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UK Video Game Tax Relief Cancelled

Soulskill posted more than 4 years ago | from the you-just-lost-the-angry-video-game-nerd-vote dept.

The Almighty Buck 106

Stoobalou writes "UK game developers have just been dealt a financial blow by Chancellor George Osborne in his first budget, which sees the coalition government scrapping the video game tax relief plans promised by Labour. In his speech today, Osborne simply said the 'planned tax relief for the video games industry will be cancelled.' According to the government's budget report, the cancellation of video game tax relief will save the government £40 million in the 2011-2012 financial year, and a further £50 million in each subsequent year."

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Obviously (1)

Dexter Herbivore (1322345) | more than 4 years ago | (#32662500)

Because obviously, computer games are unproductive and a waste of time and taxpayers money... try telling that to Blizzard, EA, Rockstar and many other companies with billion dollar + profits.

Re:Obviously (1)

what about (730877) | more than 4 years ago | (#32662548)

Quite the contrary, videogames industry is as productive as any other and should pay taxes, possibly like any other

(Yes, I am against subsidies)

Just one more thing, for any economy to "work" you have to have a circular chain of producer-consumer, that is, I can buy a car from china but then china should buy something from me, or there should be a chain of buy-sell that closes back to me. If this is missing, the logic consequence is budget imbalance and collapse in the long run. (if the imbalance persist).
The above seems just plain logical to me..

Oh, if you are wondering what keeps the wheel spinning... easy, energy (solar-food), petrol, hydro, nuclear (solar-photovoltaic) etc...

And finally.... your standard of living is directly related to two things
1) How cheap is energy
2) How smart you are to use the above energy to make your life better

Re:Obviously (2, Informative)

Fallus Shempus (793462) | more than 4 years ago | (#32662672)

The point is actually to attract these billion dollar+ companies into the UK; which would obviously be a boost for the UK economy.

Maybe we should re-phrase the old adage - There's no such thing as a free market.

Re:Obviously (1)

alfredos (1694270) | more than 4 years ago | (#32662558)

Well, they are a part of the economy, but in the not-so-high times we are living now, even politicians can think of many better places to send the hard-earned cash of the average taxpayer. How many people does the gaming industry employ, and what is the status of the health of the average company? Compare that to the rest of the economy and you may well find the reason why they did that.

Dollars? US companies? (0, Flamebait)

SmallFurryCreature (593017) | more than 4 years ago | (#32662652)

Exactly how is any of this relevant to the UK? No, contrary to what many seem to think the UK is NOT a vassal state of the US. The only thing the two got in common is a language (barely) and a lack of taste buds that allows you guys to eat processed cheese and boiled meat.

The current UK government is facing a debt crisis not dis-similar to the one in Greece but where that one was caused by typical garlic incompetence and blatant fraud, the UK one is caused because the country hasn't actually produced anything in years but still thinks it rules an Empire. US made might be rare but not as rare as UK made. Their economy is going down the drain and the basic message is "there is no money". 40 million might sound like not much but if you got nothing it about a gazillion times to much.

Re:Dollars? US companies? (4, Funny)

lisaparratt (752068) | more than 4 years ago | (#32662676)

Um, I think you'll find the UK has a huge variety of traditionally made cheeses, above and beyond that of many continental countries.

Re:Dollars? US companies? (1)

fyoder (857358) | more than 4 years ago | (#32662786)

Well, stout yeoman, four ounces of Caerphilly, if you please.

Re:Dollars? US companies? (2, Funny)

Chrisq (894406) | more than 4 years ago | (#32662814)

Or maybe a nice piece of Wensleydale Gromett.

Re:Dollars? US companies? (2, Funny)

spartacus_prime (861925) | more than 4 years ago | (#32666582)

I think it's a bit runnier than you'll like it, sir.

Re:Dollars? US companies? (1)

2sheds (78194) | more than 4 years ago | (#32663342)

Ohhhh... the cat's eaten it. Sorry.

Re:Dollars? US companies? (1, Interesting)

Anonymous Coward | more than 4 years ago | (#32663956)

How had this been modded funny? The UK has about 700 regional cheeses. In comparison, France (who are supposed to be a great cheese nation) have only 600 cheese varieties.

Re:Dollars? US companies? (0)

Anonymous Coward | more than 4 years ago | (#32665742)

of which 699 cheddar variety.

Re:Dollars? US companies? (1, Flamebait)

loufoque (1400831) | more than 4 years ago | (#32664050)

British cheese is not only terrible, it is also quite expensive.
A marvel of its own kind.

I am French and I live in the UK, love cheese, and found British cheese so bad, even something you could get at a farmer's market, that I only buy supermarket cheese imported from France.

Re:Dollars? US companies? (3, Funny)

lisaparratt (752068) | more than 4 years ago | (#32664318)

Because, of course, the French would *never* be biased against things English...

Re: UK hasn't made anything in years... yeah,right (2, Informative)

weffew... (954080) | more than 4 years ago | (#32662968)

A list of some of the things the UK apparently hasn't produced in years, which is relevant to both the OP and your post: http://www.giantbomb.com/united-kingdom/95-492/list-of-video-games-made-in-uk/35-9288/ [giantbomb.com]

Re: UK hasn't made anything in years... yeah,right (1)

TheThiefMaster (992038) | more than 4 years ago | (#32663200)

A list which doesn't include Pitbull Syndicate (makers of Test Drive 4,5,6,Overdrive and LA:Rush, among others) or Midway Newcastle (who bought them out, made Wheelman, then went bankrupt).

There are probably a few others missing too.

Re:Dollars? US companies? (1)

blackest_k (761565) | more than 4 years ago | (#32663112)

The video games industry is of value, it is skilled work. Perhaps the UK Government is confusing developing games with playing games.

It makes sense to make the UK attractive to Video Game Companies, there is the technical skill. When development finishes the game brings in world wide revenues for a cost of pennies per copy. They are a fantastic export practically a license to print money.

It might seem as if Video games are just fluff but looking at the rest of the software industry its largely a market defining leader and possibly some free alternatives. Theres very little demand for commercial software that isn't the industry standard or free.

