A tax shelter for the video game sector is a bad idea

At the start of this legislature, Finance Minister Vincent Van Peteghem (CD&V) was given the herculean task of tackling the country’s tax complexity.

Our tax system is a opaque tangle in which just about every industry or occupational group enjoys a favorable tax deduction or regime. As long as we pull hard enough by the sleeve of the political class. Our democracy is overwhelmed by a lobbying bureaucracy. However, no one at Rue de la Loi seems to have the courage to bring order to this chaos and finally do something about the fiscal pressure gargantuan in this country.

The Vivaldi government has been dangling a major tax reform for months. For now, however, the silence remains deafening.

It was only on the extension of the tax shelter to the video game sector that the federal excellences reached an agreement. This is certainly not the major tax change that our country so badly needs, and this is another painful example of an interest group doing everything to the detriment of the taxpayer.

Today, the tax exemption system of the tax shelter only applies to audiovisual sector. The system works as follows: investors can invest their tax money directly in a cultural project of their choice. Thanks to the legally guaranteed tax advantage, they enjoy an average return of 5%. The creation of additional jobs must then feed the public treasury. A extension to the video game sector is now in sight. A measure that video game developers are obviously in favor of.

The national video game sector is booming. Year after year, the turnover and the number of developers increase. With Larian Studios, Belgium even has a world-famous actor. Education also puts Belgium on the world map. At the University of West Flanders (Howest) in Kortrijk, the bachelor’s program “Digital Arts and Entertainment” has been on the rise for several years. In five years, it has been elected three times as the best formation in the world in the field of video games. From all over the world, students flock to the city of Kortrijk to follow this program.

All the more reason for give a boost to the growth of the video game sector through the tax shelter?

A number of considerations should be made about these plans being developed.

First of all, the extension of the tax shelter to the video game sector is not limited to Belgium. The European Commission found this to be an unfair competitive advantage compared to other players active on the European market. Therefore, non-Belgian companies active in Europe can also benefit from the system. In fact, the federal government is organizing a looting from the Belgian treasury for the benefit of foreign companies.

Second, the administration felt thatit is virtually impossible to analyze the cost to the government an extension of the tax shelter to the video game industry. He did, however, give an indication – with many reservations and caveats about the difficulty of forecasting – that in the early years this would lead to a drop in revenue of some 4.5 and 6 million euros.

But it is likely that the cost is underestimated and will only increase due to the strong attraction exerted on foreign companies. The estimates for the extension of the tax shelter for the performing arts are proof of this: the reality has established a multiple cost compared to the initial estimated cost.

Thirdly, unlike the audiovisual sector, there is no obligation for the video game sector to ensure that its production takes place physically on Belgian territory. Gaming industry workers are extremely flexible. Their work can be done remotely abroad. What guarantee can the federal government offer that only one euro of production costs will be spent in Belgium?

Fourth, the video game sector is in perfect health and shows impressive growth figures year after year. This stands in stark contrast to the cultural sector, which has seen every corner of the room due to the pandemic. It is not inconceivable that the funding for the tax shelter currently benefiting the cultural sector will be diverted to the video game sector. In other words, the cake does not necessarily get bigger, but it is more divided. It can hardly be called fair.

Belgian public finances are in very bad shape. The extension of the tax shelter to the video game sector would another step in the wrong direction. Instead, work on meaningful tax reform. The taxpayer thanks you.

Pieter-Jan Van De Weghe
Member of the Flemish Liberal League (Liberaal Vlaams Verbond – LVV)