No pizza, no giveaways, but the budget remains big news for the media

Digital gaming tax credit is one measure that should be back for mention in Budget 2022

The budget stopped selling newspapers "seven or eight years ago" was the verdict of retiring Dublin newsagent John Hyland as he prepared to close down after decades in business last week – and his was one of those increasingly rare shops that still deemed newspapers and magazines worthy of prominence.

It’s tempting to blame the budget for this one: the guts of it are usually drip-fed out or leaked in advance, the speeches are devoid of much of their former colour and, in the years since the financial crash, the announcements seem to make little material difference to many people.

But, as Hyland alluded to when he said “news doesn’t sell newspapers” anymore, it’s the medium not the message that has triggered the shift. Next Tuesday brings us Budget 2022, and if the pattern of recent years holds firm, it will be a massive day for online consumption of news.

In the absence of some truly unprecedented distraction, articles summarising the main points will garner huge traffic for Irish news publishers and, among editors at least, pictures of Minister for Finance Paschal Donohoe getting out of a car will be in hot demand.


Tent-pole event

So budget day is still a tent-pole event for news media, albeit one that in light of empty or skeletally staffed newsrooms, no longer involves the mass delivery of pizza.

But what can the news business and the wider media and entertainment industry expect from the contents of the budget briefcase? Not a lot, in all likelihood. Too many other sectors remain in visible states of post-Covid distress, leaving little space for long-sought but headachy-to-implement policy fixes to a business like the media.

The measure with the lowest odds of making an appearance in some shape or form is a digital gaming tax credit, which was given a fleeting mention on last October’s budget day, when Donohoe said work would start on the development of such a credit “with a view to supporting qualifying activity from January 2022 onwards”.

While a year is ample time to quietly shift something to the back-burner or push out the timeline, such a tax credit appears to still be on the Government's radar, as indeed it should be – similar credits are well-established in countries including UK, France, Germany and Canada.

A digital gaming tax credit was recommended in the much-quoted 2017 analysis of the Irish audiovisual industry prepared by consultants Olsberg SPI and Nordicity, aka the Olsberg report, which found that the Irish games sector had been “inhibited” by lack of access to reliable funding and recommended the extension of the screen industry’s section 481 tax relief – open to film, television drama and animation – to games.

Work has since been done on devising a separate credit targeted specifically at the digital gaming sector, with the aim of boosting the Irish contribution to what is a globally surging business. This could create “synergies”, as Donohoe envisioned it, with the booming Irish film and animation sector.


Higher levels of activity in digital gaming would also be a prize in itself. With the likes of Netflix publicly identifying mobile games as its next path to growth, yet still only warming up on this front, confirmation of an Irish digital gaming tax credit now would look progressive on the Government's part – even if the reality is that the State would be playing catch-up with other countries.

The Olsberg report also urged the introduction of a fund to support companies making prototype games that they then take to the market for further financing: grants for research and development (R&D), ostensibly. In its pre-budget submission, business group Ibec notably called for greater State investment in R&D in general. This raises a broader point about the Irish media and entertainment industry’s access to R&D funding. When money for capital investment is tight to non-existent, yet evolution is necessary for survival, every little tax credit helps.

A tax-related ask from the news industry – that VAT on newspapers and digital news products be slashed from the current rate of 9 per cent to help support public interest journalism – is more complex than it might seem given European Union rules on VAT, though the argument that charging VAT on these products represents a tax on information remains compelling.

With newspapers and magazines fast slipping off newsagent shelves, and the concept of the traditional newsagent not as secure as it once was, some Government intervention – either through VAT or another mechanism – may eventually be required. But it’s unlikely to come in this budget.

Annual funding

Meanwhile, public bodies from RTÉ to Screen Ireland and the Broadcasting Authority of Ireland (the regulator destined to be subsumed within the proposed Media Commission) will be eyeing any changes to their annual funding.

In RTÉ's case, this can be achieved through the slightly opaque means of adjusting the sum that the Department of Social Protection allocates the broadcaster in respect of free television licences awarded to certain households – remarkably, even in the years when this funding has gone up, as it did in Budget 2020, the increase never seems to resolve RTÉ's financial woes.

Screen Ireland, on the other hand, has joyfully seen its budget allocations increase in recent times in line with the recommendations of the State’s audiovisual action plan – the stimulus funding it received during the pandemic has allowed it to build up its role in the television drama sphere that was once solely the preserve of RTÉ.

Of course, what almost all media companies would like to see in Budget 2022 is a package of measures that substantially boosts disposable incomes, sending consumer confidence rocketing and encouraging advertisers to spend more money. Such a bonanza this year, of all years, really would be news.