Video games are unique, like books or films there isn't really a substitute for the real thing for anything but simple games.

The current British government seems determined to make everybody scrimp to try and reduce the deficit. But the effect will be to reduce everybody's spending to the minimum and increase unemployment by reducing local demand. By growing the economy, increasing employment, increasing production and exports the tax base is increased and the revenues will increase and the deficit will be reduced.

So what is going to happen to these skilled developers who are out of a job because other countries have made it more attractive for companies to do their development there. Maybe some will find alternative work in the UK or perhaps move to other EU countries either way Britain isn't making best use of its assets.

Re:Dollars? US companies? (1)

mdwh2 (535323) | more than 4 years ago | (#32664878)

So do all skilled jobs get tax relief in the UK? Does software development in general get a tax relief? I don't think so.

Indeed, the argument they were making was not on the grounds of it being skillful, but on the grounds of it being a creative medium, arguing it should be treated the same as the film industry (which does get tax relief, AIUI).

So what is going to happen to these skilled developers who are out of a job because other countries have made it more attractive for companies to do their development there.

Which countries are more attractive, OOI?

Re:Dollars? US companies? (1)

blackest_k (761565) | more than 4 years ago | (#32666946)

Ireland might be one option Microsoft and Apple seem to see an advantage. Artists do pretty well too and theres no need to learn a second language.

http://news.scotsman.com/politics/Taxbreak-loss-may-push-video.6377787.jp [scotsman.com]

"Games makers warned they might be forced to leave Scotland as a result of the move.

Manufacturers in Dundee have led the world when it comes to making hi-tech games. The previous Labour government had offered them tax relief they felt would increase spending on research and development in the UK by £457 million and create 3,000 jobs.

The industry is estimated to contribute £1 billion to the UK's GDP each year.

Colin MacDonald, from Realtime Worlds, which created the Grand Theft Auto series, said he was "hugely, hugely frustrated and disappointed".

He added: "We would hate to move away, but we're a business. When Canada is 40 per cent cheaper and France has built-in tax credits, you're looking at saving millions a year. We have to take that seriously."

Mr MacDonald said without the tax incentive many gaming companies would not be able to experiment and innovate, which would leave them falling behind in a global industry worth billions."

Re:Dollars? US companies? (2, Insightful)

Xest (935314) | more than 4 years ago | (#32663166)

"the UK one is caused because the country hasn't actually produced anything in years"

Yeah, except the UK is still sitting at about the 5th to 7th largest economy in the world by manufacturing output and in the top 5 for service sector output. Contrary to popular belief, it's really only it's position in agriculture on the world stage that's declined.

That's quite an achievement for a country that hasn't produced anything in years.

No, Britain's problems were caused by it's reliance on the service sector in the face of the US' credit crisis in which it was deeply involved.

Britain doesn't have a problem with money or assets per-se, it has so many programs it could cancel (i.e. Trident) if push came to shove to pay it's debts, the issue is that the previous government over-extended public sector, such that we have more public sector expenditure than we can realistically afford. Britain's pain is merely going to have to be a scaling back of the public sector programs we have, coupled with higher taxes to pay for the rest of it- this isn't Britain's only option, because as I say, Britain has so many schemes and so much expenditure and so forth still that it could cut if it really needed to it's really not at much risk.

In contrast, countries like Greece don't have big things like nuclear weapons programs with money set aside for that they can cut now that it's hit crunch time. The same goes for Spain and so forth.

So effectively, like the US and France, whilst Britain doesn't have a lot of actual cash floating round, it does have a lot of expenditure planned, or assets to sell off should things get really bad.

In other words, Britain, like the US and France could solve it's financial situation tommorrow if the population was willing to accept the loss of some massively important albeit luxury programmes people have gotten used to having such as Trident, new aircraft carriers, child tax credits, free care for the elderly and that sort of thing. Of course, that wouldn't be pleasant for the people who depend on those schemes, which is why the government is trying to solve the debt problem a bit more slowly, and a bit more carefully.

Effectively, it has simply deemed that the UK video game industry tax relief is one of those small things that can be cut without the vast majority of the population actually giving a flying fuck, and without any real harm to the economy.

Conveniently the BBC have produced this tool that illustrates the rough point quite well:

http://news.bbc.co.uk/1/hi/business/10373060.stm [bbc.co.uk]

Try moving the welfare slider to see what I mean- in one fell swoop most the deficit could be eliminated, but the key is to do it with least impact on people possible.

Re:Dollars? US companies? (1)

damburger (981828) | more than 4 years ago | (#32663198)

That website is practically push-polling; for example, it doesn't offer the chance to cut some of the £5 billion we spend on prisons (presumably by not throwing non-violent drug users into prison when they steal to support a habit, just a thought...)

Re:Dollars? US companies? (1)

Xest (935314) | more than 4 years ago | (#32663322)

Yeah, it's extremely simple but as I say, it demonstrates well the fact that if things get bad it's easy for Britain to make money.

If the country was on the verge of bankruptcy, would saving a phenomenal £60bn at the expense of £30 a week less state pension really be that bad? It'd certainly be better than the alternative of increased debt payments and an eventual inability to afford any state pension at all! The point is it demonstrates that Britain has got plenty it can cut, and that's a good thing. It's when you're both bankrupt and have nothing to cut either that you need to worry.

Re:Dollars? US companies? (0)

Anonymous Coward | more than 4 years ago | (#32664596)

Do you know the current state pension amount? £97 a week! tell you what spend £67 a week next winter (don't forget this includes any heating housing council tax etc you have to pay) and then say that cutting that much is fine and not a problem.

Tell you what how about we change income tax so that people earn 30% less and see how much more we earn that way?

Re:Dollars? US companies? (2, Insightful)

Xest (935314) | more than 4 years ago | (#32669942)

I think you completely missed the point.

Surviving on £30 a week less is better than the alternative of having the entire economy fail because if it did your £30 a week wouldn't be worth shit anyway.

I'm not saying we should decrease the state pension, I'm not saying that at all, I'm just pointing out that if we really reached crisis point it would be at least one option that would allow us to avoid complete and utter national meltdown.

