Game machine industry association BACTA’s plea to Norwich Treasury minister

Arcade owners and game machine operators from the region will today urge Treasury minister Chloe Smith not to hit an already struggling gaming industry with high machine gaming duty (MGD).

The British Amusement Catering Trade Association is to meet the Norwich North MP to urge her that the new tax should only be introduced at a higher rate no greater than 15pc and a lower rate - on machines with a maximum 10p stake - of no greater than 3pc.

The association will also say that games which are currently excluded from tax such as skill with prizes games should remain exempt from MGD and that businesses should be allowed to offset irrecoverable VAT against MGD.

Last year Ms Smith announced that a new machine gaming duty tax would be introduced, with details of the level of the tax due to be announced in the budget next month.

MGD will only apply to cash prize machines - meaning that many traditional arcade games will not face the new tax as first feared.

Andy Grear-Hardy, office manager at Ashwellthorpe machine operating company Tunmore Leisure, said they were unable to plan because of the uncertainty surrounding the new tax.

Around 80pc of its business is to pubs.

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Mr Grear-Hardy said he supported the calls by BACTA to limit the taxes to 15pc at the higher rate and 3pc at the lower rate and he said that it would work out at about the same rate of tax as previously or slightly less.

He said that they were also calling for a current system where companies are able to claim back VAT should remain in place.

As well as the uncertainties around the tax Mr Grear-Hardy said a decline in pubs was also having a knock on affect for the gaming industry.

'It started with the smoking ban and it is affecting the machine gaming industry quite badly. People used to smoke and have a pint and go on the fruit machine. With the recession the spending in people's pockets is less too.

'The general feeling we have from people is that they are going to find it really tough. It is the uncertainty of the situation and the level of rates and the VAT. Once we know that is we can make a decision about what is viable. We want to keep trading.'

Leslie MacLeod-Miller, Chief Executive, BACTA said: 'Our meeting with Chloe Smith MP today is critical. We urgently need her to show a level of real commitment to these small businesses and the jobs they provide.

'Previously, we have been told that the proposed changes on taxing amusement arcades will be revenue-neutral. The problem however is less the impact on the industry overall, and the uneven way in which it will likely affect arcade owners. The impact of tax is felt at an individual level by each and every business – the new tax structure can't simply be revenue-neutral for the industry, it must be neutral for each and every owner. We hope that the Minister will pledge to address this if indeed the new system turns out not to be revenue-neutral.

'If the government makes the wrong choice on this issue then it will be a clear message that small businesses cannot trust the coalition with their futures. Our industry has already witnessed 290 closures and the loss of 1,000 jobs in the past three years. There are a few hundred traditional arcades left across Britain. Their owners are doing everything they can to grow their businesses and keep them thriving for seaside resorts. A poorly designed tax system is not what they need.'

A Treasury spokesperson said the tax would make the taxing of machine games fairer and more sustainable. 'Critically, MGD will be fairer than the current system because tax will be directly linked to gross profits,' he said.

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