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SNP MEP Ian Hudghton has made a plea to the European Commission to extend tax relief for the games industry, describing as "alarming" recent reports that temporary concessions granted in 2007 are about to end. Mr Hudghton's call comes in the wake of TIGA's recent bid to have tax breaks for the industry included in the UK Government's forthcoming Budget.
Without these concessions, the MEP argues, games companies are liable to shift production out of the EU to countries such as Canada and South Korea with the loss of high quality jobs. Although Scotland does not currently have the benefit of these tax allowances, those involved in the industry, with the support of the Scottish Government, are continuing to fight for it to be implemented here.
The MEP, who shares an office in Dundee with Joe FitzPatrick MSP, Chair of the Scottish Parliament's Cross Party Group on Video Games Technology, has written to Wouter Pieke of the European Commission's Competition Directorate-General appealing for the current tax breaks to be extended past their 2012 deadline to give Scotland a chance to benefit from the competitive advantage they afford.
Writing to Mr Pieke, Mr Hudghton said:
"I have been alarmed by recent reports that the European Commission is considering halting tax relief on the games industry in the EU. This would have a devastating impact on the many companies which have been established here in Scotland and which are providing high quality jobs at a time of severe economic challenges.
"Although Scotland does not currently benefit from these tax breaks, the games industry with the support of the Scottish Government is currently arguing the case for Westminster to introduce tax relief to ensure that this industry can compete in the global market.
"Whilst I appreciate that the initial tax breaks were introduced on a temporary basis, experience shows that, without these incentives, companies will simply take their production elsewhere, out of the EU to Canada, South Korea and so on.
"I'm sure you will agree with me that we should be doing all we can during these tough financial times to ensure that the EU remains competitive in the global games industry market. Removal of the current tax relief on the games industry in the EU would be a step in the wrong direction and I would urge you to consider the consequences this would have not just on the companies which are based in my constituency but in the wider EU context."
Welcoming Mr Hudghton's intervention, Joe FitzPatrick MSP said:
"The Westminster government's failure to intervene and create a level playing field for our firms shows a complete lack of imagination.
"TIGA's proposed Games Tax Relief would more than pay for itself. Over five years, it is estimated that a relatively modest £96 million tax relief would help to generate almost £200 million investment in the sector and £172 million in new and protected tax receipts to HM Treasury. In addition, it would secure almost 5,000 jobs.
"The Chancellor repeatedly stresses the need to support export-oriented, highly skilled, low carbon businesses, yet when the time comes to put his money where his mouth is he falls far short of his rhetoric.
"With growth in the economy floundering, the Chancellor needs to take decisive action in his forthcoming budget to support growth in this sector. Responsibility for doing so falls squarely on his shoulders, as only he has the necessary tax powers to do so."