Re:Dollars? US companies? (2, Insightful)

Hognoxious (631665) | more than 4 years ago | (#32663800)

Well you've pretty much summed it up, but I'll add that when it comes to having a big bloated public sector Greece and Spain (plus Belgium and France) are in an entirely different league. Jobs for life (many of which don't really need doing - just as well because they don't bother to do them anyway), early retirement with an index linked pension - and still they're on strike at the slightest excuse.

Right now I see the ferries to the Greek islands are blocked by a bunch of hooligans. So there's hundreds of tourists stuck on the docks, fuming and swearing they'll never go back there, when they should be in shops and taverns putting money into the local economy.

Do these morons think there's an endless pot of gold that the government is withholding from them just to be mean?

Re:Dollars? US companies? (2, Insightful)

Xest (935314) | more than 4 years ago | (#32664636)

Yep, it did make me chuckle the other day when I saw the French were raising the retirement age to 62- poor sods, however will they cope?

Here in the UK though if you've seen the comments from the unions their attitude is no different- according to the unions in the UK we can't make cuts and we can't raise taxes. I'd love to know what planet the unions are on, I'd love to know where exactly they think we're going to find £150bn without cutting or raising taxes. That's a common trait amongst unions it seems though, they're often more than happy to whine and moan about everything, but they never actually offer any alternative solutions to the problems, just claim the solutions everyone else comes up with can't work.

Re:Dollars? US companies? (1)

Dogtanian (588974) | more than 4 years ago | (#32665088)

US made might be rare but not as rare as UK made.

Where do you live? I suspect the story might be different from within the EU than within the US.

US-made goods are actually very rare in the UK- I used to note that my disposable contact lenses and aftershave were some of the few things I owned that were made in the US, but the same type of lenses and aftershave are now made in Ireland and (IIRC) Switzerland respectively. Most things here are either made in the Far East (electronics, mass-produced plasticky stuff and the like) or within the EU. I suspect that within the US it's either the Far East or NAFTA(?) countries instead.

But yeah, we do make jack s**t because obviously call-centre jobs are^w were the future of our economy.

BTW, 40 million is still absolutely f*****g peanuts on the scale of things, regardless.

Re:Obviously (2, Insightful)

ZeRu (1486391) | more than 4 years ago | (#32662720)

I don't that's an issue here, more like it's part of UK Govt's plan to increase taxes to get rit of its debt.

Re:Obviously (0)

Anonymous Coward | more than 4 years ago | (#32662738)

When trying to cut a billion pound deficit, yes. It is unproductive to give tax cuts to companies based in Britain making "culturally British" games. It was a hugely masturbatory exercise in the first place. Better to make doing business in general cheaper in the UK and offer tax breaks on entering low employment areas. That way video game developers can benefit without having to show how starfighters 3 is culturally british... And other companies can benefit too.

Not that bad for indie devs, at least (4, Informative)

gravos (912628) | more than 4 years ago | (#32662518)

Actually, an indie game developer in the UK [positech.co.uk] has said that this is not a huge deal (for him at least) because they lowered the business tax rate 1% instead, and this way he doesn't have to fill out any forms for his games business to get a boost.

Not that bad for non-indie devs either (1, Insightful)

Anonymous Coward | more than 4 years ago | (#32662578)

I work in the games industry too, and I'm not at all bothered by this tax relief being cancelled. It wouldn't have helped the average developer one bit, all it'd have done is give the big cats who run the companies even more money.

The only argument that really holds any weight in this discussion is for the giant multinationals who might decide to relocate their UK studios elsewhere for tax breaks. Even if the big companies move, those people will probably still find jobs elsewhere anyway. If they stay, we're just giving UK government money to a foreign company. Seems a bit daft really.

Re:Not that bad for indie devs, at least (3, Informative)

cappp (1822388) | more than 4 years ago | (#32662938)

The UK isn't the only one to make the move. Wisconsin recently decided to scale back it's tax incentives for the entertainment industry as reported http://www.gamepolitics.com/2010/06/16/wisconsin-scales-back-film-interactive-tax-incentives [gamepolitics.com] - seemingly largely based on their experience with the film industry

While more aggressive incentives did manage to lure the Public Enemies production to Wisconsin, after doling out $4.6 million in tax credits to the production, it was estimated that the filming of the movie only brought in $5 million in local economic activity

Seems the UK government was aiming for a wider ranging effect with it's budgeting as noted http://www.develop-online.net/news/35205/Tax-Breaks-the-deal-is-off [develop-online.net] -

As part of his Emergency Budget, Osborne said that subsidies for developers first proposed by the previous Labour government in April will not come into force. He described the suggestion as 'poorly targeted' as part of a wide-ranging budget that outlined a number of cuts and tweaks to the economy designed to reduce the deficit and facilitate business growth. And despite saying "I want a sign to go up above the British economy that says 'open for business'," he made it clear that this will not be made by selectively offering tax cuts to specific fields such as games.

Re:Not that bad for indie devs, at least (1)

AmiMoJo (196126) | more than 4 years ago | (#32663390)

Not expecting any loss of sales/profits due to the VAT increase then?

Either his prices will have to rise or his profit margins fall. It's loose-loose.

Re:Not that bad for indie devs, at least (1)

imakemusic (1164993) | more than 4 years ago | (#32663440)

Er, loose margins means big profits, right?

Re:Not that bad for indie devs, at least (1)

tlhIngan (30335) | more than 4 years ago | (#32665418)

Not expecting any loss of sales/profits due to the VAT increase then?

Either his prices will have to rise or his profit margins fall. It's loose-loose.

Would be interesting to see what happens first - complaints about how UK/EU always "overpays" for stuff or how big the price changes are.

Unlike most of North America, UK/EU prices build in all the sales taxes, so what you see is what you pay. Now, with the VAT going up, what will that do to prices? After all, I'm assuming retailers love doing the 199.99 thing - are they going to eat the extra 5-ish pounds, or will they rise to 204.99? Or 209.99? (After all, a 199.99 price is much "nicer" to humans than slightly oddball amounts like 204.99 or 209.99).

Of course, it also means that in North America, sales taxes increasing means consumers see it directly...

