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MP calls for ‘Leisure Technology’ tax on games and videos

This is nearly as daft as the Window Tax

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A Labour MP is calling on the Government to fund a huge expansion in adult learning with a "leisure tax" on computer games and videos.

Stuart Marsden, a member of the House of Commons education select committee, wants to see "all part-time students in higher education having access to means-tested loans to cover the cost of tuition, as applies to full-time students", BBC Online reports.

He is "one of 12 new Labour MPs who argue, in a pamphlet promoting policies for a future Labour government, that only radical proposals will see its goals accomplished".

But Marsden is a realist - he knows the money to pay for all this has to come from somewhere. And where better than from computer games and "recreational videos". So he is calling for a "Leisure Technology Levy" of between 20p and 50p on the sale or rental of videos and CD-ROM games. (Presumably that includes cartridge games too.)

"These are not taxed at the moment and they are therefore a reasonable target to consider," Marsden says.

But isn't he forgetting Value Added Tax, set at a hefty 17.5 per cent, which is already levied on computer games and videos? Apparently this doesn't count.

"I am not trying to be a lifelong learning Gradgrind," Marsden says. "But if there is a potential source of income out there, it is something that should be considered".

Then why not tax books or light-bulbs or milk?

Now, suppose Marsden actually succeeds in imposing his Leisure Technology Levy on software owners and rentiers. What then?

First, spending patterns would change. The levy would be "approximately one per cent of the purchase cost of new games", BBC Online says. But we say it would also add up to 25 per cent to the cost of video rentals (and more if the levy is applied before VAT).

Second, the economics for purchases of computer game downloads and, when the bandwidth is there, videos, become more favourable, while high street transactions become less favourable, simply, because the Tax Man will have his work cut out trying to claw back Leisure Technology Levy money from overseas e-retailers. (The only way around that would be to clobber the purchaser through a Bit Tax -- Treasury feasibility studies for this are surely well under way.)

Dumb taxes work in unexpected ways - a classic example is The Window Tax. This was levied in England between 1695 and 1851, with property owners paying according to the number of windows in their houses.

So what did people do? They bricked up their windows.

And what happened to the British glass industry? Well, there wasn't one. All the glass -- 900,000 "superficial feet" -- required for the construction of Crystal Palace, the gigantic 700,000 sq ft glass and steel hall built to house the Great Exhibition of 1851 (the year the Window Tax was abolished), had to be imported from France.

Less than Zero

What chance is there of seeing a Leisure Technology Levy actually get onto the statute books? About zero, The Register reckons.

Chancellor Gordon Brown is keen on "stealth" taxes (a point here on travel insurance, a few quid there on airport taxes), but he would be extremely reluctant to hypothecate, or earmark, tax money.

That's not the way it works here in Britain. Tax money pours into Treasury coffers and the Government spends this on what it sees fit. So cigarette taxes are not pumped into cancer and emphysema wards; and only a small proportion of road tax levies is actually spent on maintaining the country's highways.

In Britain, hypothecation is tolerated only with taxes that pretend to be something else. Examples include the ludicrous and regressive Television Tax (which the Government prefers to call a licence fee) - all of which goes to the BBC (once the Post Office, the Television Tax collecting agent, has taken a hefty chunk); National Insurance, an income tax by any other name, which is supposedly set aside for pension and sickness payments; and the National Lottery, which as a tax on the stupid and the poor, qualifies as possibly the ultimate regressive tax. This sees the surplus misspent by worthy sports, arts and charitable bodies. ®

Related story

BBC Online: Games levy to fund adult learning

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