Cutting Software Piracy Would Increase UK Tax Revenues By GBP2.8 Bn, Says BSA

by Robin Pilgrim, LawAndTax-News.com, London

12 December 2005

According to a study released on Thursday by the Business Software Alliance, cutting the software piracy rate of 27% in the UK by 10 percentage points could generate nearly 34,000 new jobs, GBP11bn in economic growth and GBP2.8bn in tax revenues.

The independent global research, conducted by International Data Corporation (IDC), also found that reductions in the domestic software piracy rate could jumpstart growth in the information technology (IT) sector. While IDC currently projects that the domestic IT sector in the UK will grow by 30% through 2009, a 10-point reduction in software piracy could increase that growth to 37% by 2009.

The BSA-commissioned study assessed the IT sector’s economic impact in 70 countries worldwide and the benefits that could accrue to countries that reduce software piracy and promote the protection of intellectual property (IP).

With the largest IT sector in the world behind North America’s, the European Union (EU) has a $311bn IT industry that supports 365,000 companies, employs 2.5 million IT workers and contributes nearly $268bn a year in tax revenues. A 10-percentage point reduction in the EU’s 35% software piracy rate by 2009 could generate $88bn in additional economic growth, $25bn in additional tax revenues, and add an additional 155,000 IT jobs.

Siobhan Carroll, Regional Manager, Northern Europe, for BSA observed that:

“The software industry is a powerful driver of economic benefits in the UK and across the EU and is becoming increasingly important as we move into a knowledge economy. But the current contribution represents a fraction of the potential economic gains that could be felt in and beyond the software industry. More needs to be done to protect the value of intellectual property in terms of education, legislation and enforcement if the UK wants to realise the potential benefits of the IT industry.”

In addition to outlining the economic benefits that can be realised through increased protection for intellectual property and a reduction in software piracy, the study suggests that countries that wish to enjoy the possible economic benefits should take the following five steps:

• Update national copyright laws to implement World Intellectual Property Organization (WIPO) obligations;
  
• Create strong enforcement mechanisms, as required by the World Trade Organization, including tough anti-piracy laws;
  
• Dedicate government resources to the problem, including national IP enforcement units, cross-border cooperation, and more training for law enforcement;
  
• Improve public education and awareness; and
  
• Lead by example by requiring the public sector to use only legitimate software.

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