Re:Not that bad for indie devs, at least (1)

AmiMoJo (196126) | more than 4 years ago | (#32667148)

An interesting point you raise there. We VAT lowered to 15% for 12 months to stimulate spending for 12 months at the height of the crunch. When it went back to 17.5% a lot of retailers didn't pass on the increase, instead just letting it eat into their margins. Maybe they slowly pushed prices up over the 12 months to compensate.

I don't think many will be willing to eat this further increase though. Many places have been moving away from round number prices lately anyway, perhaps due to all X.99 prices end up as odd amounts when VAT fell. It's a good idea really because as well as helping to prevent these kinds of issues when for one reason or another prices have to go up it also seems more honest to most people.

Re:Not that bad for indie devs, at least (0)

Anonymous Coward | more than 4 years ago | (#32668062)

i think games developers from the UK sell outside the UK too, where no VAT would be charged.
So yes, still a win.

Why should the video game industry get breaks? (0)

Anonymous Coward | more than 4 years ago | (#32662524)

I don't get a tax break. My company doesn't either. I thought it was only banks that got the bailouts.

Re:Why should the video game industry get breaks? (1)

Hognoxious (631665) | more than 4 years ago | (#32662560)

I don't get a tax break. My company doesn't either.

Yes it does, they're lowering corporation tax and employers' NI contributions.

Re:Why should the video game industry get breaks? (1)

BasilBrush (643681) | more than 4 years ago | (#32662644)

So much for the story about cuts being to pay off the national debt.

Re:Why should the video game industry get breaks? (1)

Hognoxious (631665) | more than 4 years ago | (#32662962)

So much for the story about cuts being to pay off the national debt.

What do you think they should do, put everybody's taxes up to 100% so that nobody bothers working, companies all emigrate and the government ends up with all of nothing?

It's not like the situation left any good options; rather it was case of choosing the least bad course. There's a fine line, and I think they got it more or less right. But only time will tell.

Re:Why should the video game industry get breaks? (1)

SkunkPussy (85271) | more than 4 years ago | (#32665098)

well osborne suggested during the election that the tories would not increase VAT.

http://conservativehome.blogs.com/thetorydiary/2010/04/george-osborne-aims-to-strangle-labours-vat-attack-at-birth.html [blogs.com]

Re:Why should the video game industry get breaks? (1)

Hognoxious (631665) | more than 4 years ago | (#32667718)

"We have no plans to do X" != "We will never do X". Bear in mind that the incoming government don't get to see the books in advance. I mean, do you call this [guardian.co.uk] sensible grown-up politics?

It's still lower than in Belgium and Denmark, and only a gnat's chuff higher than France. Sooner or later the barmy bastard Brussels bureaucrats would have forced us to put it up (or in their language, "harmonized" it) anyway.

Re:Why should the video game industry get breaks? (1)

BasilBrush (643681) | more than 4 years ago | (#32672050)

What do you think they should do, put everybody's taxes up to 100%

I think at a time when they are making cuts, they shouldn't be reducing tax for corporations. That doesn't imply raising them, let alone to 100%.

Re:Why should the video game industry get breaks? (0)

Anonymous Coward | more than 4 years ago | (#32662714)

I don't get a tax break. My company doesn't either.

What a pathetic and ignorant attitude. Maybe the games industry is international and fragile and makes more money for the country than your industry. Or maybe it doesn't. Not the point - the point is that different industries have different dynamics and needs, and some are more valuable than others and need to be protected with different incentives.

Re:Why should the video game industry get breaks? (1)

TheRaven64 (641858) | more than 4 years ago | (#32662796)

I'm international and fragile - currently, none of my clients are in the UK, so every pound that I earn is a net increase for the UK economy. Somehow, because I'm self employed, I get nothing from this budget. Maybe I'll move to France and enjoy nicer weather...

Re:Why should the video game industry get breaks? (1)

Hognoxious (631665) | more than 4 years ago | (#32662934)

Are you a sole trader? If so you should gain something from the NI reductions. If you have your own company then you'll save some corporation tax too.

And if you think it's any better in France, you're hopelessly naïve. The tax authorities there are absolute bastards, and good luck dealing with them if you don't speak fluent French.

Re:Why should the video game industry get breaks? (0)

Anonymous Coward | more than 4 years ago | (#32674998)

So despite being explicitly told what the point was not, you missed it anyway. You do not constitute an industry. Do you expect the government to set a tax plan for every individual business? Please go to France.

Re:Why should the video game industry get breaks? (1)

Hognoxious (631665) | more than 4 years ago | (#32662894)

I'd say replying to the wrong post (and/or not understanding what quotes are) is pretty pathetic and ignorant.

Life is not a Game of Halo (0)

Anonymous Coward | more than 4 years ago | (#32662530)

The game industry in the form of TIGA were just trying it on. It played well for the right wing attack dogs as it made the Labour government look like they were anti games. Labour caved in to buy them off when none of their reasons never really stacked up. Now the lame right wing Conservative government has got in the bribe is no longer necessary so it's being chopped. The fat cats have avoided paying for their mistakes while the poor are facing an effective 10% cut in incomes over this parliament as a mimimum. When the real cost of the right wing economic illiteracy hits home TIGA may discover that playing games with peoples lives isn't quite as cost free as a round of Halo.

Re:Life is not a Game of Halo (1)

Goffee71 (628501) | more than 4 years ago | (#32662594)

Does the Arts Council still exist (The Raffia Mafia - if my "Yes, Minister" is correct)? TIGA should join with them and snuffle around that little grant factory.

Re:Life is not a Game of Halo (0)

Anonymous Coward | more than 4 years ago | (#32662742)

Art has rarely done well without patronage or people viewing it with an eye to investment which is where the Arts Council comes in. I'm pushed to see how established games businesses need any support. I suspect, like most businesses, they need to spend more time innovating and developing markets instead of procrastinating. Off the top of my head I can think of a number of things the British games industry can do that they're not doing. Applying for grants is not one of them.

