Report: ESLPA Expressed Concern During Tax Break Talk with UK Government

December 8, 2010 -

A four-page expose put together by GameIndustry.biz reveals that ELSPA -- the trade group representing the interactive entertainment industry in the UK -- may have quietly been working against tax breaks. While it sounds like a nefarious, under-handed scenario - and one that may have inadvertently sent a mixed signal to the government at the time - the group had its reasons.

While the industry continually lobbied the government last year to provide tax breaks and other business support, ELSPA aired a number of concerns it had with the government over "cultural tax breaks." ELSPA apparently warned the government against such tax breaks, instead urging them to offer the industry 'software' tax breaks.

The difference between the two is vast:

"Currently videogames are classed as 'software' under World Trade Organisation rules, and as such enjoy the benefit of free trade status," wrote ELSPA in its DCMS submission. "Cultural products on the other hand, are afforded a protected status, that allows countries to apply trading restrictions to protect their own locally cultural products and therefore to restrict free trade.

"Any change to the classification of videogames could seriously affect the commercial development of the industry and its long-term future. Currently, videogames are not affected by the imposition of retail levies, output quotas and the like which are applied to cultural industries (such as the French and Spanish film industries) in order to fund the tax relief schemes.

"Our concern is that the provision of a tax relief scheme on cultural grounds could label the industry's products, in the EC's view, once and for all as cultural, and that this could be an irreversible first step towards the imposition of retail levies or further protectionist regulation aimed at sourcing funding to support the tax relief scheme.

"Any introduction of retail levies within the videogame industry would, from the publishers' point of view, erode any previous financial benefit derived from tax relief at the development stage, mainly because retail levies would apply across all products whereas only a percentage of videogames in development would be successful in obtaining tax relief."

ELSPA, now known as UKIE, claimed that it was not engaging in "anti-tax talk" at the time:

"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," said ELSPA director general Michael Rawlinson at the time. "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."

Inevitably, the games industry did manage to secure film-style tax breaks in the 2010 budget from outgoing government early in 2010, but as the new government began making deep budget cuts, the tax break was one of the first items on the chopping block.

None of ELSPA's concerns on cultural tax breaks had been made public until the GI.biz report.

On a related note, GI.biz also offers an extensive timeline of events dated January 2008 - November of this year related to ELSPA's public statements on tax breaks for the UK games industry.

Thanks Vincent Scheurer of London-based law firm Sarassin LLP - who had a hand in making the report possible in the first place because of its Freedom of Information Act request on lobbying efforts.


Comments

Re: Report: ESLPA Expressed Concern During Tax Break Talk ...

And we also know that a major unnamed publisher lobbied the government not to introduce tax breaks as it would have had an affect on the Canadian games industry.

 
Forgot your password?
Username :
Password :

Shout box

You're not permitted to post shouts.
E. Zachary KnightGot that same recommendation on Twitter. So I guess that is a good sign.09/15/2014 - 8:39pm
prh99Portlandia, though I don't watch a lot of sitcoms. Heard it was good though.09/15/2014 - 8:02pm
E. Zachary KnightSitcom recommendations for someone who like Parks and Rec but hates The Office: Go.09/15/2014 - 6:08pm
NeenekoEven if they do change their policy, they can only do it moving forward and I could see the mod/pack community simply branching.09/15/2014 - 12:50pm
Michael ChandraAs for take the money and run, the guy must have a networth of 8~9 digits already.09/15/2014 - 10:33am
Michael ChandraMe, I'm more betting on some form of mod API where servers must run donations/payments through them and they take a cut.09/15/2014 - 10:32am
Michael ChandraEspecially since they want it for promoting their phones. Killing user interest is the dumbest move to make.09/15/2014 - 10:32am
Michael ChandraGiven how the EULA actively allows for LPs, I'm not sure Microsoft is ready for the backlash of disallowing that.09/15/2014 - 10:31am
Matthew Wilsonthey wont do that, the backlash would be too big.09/15/2014 - 10:25am
ConsterSleaker: how is that a flipside? Sounds to me like that's basically what Notch himself said, except rudely.09/15/2014 - 10:18am
MaskedPixelanteOn the plus side, no more lazy Minecraft LPs, since iirc Microsoft has a strict "no monetization period" policy when it comes to their stuff.09/15/2014 - 10:13am
james_fudgeBut it continues to sell on every platform it is on, so there's that09/15/2014 - 10:09am
james_fudgeOh, well that's another matter :)09/15/2014 - 10:08am
E. Zachary KnightNothing against Notch here. I think it is great that he made something so cool. I just can't understand how it is worth $2.5 bil09/15/2014 - 9:59am
InfophileWhat a world we live in: Becoming a billionaire was the easy way out for Notch.09/15/2014 - 9:42am
james_fudgelots of hate for Notch here. I don't get it. Sorry he made a game everyone loved. What a monster he is!09/15/2014 - 9:37am
SleakerOn the flipside, Notch has been a horrible CEO for Mojang, and the company has grown on sheer inertia, DESPITE being mishandled over and over.09/15/2014 - 9:33am
SleakerI can understand Notch's statements he made to Kotaku about growing bigger than he intended, and getting hate for EULA changes he didn't enact.09/15/2014 - 9:32am
MaskedPixelantehttp://pastebin.com/n1qTeikM Notch's statement about the MS acquisition. He wanted out for a long time and this was the easiest way.09/15/2014 - 9:08am
ConsterEh, I can't blame him.09/15/2014 - 9:01am
 

Be Heard - Contact Your Politician