Govt division on tax breaks emerges

The Treasury’s stance on games tax breaks has been branded “increasingly threadbare” by trade association Tiga, following comments from a senior Treasury official that supported the now-rejected policy.

Chancellor George Osborne famously deemed game tax breaks ‘poorly targeted’ in his June Budget speech – a stance that, until last month, showed little sign of resistance from within.

It has since been revealed that Edward Troup, the managing director of budget, tax and welfare at the Treasury, told a Scottish Affairs Select Committee that such a scheme may not be poorly targeted after all.

“I am not sure I would say it was poorly targeted,” he said late last month.

Troup told the committee he believed that Labour’s game tax relief bill – announced in Alistair Darling’s final budget before the election – was “perfectly designable if we had continued with it.”

He added: “I don’t want to overstate the problems because I am quite confident the Treasury and my colleagues in Revenue and Customs would, if given the chance and given the remit, be able to write a set of rules, as they have for the film industry, which define the relief. So I am sure we could do it.”

Tiga, which has lobbied for game tax breaks for over two years, said Troup’s comments were “very encouraging”.

Meanwhile, culture minister Ed Vaizey has revealed he was “unaware” the Treasury regarded tax breaks as poorly targeted.

Weeks before the election he told Develop that the Conservatives “are fully behind game tax breaks.”

“This is my unequivocal statement,” he said. “It’s been approved by George Osborne.”

That assurance was recited to him by committee chair Ian Davidson, who told Vaizey; “You, then the Shadow Cabinet Minister, told Develop that the Conservatives are going to support tax breaks for the video games industry in the Conservatives’ first Budget.”

Vaizey was then asked what had caused his change in stance before and after the election.

In response Vaizey said he did not wish disguise anything, but “that is a question for Treasury Ministers because obviously George Osborne, the Chancellor of the Exchequer, took a view in terms of his Budget about what was the appropriate way forward.”

Vaizey’s own belief is that Osborne “took a view that in terms of the business support package he was putting together in the Budget… he was creating an environment which was a good place to do business whether you were in the video games business or [not].”

Chair Davidson returned: “I understand some of that, but the difficulty that I have is that the quotes we have been given said that you – not as the Treasury Minister but as the Shadow Cabinet Minister for this industry – said that you were going to do it and you said that George Osborne was on board for it. I am not clear, from your answer, why that was said then and then changed afterwards.”

Vaizey responded: “To put it completely bluntly, as far as I am concerned, after the election all bets were off in terms of the financial situation and in terms of how the Chancellor wanted to approach his Budget.”