('Yes, Minister' is funny but too cynical and jaded for me. It's precisely the sort of programme that reinforces bad habits rather than encourages better ones. Instead of indulging backwards clichés more constructive developing of the sort of vision people want looks more productive to me. After all, the future is where we're going to be living.)

Re:Life is not a Game of Halo (1)

Hognoxious (631665) | more than 4 years ago | (#32663118)

It's precisely the sort of programme that reinforces bad habits rather than encourages better ones.

Correct me if I'm wrong, but I don't recall it being marketed as a training course.

Re:Life is not a Game of Halo (1)

Chrisq (894406) | more than 4 years ago | (#32662826)

Does the Arts Council still exist

Yes [artscouncil.org.uk] but its 25% smaller than it was yesterday.

Re:Life is not a Game of Halo (0)

Anonymous Coward | more than 4 years ago | (#32663492)

Only another 75% of it to go, then. Good riddance.

What the summary doesn't say.. (1)

DigitAl56K (805623) | more than 4 years ago | (#32662544)

.. is that this is part of an "austerity" budget aimed at cutting £1.3bn of debt, including public sector pay freezes and an increase in VAT to 20% among other measures. In light of that losing £40-50M in "promised" tax cuts (promised by Labour party, recently out of power) for the gaming industry isn't exactly the worst problem the British are facing. Sounds like one of the more sensible cuts in fact.

And the other half of the story... (4, Informative)

Hadlock (143607) | more than 4 years ago | (#32662554)

The economy is bankrupting the UK. Fark puts it succinctly: "Facing a massive budget deficit, the UK to cut welfare, increase the VAT to 20 percent, and impose a new tax on anyone who brings one of those damn vuvuzelas back from the World Cup". Chancellor George Osborne is doing what all countries should do in that situation but are afraid to do, due to the unlikelihood of reelection. The country is damn near bankruptcy, the whole European continent is over-leveraged on debt and Britain is doing their best to make an example by balancing their budget. Tax handouts to the entertainment industry don't help balance the budget. Insert snarky comment about US legislators growing some balls and balancing our budget here...
 
Here's some more info on the subject:

from the NYT http://www.nytimes.com/2010/06/23/world/europe/23britain.html?hpw [nytimes.com]
  Britain Unveils Emergency Budget
LONDON -- Setting the scene for years of potential strife with the powerful public-sector unions and their allies in the Labour Party, Britain's new coalition government on Tuesday unveiled the most severe package of spending cuts and tax increases since the early days of Margaret Thatcher's era.

George Osborne, the chancellor of the exchequer, held the budget box as he left 11 Downing Street for Parliament on Tuesday.
After only six weeks in office, the government of Prime Minister David Cameron took what his coalition of Conservatives and Liberal Democrats acknowledged was a historic gamble: that austerity measures will help balance the government's books without pitching the country into a double-dip recession.

The cuts and tax increases, including average budget reductions of 25 percent for almost all government departments over the next five years, will make Britain a leader among European countries, including Ireland, Greece and Spain, competing to show they can slash spending and appease investors worried about surging debt. But the sharp reductions defy conventional economic wisdom, which holds that governments should increase spending to stimulate growth when the private sector is weak.

The steps outlined to the House of Commons by George Osborne, the chancellor of the Exchequer, would cut the annual government deficit by nearly $180 billion over the next five years, shrinking Britain's public sector and instituting tough reductions in public housing benefits, disability allowances and other previously sacrosanct aspects of the country's $285 billion welfare budget.

Only health and international aid spending would be protected from the 25 percent cuts for government departments by 2015, the steepest fiscal spending reductions since the 1930s. Mr. Osborne also announced a two-year wage freeze for all but the lowest paid among Britain's six million public servants and a three-year freeze on benefits paid to parents for rearing children, in addition to new medical screening for people claiming disability benefits, part of a bid to cut $16 billion from the annual welfare budget.

Mr. Osborne also announced a raft of tax increases, though he was at pains to say that the government's plan to sharply reduce the country's $1.4 trillion national debt would rest on making roughly four pounds in spending cuts for every pound in tax increases, a point of considerable political weight in a country that is already among the highest-taxed in Europe.

The new taxes include an increase next year to 20 percent from 17.5 percent in the value-added tax on most goods and services, and an increase in the capital gains tax, to a new high of 28 percent, to curb what Mr. Osborne described as rich people in Britain "paying less tax than the people who clean for them." At the same time, changes in income tax will remove nearly 900,000 of Britain's poorest people from the income tax system altogether, and corporate taxes will also be reduced over a five-year period, to 24 percent from 28 percent.

"I am not going to hide the hard choices from the British people," Mr. Osborne said in a speech in which he accused the former Labour government of understating the impact of its 13 years of deficit spending. But he said the new coalition government, which should have little difficulty enacting the new measures with its Parliament majority, had striven to make the austerity fair.

"Over all, everyone will pay something," he said, but the poor would pay less than the rich.

The concerns about the budget stringencies seemed likely to reverberate well beyond Britain, pitching the Cameron government squarely into the political and economic dispute about the best way to navigate world economies out of the worst recession since the 1930s.

Last week, President Obama wrote to the leaders of the so-called Group of 20 nations, including Britain and other major economies, saying that while "credible plans" to cut national deficits were important, cutting them too quickly could lead to "renewed hardships and recession." The letter was seized upon by the Cameron government's opponents in Britain, who cited it on Tuesday in condemning the Osborne budget.

"It's back to the economics of the 1930s," Ed Balls, a left-wing Labour figure who is one of five candidates running to succeed the former prime minister, Gordon Brown, as Labour leader, said in a BBC interview.

There's more but you can click on the link if you like.

Re:And the other half of the story... (0)

Anonymous Coward | more than 4 years ago | (#32662634)

The economy is bankrupting the government. The rest of the UK isn't doing too badly.
If you actually care, it's still early enough to bitch about this being labour's fault.

All countries should do? (1)

SmallFurryCreature (593017) | more than 4 years ago | (#32662682)

That is up for debate. The initial reaction the global recession was to spend instead. Spending keeps businesses running, keep people earning wages and paying taxes and from that you can spend again.

Stop spending and business stops, people stop collecting wages and stop paying taxes and then you can't spend.

