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Who Killed Videogaming Tax Relief?

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Yesterday afternoon a bold story appeared on Develop’s site, stating that there was far more to the abandoning of videogame tax relief in this week’s UK budget. It was not, they say, a case of the treasury overturning the decision, but rather the influence of an unnamed “global publisher” who “sabotaged [the] UK games tax break.” Obviously this story has received quite a lot of attention, especially with people guessing who this major publisher might be. But major industry figures give the impression that it might be no publisher at all.

Develop’s story was unambiguous, beyond their shyness in revealing which publisher they were talking about.

“One of the biggest game companies in the world exerted pressure on the UK government and British trade associations to abandon plans for UK tax breaks, Develop can reveal. While the majority of UK studios lobbied tirelessly to attain tax relief, one publisher counterbalanced the bid with a scandalous assertion of its own international influence and power.”

However, what this pressure was, and how it was in their interests to exert such pressure, was not made clear. Develop said they had spoken to TIGA, the industry body representing games development who have spent two years campaigning for the tax relief:

Today TIGA, the UK trade association widely applauded for spearheading Britain’s push for game tax breaks, called for cross-industry unanimity on the issue.

“TIGA has campaigned rigorously for two years for Games Tax Relief,” CEO Richard Wilson told Develop.

He appealed to overseas companies, stating that they could tap into the huge talent base in the UK that would no doubt be bolstered by tax relief measures.
“We will not give up,” he added, “and we ask publishers to join us.”

By this morning Games Industry.biz were reporting that ELSPA were not interested in a witch hunt to identify the publisher, and found it unlikely to be the reason behind the move. ELSPA chief Michael Rawlinson told GI:

“We have no idea where that has come from, it’s totally left of field and has certainly not been on the agenda of any of the many political briefings we’ve been involved in. That’s not to say it’s not true, but we’ve been discussing tax relief for some time, and lobbying solidly. It’s something we haven’t come across.”

This afternoon GI’s Alexi Meere (or something) has been doing some more digging, and it seems that the decision was increasingly unlikely to be based on publisher interference at all. Speaking to TIGA’s Richard Wilson themselves, the news boffins site reports the boss man has no idea if there was pressure from any publishers, but he think it not likely to be the reason behind the decision.

“It’s the usual thing, the treasury are the people we have to convince. I think the key people in the government who need to be convinced are definitely George [Osborne], and also I think David Gauke, the exchequer secretary, who is probably fairly invisible actually, externally. But he is a very, very important man.”

In defiant mood Wilson continued his tireless campaign to see these tax breaks come in, even after the current setback. Batting away the notion of publisher interference he comments,

“The truth of the matter is we don’t know. What I would say is the key thing is, rather than to look for any scapegoat in the industry at home or aboard, for Machiavellian machinations going on in the background, to focus on the Conservative party and the Liberal Democrats. They both promised before the election they would give us games tax relief. We want them to honour that commitment.

Even if there is [industry sabotage], and we don’t know, or has been a publisher arguing against games tax relief, they’re not going to win. We’ve won the argument. We’re going to continue with the arguments, and we are going to get it established.”

ELSPA’s Rawlinson is similar piqued by the recent developments, adding his suspicions that there were never any intentions of bringing in the relief in the first place.

“The government went from seeing a lack of conviction for tax relief to seeing the games industry as the best thing since sliced bread last March, and I’m not sure the arguments for tax breaks were any more convincing, there was just more lobbying. I think it was a cynical move by a government that wouldn’t have had to deal with the consequences following the election.”

Whether there is any evidence behind Develop’s extremely bold claims remains to be seen. The conviction with which they present their statements is pretty overwhelming, but they’ve done so without any form of evidence, nor any understandable motivation beyond the suggestion that it would somehow be unfair for Britain to receive such benefits. (But presumably not France, Canada or Australia.) We’ll keep an eye on the story.

EDIT: Revolution’s Uncle Charles Cecil has weighed in, leaving a comment on Develop’s site in which he suggests there may be some truth to the suggestions of lobbying against the tax relief from overseas publishers:

“In March I was invited to an event at the House of Commons – this was just before Labour made their commitment. There I met a number of MPs with an interest in the sector. I was told that they were getting mixed messages from the industry: that foreign owned publisher / publishers were lobbying hard against the tax break because they were concerned about the cultural test. Without a uniform voice, we were, I was told, highly unlikely to get a tax break. So essentially, this story is accurate.

My opinion is that the opportunity for tax breaks was realistically lost once the banking crisis struck. Gordon Brown had a long reign of apparent prosperity before things turned sour – he had plenty of opportunity to introduce the initiative without too much risk of controversy.”

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John Walker

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One of the original co-founding robots of Rock, Paper, Shotgun, I'm now a senior editor and hero of humanity. Old and special.

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