FOR Message 22/2018: "Cultural games" or culture of lobbying?
- When politicians start to distribute taxpayers' money, it invites lobbying. Even the leading industries start to pretend that they need support. Polish video game industry is no different. The market capitalization of CD Projekt has already overtaken KGHM. At the same time, it lobbies for CIT tax relief for the so-called "Cultural games" through the Polish Games Association, together with other leading producers. Previously, the same association took advantage of the opportunities created by the sectoral programs of the National Center for Research and Development, leading to the launch of a program of subsidies, called GameINN, for the electronic entertainment industry from EU funds. Two editions of the program distributed about PLN 200 million of subsidies in the sector, even though the access to capital remains one of the least frequently reported problems in the industry.
- The status of a so-called "cultural game" would be awarded on the basis of a "cultural test" taking into account such factors as the place of action and inclusion of elements of cultural or historical heritage. The PiS government reassures that the test will follow similar British solutions. However, the weakness of the institutions of the Polish state raises concerns that subsidies will be granted to games that are liked by politicians, not by Polish and world players. The warning sign is provided by the "impartiality" of the Polish state TVP, so far from the standards of the BBC.
- The PiS government remains deaf to the most pressing problems of the industry and considers tax privileges instead of key reforms. The most frequently reported development problems in the industry are bureaucracy, staff shortages, and fiscal uncertainty. This year, the tax office changed the interpretation regarding 50% rate of tax deductible costs and tax inspections demanded that programmers pay allegedly overdue tax for last five years. In the same year, the PiS government excluded computer programmers and graphic designers from the right to apply 50% rate as tax-deductible costs for computer programmers and graphic designers and then restored it after a few months. Tax uncertainty remains a key problem for all those working in atypical, modern sectors that do not fit the archaic Polish labor code and the tax system that strongly differentiates rates depending on the source of income. Unfortunately, the only move of the PiS government in this regard was the establishment of the Labor Law Codification Commission, whose proposals proved to be so bad that they were rejected by the government, the employers and the trade unions as well.
- The addition of another tax relief will only deepen the problem of the complexity and volatility of the Polish tax system. Instead, the PiS government should attempt to create a transparent and predictable tax environment, also for highly-paid programmers, animators and graphic artists from the video game industry. Then the benefits will be felt by all Polish companies.
Rafał Trzeciakowski, economist
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