The UK is however not just facing the global recession but the fact that the UK has been slipping for decades. The recession has just made it clear just how rotten the UK economy is. It has/had a huge financial sector but suddenly after the banking crisis it has become clear just how much hot air that was. Meanwhile production has fallen to an all time low, the UK produces even less then the US, it is a consumer/service based economy and that economy is prone to bubbles.

The UK government might have no other choice but to cut spending but these cuts are only going to hurt the economy more and more. Consumer spending will drop like a rock as people save instead for the downpour that they now know is going to come. I predict fore-closures of small businesses will sky-rocket and medium business will soon follow.

Just ask any rich person. In time of prosperity, save. In times of recession, spend. Sadly, right wingers want to spend (on tax cuts) when time is good and then when times are bad they got nothing left to spend.

Just how is the economy going to recover if nobody has any money to spend?

Re:All countries should do? (1)

Simmeh (1320813) | more than 4 years ago | (#32662856)

UK Plc is getting into more debt just to pay the interest on the existing debt. There is a massive black hole in the finances for pensions etc. This parliament is focusing on removing that structural deficit. Debt should peak by 2014. Public sector spending has soared this past decade. Notably, duty on booze and cigs hasn't been increased, so consumers will continue to drink their sorrows away. It's a gutsy move, but I think consumer spending in the long term will remain steady.

Re:All countries should do? (0)

Anonymous Coward | more than 4 years ago | (#32663010)

UK Plc is getting into more debt just to pay the interest on the existing debt.

[citation needed]

Re:All countries should do? (1)

SkunkPussy (85271) | more than 4 years ago | (#32665390)

We have a national debt and an annual deficit.

Its impossible not to be getting further into debt with this combination.

[editor rights removed from Anonymous Coward for over-use of meme]

Re:All countries should do? (1)

Hognoxious (631665) | more than 4 years ago | (#32663246)

Stop spending and business stops, people stop collecting wages and stop paying taxes and then you can't spend.

But keep spending money that you don't have and sooner or later the person you borrowed it from is going to get nervous about whether they're ever going to get it back. Or they might not have any more to lend.

Just how is the economy going to recover if nobody has any money to spend?

They could, you know, work and earn some? Presumably that's how it started, it certainly didn't fall out of the sky.

Re:All countries should do? (1)

Beyond_GoodandEvil (769135) | more than 4 years ago | (#32663398)

They could, you know, work and earn some? Presumably that's how it started, it certainly didn't fall out of the sky.
Even only it were that simple. Now, clearly the UK has been not keeping an eye on its non-productive welfare payments, thus creating a whole generation of chavs. The fix to that problem won't happen overnight. And glib statements of "get a job, wanker" aren't particularly helpful either.

Re:All countries should do? (0)

Anonymous Coward | more than 4 years ago | (#32664862)

I agree, it's also not going to help that next month, when this years graduates leave, they are going to find it just as hard to get a job which will make the unemployment worse, it will also make it even harder for folk(like me) who left Uni last year and are still job hunting. It's not always a case of not wanting to work. Where I live in the UK there are simply not enough jobs for everyone who does want to work.

Re:All countries should do? (0)

Anonymous Coward | more than 4 years ago | (#32664452)

Ok my chronicly ill partner who can't move some days to go to the toilet let alone anything else will miraculously pull a full time job and the health to work it outta thin air.

Until you know what its like trying to live in this country on benefits shut your arrogant ass mouth and go preach to your conservative club friends. This budget effects the poorest 30% of the country by a HELL of alot more than the rest. Someone did an analysis if your on 40k a year you will spend a massive 80 quid more a year, if you rely on benefits your £400!! a year worse off yeah great planning there and worst of all the libdems are signing off on the ONE thing they promised they would never do RAISE VAT! VAT is already the worst Tax to use for fair taxation it effects the poorer people in this country much much worse than even those in a middle income bracket.

Re:All countries should do? (1)

DigiShaman (671371) | more than 4 years ago | (#32664198)

Just ask any rich person. In time of prosperity, save. In times of recession, spend. Sadly, right wingers want to spend (on tax cuts) when time is good and then when times are bad they got nothing left to spend.

Sadly, this isn't a political policy issue so much as a cultural one. Though governments around the world are NOT helping in the slightest.

In America at least (perhaps Europe too), most people adjust their lifestyle to match their income. In other words, they live beyond their reasonable means without saving. So when people live paycheck-to-paycheck, they often put themselves at the dependency of the Government. Killer is, when the economy retracts like it is now, it becomes a downward spiral of self destruction. I believe we are seeing this now in in part to a cultural mindset lead on by generations of "living in plenty"

Quite a shock for everyone.

Re:And the other half of the story... (2, Interesting)

IBBoard (1128019) | more than 4 years ago | (#32662854)

Chancellor George Osborne is doing what all countries should do in that situation but are afraid to do, due to the unlikelihood of reelection

But the advantage that he has is that they're part of a coalition, so it isn't just his party that takes the blame. In a way, this coalition has its very good points. There are almost certainly some of these measures that wouldn't have been taken without it, even if they were necessary.

Re:And the other half of the story... (1)

Hognoxious (631665) | more than 4 years ago | (#32662858)

Tax handouts to the entertainment industry

It's not a handout. It's a reduction in taxes.

don't help balance the budget.

If the companies in question would otherwise relocate elsewhere then they do, because 39% of something is more than 40% of nothing.

Re:And the other half of the story... (0)

Anonymous Coward | more than 4 years ago | (#32662988)

By that logic all companies that produce services that can later be moved should be taxed at 0%, otherwise the company should move to a country with lower taxes. That would include (of the top of my head), Architects, Development Engineers, Music Production, Game Development (duh), Artists, Programmers etc. Perhaps even lawyers and banking could be done mostly in a 0% tax country and only small local representatives.

Re:And the other half of the story... (1)

Hognoxious (631665) | more than 4 years ago | (#32663146)

By that logic all companies that produce services that can later be moved should be taxed at 0%

Fallacy of the excluded middle. Didn't bother reading the rest.

