Foreign games companies lobbied the British Government to abandon plans to give its homegrown firms tax breaks, it has been claimed.
Dundee West MSP Joe FitzPatrick said the allegation was “extremely worrying” for the city’s games industry.
Chancellor George Osborne scrapped tax relief for games companies in last Tuesday’s emergency Budget, just three months after the previous Labour administration had announced the scheme.
Games companies and the trade organisation TIGA had campaigned for games tax to be introduced for years beforehand.
Although the games industry is worth millions to the UK economy, TIGA claimed British developers could not compete on a level playing field with foreign firms already receiving tax relief.
It said the government would earn over £400 million in tax receipts if it implemented the scheme, which would have cost £192 million.
However, it has now emerged that an international publisher, which owns some British development companies, lobbied the government not to introduce games tax breaks for British developers.
Charles Cecil, from Revolution Software, which has just produced the Doctor Who games for the BBC website, said he was told firms lobbied against the games tax because of the “cultural test” the criteria companies would need to meet to qualify for the tax break, which they believed would favour some developers over others.
He told industry website Develop, “I was told that they (MPs) were getting mixed messages from the industry: that a foreign owned publisher or 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.”
Dundee West MSP Joe Fitzpatrick said he will raise games tax relief with chief secretary to the Treasury Danny Alexander today.
“If this was the case then it would be extremely worrying,” he said.Disappointing”The Budget was extremely disappointing.
“Prior to the election both the Liberal Democrats and the Conservatives committed to tax breaks but I and people in the industry will continue to make the argument for tax breaks.
“Danny Alexander is coming to the finance committee today and I will be raising a number of issues about games tax with him and will give him a chance to deny these allegations.”
Dr Richard Wilson, chief executive of TIGA, said work to convince the coalition government to reinstate tax breaks should continue.
“This is not the time to look for scapegoats in the industry,” he said.
“This is the time to convince the Conservative Party and the Liberal Democrats both of whom promised to introduce video games tax relief before the general election to renew their commitment to implement this crucial fiscal measure at the earliest opportunity.
“The UK games industry needs games tax relief to put us on a level playing field against games businesses in other jurisdictions which currently benefit from significant tax breaks,” added Dr Wilson.
Last week Scottish Labour leader Iain Gray called on the Scottish Government to invest £5 million in the games industry in Dundee, which he said would safeguard 200 jobs.
Photo used under Creative Commons licence courtesy of Flickr user artwork_rebel.