Daily Archives: January 5, 2011

#oneaday 3:Tax Lax

On the day that saw the UK’s value added tax rise from 17.5% of the sales value to 20% of the sales value of goods and services, with some notable exceptions, there has been much debate as to whether this is a ‘progressive’ or ‘regressive’ tax. All 3 party leaders seem to have had conflicting and changing views on this aspect, indeed a bout of memory loss seems to have been doing the rounds over the Christmas break. But hey times change and all that, and we are all rightly concerned about the ‘national interest’ so needs must, pay your part.

Today was also the day that the 38 Degrees Campaign ran its rather irreverent ‘Artful Dodger’ ads in some of the national newspapers – The Guardian, The Independent and the i. Allegedly, The Daily Mail, The Daily Telegraph and The Metro (part of the same group as the Mail) pulled the ads, or put their prices up. That is their right and their call, both the Daily Mail and The Daily Telegraph have shown their hands in recent times, so we all know where their allegiances lie. But we have a free press and for that we should be thankful.

This is the rather dodgy ad run by the 38 Degrees Team

However, one issue or number that I am totally perplexed about is the quoted £150 billion per annum which tax avoidance, tax dodging or working within the tax laws depending on how you view these things is supposed to cost the UK Exchequer. £150 billion – ie just shy of the deficit we are all being told must be chased down with extreme vigour and haste.  This is a serious amount of money and I for one would like know where this figure comes from – does anyone know or is it an urban myth? Have Vodaphone avoided, legitimately or otherwise, paying UK taxes to the tune of £6 billion last year? We need some facts, please.

This whole issue of tax and tax avoidance, indeed use of individuals’ or companies’ earnings to put against their tax allowances is relevant in the computer and video games industry, given our disappointment when the much campaigned for production tax credits. The Film Council has used the tax breaks system and National Lottery funding to part fund many films on the basis of cultural relevance. The net result of all these systems to offset tax against production of creative industrial output is that we have a pretty healthy film industry. Only today I watched ‘Tamara Drewe’ and ‘Another Year’, two very British films that would never get made in Hollywood, or if they did, would be dramatically altered in their final delivery. Last week I watched ‘Made in Dagenham’ and ‘The King’s Speech’ and the same observation could be made. These films define our culture both in an historical context as well as a contemporary one. They also earn the UK money, provide key jobs, and get us noticed in an ever competitive world. In short they feel like a good thing.

A quick look at the UK Film Council’s website tells quite a lot, namely:-

  • The core UK film industry now contributes approximately £4.3 billion per year to the UK economy – up by 50% since 2000, when the UK Film Council was created;
  • In 2009 UK films took 7% of the global box office and 17% of the UK box office; Independent UK films took an 8.2% share of the UK box office, the highest figure of the last decade;
  • UK film grossed $2 billion at the worldwide box office last year;
  • UK box-office takings are at record-breaking levels, worth £944 million in the UK in 2009, up 62% from 2000;
  • The overall territory box office gross for the UK and the Republic of Ireland exceeded £1 billion for the first time in 2009;
  • UK Film Council investments in British films have been hugely successful – for every £1 we have invested, £5 has been generated at the box office;
  • Over 173.5 million people went to the cinema in the UK in 2009 – up 31 million from 2000, the highest since 2002 and the second highest since 1971;
  • The UK has more digital cinemas than any other European country – 365 and counting;
  • Overall UK audiences had a far greater choice of films in 2009 – 503 films were released, 31% more than a decade ago;
  • The UK film industry directly provides jobs for almost 44,000 people, with extended employment impact of 95,000 jobs;
  • The film industry earns over £1.3 billion in export income from film rights and film production services;
  • In 2009 alone, British films and talent scooped 36 awards. 

Impressive stuff. Now, what if we could convert some of that ‘tax avoidance’ into ‘incentives to back creativity and innovation’ to produce a win win for the tax payer/avoider and the creative industries? Rather than blaming the bourgeoise or the benefit classes in some outdated class war, if we really are all in this together, let’s get creative and encourage big earners to contribute to things that can earn the UK vital export Dollars, Euros and whatever China uses as currency. After all, I actually think we could do with some culturally British computer and video games, rather than every game that is based on earth being impregnated with American or Japanese cultural reference points.

More on this in the coming weeks.

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