Re:And the other half of the story... (1)

Tekfactory (937086) | more than 4 years ago | (#32663946)

If your country wants these service industries, especially the High Tech ones, then maybe its worth considering. 0% tax on the corporation, but regular income tax on the workers themselves, regular taxes on the electricity the company consumes, computers they buy, space they rent, office supplies they use.

Re:And the other half of the story... (2, Insightful)

drinkypoo (153816) | more than 4 years ago | (#32663438)

It's not a handout. It's a reduction in taxes.

In practical terms, there is no difference.

If the companies in question would otherwise relocate elsewhere [...] 39% of something is more than 40% of nothing.

Propping up failing business is not the answer. Allowing businesses to fail in a timely fashion so that the results are not magnified by keeping them going up until the last, catastrophic minute only causes further financial fallout.

Re:And the other half of the story... (1)

Hognoxious (631665) | more than 4 years ago | (#32663568)

It's not a handout. It's a reduction in taxes.

In practical terms, there is no difference.

Rubbish.

In one case, there's a net flow of money out from the government. In the other there's a net flow (even if the magnitude is reduced) towards it.

Re:And the other half of the story... (1)

drinkypoo (153816) | more than 4 years ago | (#32664548)

In one case, there's a net flow of money out from the government.

Uh, no.

In one case there's a net flow of money into government. In the other case, there's a net flow of money into government. This will continue to be true until government exceeds 100% efficiency, i.e. forever and ever. What's the difference between getting a rebate and not paying taxes? Nothing as far as everyone but the person either getting the rebate or not paying the taxes is concerned.

Re:And the other half of the story... (1)

cappp (1822388) | more than 4 years ago | (#32662982)

The whole European continent is over-leveraged on debt and Britain is doing their best to make an example by balancing their budget

Hardly the only ones though. France and Germany jointly announced similar budgets, for instance France committing itself to

cut 45 billion euros from the nation's budget and raise the retirement age to 62 years... "We've made a commitment to bring down our deficit from 8 to 3 percent by 2013, and we will concentrate all of our efforts on it."

as noted at http://www.foreignpolicy.com/articles/2010/06/17/couples_retreat?page=full [foreignpolicy.com] As for Germany, http://www.france24.com/en/20100608-merkel-rolls-out-unpopular-austerity-package-germany [france24.com]

Merkel...pledged to find around 11.2 billion euros (13.4 billion dollars) in savings in next year's budget. By 2014, the government hopes to cut 86 billion euros in spending.
The German government last year passed a constitutional amendment requiring an approximately balanced budget by 2016. The austerity package is intended to bring the budget into compliance with that law.
The government is also considering cutting up to 15,000 jobs from the federal administration by 2014.
The armed forces may be slashed by 40,000 soldiers and major projects such as the rebuilding of the Hohenzollern Palace in Berlin, which was badly damaged during World War II, has been postponed until at least 2014.

Re:And the other half of the story... (1)

Gudeldar (705128) | more than 4 years ago | (#32663258)

Increasing taxes and cutting spending is the exact opposite of what you want to do if you want the economy to grow.

Re:And the other half of the story... (0)

Anonymous Coward | more than 4 years ago | (#32663320)

But it's the exact thing you do if your deficit is too big. Which is the problem in most (but not all) EU countries and the US.

This was always expected, since the first fears about the financial problems. The government would inevitably have to spend a lot of money, which it didn't have, and that would increase the deficit, inevitably meaning later tax increases and spending cuts.

If a government chooses to ignore this, what happens is its debts become unserviceable and either it collapses altogether (resulting in utter misery for its citizens) or it accepts an IMF bailout which comes with an obligation to set those high taxes and ruthlessly cut spending.

The UK has done that (take IMF cash) before, and it doesn't plan to do it again.

However.. (3, Insightful)

severn2j (209810) | more than 4 years ago | (#32662564)

They are cutting Corporation Tax, employer contributions to National Insurance and (if I read correctly) new start ups wont have to pay NI on the first ten employees they hire. So rather than provide a boost for that one industry, those breaks are helping out all industries, including the games industry. Makes sense to me.

Re:However.. (1)

Zeussy (868062) | more than 4 years ago | (#32662698)

What I like is how they say, will save the government x amount of money. But they have not spent it. They have not created that money, they just are not going to spend like they proposed. If there was a current games relief tax and they stopped that, that would be saving them money. :S

that's an interesting trend (0, Offtopic)

wangbangersanonymous (1830288) | more than 4 years ago | (#32662568)

Now, it could just be me as a foreigner wildly speculating out of left field, but doesn't it seem like Australians in general, as well as most users of unix/linux and apple products seem to inherently love eating fat dicks and licking smelly/juicy anuses? As well, drinking viral ejaculate out of used condoms is pretty common there. I mean, for these guys it's practically a fucking national past-time!
Also- what the fuck is going on with the comment system?

--blowme

Re:that's an interesting trend (1)

upyourshomo (1803732) | more than 4 years ago | (#32662584)

nope, it's not your imagination, it's a startling reality...

Re:that's an interesting trend (1)

love2putmypenisthere (1804486) | more than 4 years ago | (#32662598)

yea, I've also noticed this, although thought it was an issue restricted to Apple iPhone users. How strange.

50 grand tax break (1)

NexusTw1n (580394) | more than 4 years ago | (#32662590)

Bad news for the video games industry but it's not a total disaster. They get to benefit from a drop in corporation tax, and if they are smart, they'll take advantage of the 50K tax break for setting up a business outside of the SE hot zone.

All anyone such as Rockstar needs to do is open a new software house in Bradford, adjacent to and working with Rockstar Leeds [rockstarleeds.com] for example and they get a reasonable tax break.

So while they've been kicked in the teeth, there are still some workable benefits to be had from the new budget.

Corporate & Business Tax cuts (2, Interesting)

Manip (656104) | more than 4 years ago | (#32662622)

Corporation tax is being dropped 1% every year from *25% (*current) down to 24% making it the lowest tax of its kind in the Western world.

Small businesses will also see a 1% drop in the rate of tax (between 300K-1.5M). Small businesses also have to start paying NI at a higher threshold, which means the first few employees are now much cheaper.

