why it does all these not-so-healthy practices where it basically kills certain production in all regions except for one, so if that region/country goes bankrupt, we suddenly don’t have that product (E.g. Spanish tomatoes or Bananas).

      It was never intended to be a unified front to show to others and never worked as one, which can be seen by a very obvious manipulation by USA, which incites riots in southern regions and uses EU’s obsession with “democracy” (instilled by their own influence) to flood the counties of the union with islamic refugees. Since these people have a different culture, do not understand “democracy” (I mean they kill their own by throwing rocks at them for not saying a prayer or whatever), they only consume and never give, thus lowering the strength of Euro. This has assured that US$ has climbed up again rather quickly after a very harsh plummet.

      If Great Britain quits EU, it will simply expose itself even more to US influence (which is already huge at political level). The most likely outcome will be lower prices on some goods and higher on some others. Overall not much. But your politicians will be licking more boots, that I can guarantee.

      • Beefeater1980 says:

        @Megakoresh: You are quite correct that the origins of the EU are in attempts to ensure that after WW2 Europe didn’t go to war again, thanks for the comment. I also agree in part that US influence would rise if the UK left the EU and that this would probably be a Bad Thing, although the bigger impact would probably be having a lot less leverage vis a vis multinational corporations.

        I disagree that it was never intended to be a united front and never worked as one. The EU was and is a body that co-ordinates European trade and economic policy vis-a-vis the outside world. The EU lobbies collectively at the World Trade Organisation and as a general rule attempts to prevent individual member states from taking on bilateral commitments that would shaft the other EU countries. It cannot always succeed at doing so but most organisations don’t always succeed at their goals, that’s the nature of life.

        I find the suggestion that there is some sort of American plot to disintegrate the EU baffling. A certain amount of meddling and spying probably happens because hey, that’s geopolitics but it would be very counterproductive for the US to seriously mess with the friendliest part of the world from their perspective. For me that shades into bizarre conspiracy theory.

        Apologies for the derail folks, I felt that this warranted a reply. Back to anticipating Far Cry: Neon 80s Edition.

  27. The Random One says:

    I know you guys love puns, but you missed a golden opportunity to use the headline “Tax Break Talks Break”.