Throughout the US and around the world, game developers are fighting for tax incentives and breaks similar to those offered to other creative industries such as the movie industry. Many groups such as TIGA in the UK make the claim that such tax breaks are needed in order to compete with other nations for game development talent, competition created in part by the tax breaks and incentives offered in those competing nations.
While these fights for increased tax breaks rage on, one question seems to remain unasked. Are these tax incentives worth the trouble?
TIGA, the trade group that represents the video games industry in the UK, announced that it will facilitate a series of events around the country to help developers understand the importance of the new Games Tax Relief recently approved by the government. The tour will start in Oxford, England sometime in May, and all of the events will be free for developers to attend. These events will feature input from UK industry veterans as well.
With it being tax season, what better story is there than a cautionary tale on what happens when you actively try to avoid paying taxes? According to news channel ABC 6, 49-year-old Lisa L. Harper (formerly) from Dublin, Ohio, has pled guilty to one count of committing income tax evasion with the Internal Revenue Service for the 2008 income tax year.
The U.S. Internal Revenue Service announced last week that it will treat Bitcoin as a form of property for taxation purposes, in what is one of the first major U.S. regulations of the virtual cryptocurrency.
The UK Minister for Culture, Communications and Creative Industries said that, now that the UK video games industry is confirmed to get tax relief, he wants the sector to focus on bringing more youngsters into the business, as opposed to spending that money on hiring from outside the region. Last week the European Parliament gave the greenlight to the scheme, much to the delight of the industry in the UK and the members of parliament that have long supported giving tax incentives to the sector.
The 2014 budget has been passed in the United Kingdom, but once again this year tax relief for the video games industry in the region were not included. UKIE CEO Jo Twist described the ongoing struggle to get tax relief included in the budget "frustrating." The campaign for tax relief similar to what is enjoyed by the film and TV industries has been going on for years, but there were high hopes from the sector and the trade groups representing it in the UK that it would happen this year.
The Entertainment Software Association (ESA) today presented Texas Gov. Rick Perry (and former Republican presidential candidate) an award for his efforts to create jobs, provide tax incentives and generally foster the growth of the computer and video game industry in the state. ESA president and CEO Michael D. Gallagher presented the award to the Governor and praised him for his "longstanding support for the industry" during an award ceremony at the historic Governor’s Mansion.
Retail Industry Leaders Association (RILA) said in a new report that it would push hard for the passage of an national Internet sales tax law and for better data privacy regulations this year. In its annual policy agenda, the trade group highlighted the issues it deemed to be of grave importance this year. A federal law to deal with online sales tax is at the top of the list. The group, which represents traditional retailers, believes that having a national sales tax collection law will levy the playing field so that online-only retailers don't have an advantage.
If you live in Japan you already know that the government taxes games (and other physical goods) with a consumption tax that are imported from outside the country, but that tax will soon be applied to digital purchases as well, according to this Kotaku report.
According to a brief report in Tax News the French government is pushing to reform the country's video games tax credit (known as the CIJV). French Culture Minister Aurélie Filippetti, Budget Minister Bernard Cazeneuve, and Innovation Minister Fleur Pellerin, have all embraced the French National Assembly's adoption of plans to reform the country's video games tax credit (CIJV).
Buried in a story about a number of companies seeking incentives from the Illinois state legislature being held up by a veto by Governor Pat Quinn over a lack of pension reform, High Voltage Software's name popped up. Apparently Fred Crespo, a Hoffman Estates (a northwestern suburb of Chicago) Democrat, is pushing incentives legislation for the company, which is headquartered in his district.
From the "we-could-have-told-you-that-without-a-poll department" comes this story from Politico about the public's opposition to Internet taxes. The polls - conducted for two separate conservative groups - found that most voters oppose federal Internet sales tax legislation and suggested that lawmakers who voted for it could face serious challenges in the 2014 mid-term elections.
Massachusetts State Rep. John Binienda (D-Worcester) is pushing for more tax incentives for the state's video games industry. It makes sense, given that Worcester is home to several video game development-focused colleges including Worcester Polytechnic Institute (WPI) and MassDIGI at Becker College.
On Sept. 10 the state lawmaker gave testimony promoting House Bill 2511, a bill he is the lead sponsor of that would extend a 25 percent tax credit currently given to the movie industry to game design and development within the state.