So, yes, this is a blow - but it might actually not hurt the small games industry at all and only hurt the big industry for a few years until we get down to that insane 24% corporation tax.

Re:Corporate & Business Tax cuts (1)

zoney_ie (740061) | more than 4 years ago | (#32663078)

No, it's not the lowest tax of its kind in the world. A number of countries have lower rates, including neighbouring Ireland with 12.5%. Needless to say Northern Ireland has been looking for a similar rate within the UK as a whole or a special rate just for NI.

Re:Corporate & Business Tax cuts (1)

Von Helmet (727753) | more than 4 years ago | (#32663508)

Main rate CT is currently 28%, small companies rate is 21%. Marginal rate applies between 300k and 1,500k, though the thresholds depend on how many associated companies you have. The 24% rate won't be the lowest in the western world, though it will apparently be the lowest in the G20. The drop in CT rates is good, as is the drop in NI, though it's balanced by the drop in capital allowances from 20% to 18% for main pool expenditure and 10% to 8% for special rate pool expenditure.

Why yes, I do happen to be a a corporation tax adviser ;)

So? Cuts were announced on everything (1)

Aceticon (140883) | more than 4 years ago | (#32662806)

The UK has a huge public debt (and growing) at the moment because of lack of fiscal probity in the last years of the previous government and because a lot taxpayer's money was used to "saved the banks" (the same banks that in the years before that payed billions in bonuses to traders).

The Chancellor (i.e. the Government Minister that takes care of Finances) has just announced a new budged where cuts are all over the place and Value Added Tax (i.e. Sales Tax) has gone up, all this to try and control the public debt.

Let's get some perspective - there have been cuts in spending in things like Education and Social Services: as a tax payer in the UK, no mater how much I like gaming, I don't care that a meaningless, non-strategic industry is not getting a hand-over of taxpayer's money anymore. (In fact, why should they be given taxpayer's money at all even in the good years?)

So this story is:
a) Not really news, since everybody is getting cuts
b) Really just saying that a wrong (giving my money to a special interest group) has been righted.

Cowards and liers (0)

Anonymous Coward | more than 4 years ago | (#32663064)

It should be noted that similar investment in games companies in Canada showed that every $1 invested in the industry by government got them a $13 return.

You have to spend money to make money.

Anon because I'm at work in a AAA games company. :p

Re:Cowards and liers (0)

Anonymous Coward | more than 4 years ago | (#32669210)

Citation please, because that is bullshit.

Tax Relief Cancelled (1)

mestar (121800) | more than 4 years ago | (#32663074)

But what if that cancellation got overruled? Then the headline would say:

Tax relief cancellation overruled.

tax. Oh no. ...relief. Oh yes. ...cancellation. Noooo. ...overruled. Yessss.

mod 3own (-1, Redundant)

Anonymous Coward | more than 4 years ago | (#32663372)

go of the minUtiae Project faces a set

Thames 360 Party (1)

Ogive17 (691899) | more than 4 years ago | (#32663420)

Hmm... it doesn't roll off the tongue very well...

Massive U-Turn? (2, Interesting)

phasiclabs (1840248) | more than 4 years ago | (#32663498)

I'm an indie developer, and I happened to be at the State of Independence conference in York 2 months ago.

Ed Vaisey, now the Creative Industries Minister in the Department of Culture Media and Sport was a keynote speaker, and actually took time out of election campaining to be there.

The general gist of what he was saying was that should the Conservatives get elected, then he would be pressing for tax breaks for UK game developers (he also claimed the idea of tax breaks was partly his idea, but that Labour had taken the credit).

Also, at a Playing The Game panel session (http://www.gamesindustry.biz/articles/industry-support-is-number-one-priority-vaizey [gamesindustry.biz] ), he claimed :

You are competing against countries that are giving active fiscal support to the videogames industry, and I think it's a given that you have to put something in place to, quite frankly, level the playing field - so it is my absolutely number one priority, should we win the general election."

O rly?

Re:Massive U-Turn? (3, Insightful)

Grantbridge (1377621) | more than 4 years ago | (#32664302)

Just because the minister for the Department of Jam wants more jam subsidies does not mean that the Chancellor will pay for them! I don't think he has lied or misled you, he just doesn't have the clout to persuade Osborne to cut the health budget and pay for games instead.

It must be nice to have actual conservatives (1)

nrook (1225730) | more than 4 years ago | (#32664914)

The British elected the Conservative Party to office, and they began by cutting expenses and raising taxes in a time in great need. How novel. Here in the United States, we gave the Republicans 8 years in control of the government, at least 5 of which were spent owning both houses of Congress as well as the Presidency---and we ended up with a big deficit. We even had a surplus to begin with! In fairness to Bush, he did try to reduce costs on Social Security, but on every other issue it was clear that the deficit was the last thing on his mind. Obama is no better, but at least no one expected better of him.

Entitlement programs and the military are the two largest costs to the federal government, and neither can be touched without erupting violently on whoever had the nerve to try to cut them down to size. And until they go, young people across the country will be robbed to pay for the retirements of those responsible for this deficit---a payment for which they will never receive compensation, as these entitlement programs will have collapsed by the time they grow old themselves.

Re:It must be nice to have actual conservatives (0)

Anonymous Coward | more than 4 years ago | (#32668666)

I can assure you that our British "conservatives" are nothing of the sort. They are left-liberals, like all of our recent governments. They will cut some public spending - they have to - but the really big wastes of money are going to keep on just like before. They can't touch health, education or welfare, and those are the parts of the public sector most in need of reform.

To illustrate how bad this is, after the election, the "Conservative Party" didn't have enough seats to form a government. So they quickly made a deal with the "Liberal Democrats" (a left-wing social democrat party). This deal was easy to make, because the two parties basically agreed on everything already. The "conservatives" gave up their plan to raise the inheritance tax threshold and the "liberal democrats" gave up their opposition to nuclear arms. Other than that, both parties walked away happy.

Imagine the Republicans merging with the Democrats to form a single party. Impossible? Not in a country where the Republicans are already Democrats.

Posted anonymously because I can't be bothered to deal with lefty outrage.

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