The UK Labour Government’s long-term strategy to increase corporate taxation, as outlined in yesterday’s rather chancy Pre-Budget Report, has been condemned by the national games trade association Tiga.

UK Chancellor of the Exchequer Alistair Darling (pictured) has detailed in his pre-budget report that small business corporation taxes will rise from 21p to 22p from 2010. This news has been met with great frustration from Tiga’s CEO Richard Wilson, who believes that the tax burden is already stifling UK development.

“While the Government’s short term approach to the economic downturn – a fiscal stimulus – makes sense, its long term strategy is quite wrong. Increases in national insurance contributions add to the burden of taxation and deter employment growth because they increase the cost of employment,” says Wilson.

He added that he welcomes "the Government"s plan to guarantee bank lending of up to £1 million to small businesses, to allow small companies to spread out their corporation tax, VAT and national insurance payments and to create a £25 million fund to help businesses that are having difficulty accessing finance."

The Pre-Budget Report itself was geared towards readjusting the UK economy to climb out of its recessive phase. As part of this, value added tax will be cut by a quite significant 2.5 percent, which is hoped will encourage spending by consumers, though there is an uncertainty that this drop in VAT will translate to lower prices of videogames at the retailers. 

UK National Insurance will increase for all and income taxes will grow significantly for those earning over £40,000. Darling also admitted that borrowing will increase to a higher level than it did after the recession in the early 90s and projects that national debt will go up every year until 2015. Yesterday also saw the chancellor make the UK Treasury"s biggest ever cut in its growth forecast, dropping from minus 0.75 percent to minus 1.25 percent.

Various pdf links to the UK Tresury"s 2008 Pre-Budget Report can be found here.