The Entertaintment Software Association (ESA) issued a press release this week praising the Texas Film Commission for expanding its economic incentives to include "digital interactive media productions."
Sony Australia is in a dispute with the Australian Taxation Office over $53 million AUD, which comes from five years of tax adjustments (back taxes owed and penalties) that the company believes are in error. A Sony Computer Entertainment Australia spokesperson confirmed the news with GameSpot, but added that its PlayStation business in Australia has not been affected by it. Sony is appealing the assessment.
UKIE, the trade body that represents the video game industry in the UK, says that it feels "pretty confident" that the tax break proposal will be approved by the European Union and that the doubts raised by the EU Commission over taxpayers contributing to the proposed relief will evaporate. Last year, the UK government approved tax breaks for the country's games sector, promising to provide 25 percent tax relief on 80 percent of the budget for qualifying UK-made games.
Earlier in the week while the National Governors Association and proponents of the Marketplace Fairness Act were hosting an event to encourage House members to approve the bill already passed the Senate, Republicans from the House and Senate joined Grover Norquist and Americans for Tax Reform to rally against it. Sens. Rand Paul (R-Ky.) and Ted Cruz (R-Texas) joined House Republicans and Grover Norquist, president of Americans for Tax Reform on Tuesday to rally against the bill.
The video games industry in the United Kingdom should have had tax breaks by now but the European Commission's questions on certain parts of the UK's proposals (mainly having to do with UK cultural tests) have stalled efforts so far. This week UK trade body TIGA urged the EU Commission to make a decision, reports Gamasutra.
Yesterday governors, legislators, congressional leaders, technology companies and small business owners held a meeting to promote the Senate's recently passed Marketplace Fairness Act legislation, which proponents hope will get the same kind of approval in the House. The bill creates ways for states to collect online sales tax across state lines. Traditional retailers say that these taxes level the playing field because it forces all businesses to collect sales tax, and takes away the tax-free advantage online retailers have had for years.
You may recall that back in January, Missouri State Rep. Diane Franklin (R-Camdenton) put forth a bill to levy a one percent sin tax on "violent video games." Apparently not realizing that she lived in a state where raising taxes on anything was considered bad form, she pushed the bill forward in the wake of the Sandy Hook Elementary School shootings that occurred in December of 2012.
If the Marketplace Fairness Act that was enthusiastically passed in the Senate earlier this month were to somehow end up becoming the law of the land (through some sort of divine intervention in the House where it will likely stall for lack of support, in my opinion) then 44 percent would cut back on buying products online. This is according to data from a study sponsored by electronic postage software company Endicia and posted on Mashable.
Vice President Joe Biden thinks that it would be perfectly okay to tax violent video games. During a recent meeting to talk about strategy for enacting the president’s proposed gun legislation, Biden said that an idea floated by Reverend Franklin Graham in late April to tax violent media might be a good idea. Participants in the session told Politico that Mr. Biden said there’s "no restriction on the ability to do that; there’s no legal reason why they couldn’t."
Democrats and Republicans in the Senate seem to agree that requiring online retailers to collect sales tax is a great idea. A bipartisan coalition from both parties easily passed the Marketplace Fairness Act by a vote of 69-to-27. The bill was sponsored by Senator Harry Reid (D-Nevada) who fast-tracked the bill and avoided any committee that might have had oversight over the bill.
UK Chancellor George Osborne and Culture minister Ed Vaizey said today that the European Commission's investigation into proposed tax incentives for the video game industry that have a cultural requirement will not stop UK lawmakers from providing games tax breaks. Speaking at the British Film Commission event for the launch of creative sector tax breaks for TV and animation, the pair showed that their support for tax breaks had not wavered.
While the Senate is likely to pass the Marketplace Fairness Act being rammed through the Senate past the red tape of committees and onto the floor for a vote later today or by the end of this week by Senate Majority Leader Harry Reid (D-NEV.), House Republicans face a roadblock that they put in place themselves when it comes time to vote for their Internet tax bill: a pledge.
The movement to bring State sales tax across the board to Internet retailers got an important endorsement this week as President Barack Obama "enthusiasticlly endorsed" the efforts by Senator Harry Reid (D-NEVADA) to push the Marketplace Fairness Act forward at a breakneck pace - according to The Hill. Senators advanced the bill in a 74-20 procedural vote on Monday evening, one vote less than it received in a test vote last month.