Tax is difficult. Ask Lionel Messi. It is always so difficult to quite what work out what’s required.
Or ask Fifa and Uefa who demand that they never pay tax to their host countries during competitions. Not a penny. If the state does not agree, then don’t bother applying. (They don’t even pay to have their own Fifa lanes painted and reserved for them on the nation’s roads).
But back to tax. France’s football clubs are being asked to pay more, and they don’t like it. Because they say they can’t afford it. And so they are going on strike.
Now I know that we don’t think about French football so much these days since Henry, Pires and the rest have gone their various ways, although given that Sagna, Koscielny, Flamini, Giroud, Sanogo and Diaby are all French perhaps we should.
And certainly if you do watch French football you’ll know that Remi Garde is still manager at Lyon – although having a tough time of it since losing 5-1 at Montpellier and currently residing 14th in Ligue 1 after nine games.
But anyway, back to those poor impoverished French clubs. While we are used to seeing the English TV deals go up and up each time they come round, the current deal (which started last season) brought in just €606m per year, compared with €668 for the previous deal. And it stayed at that level only because Al-Jazeera came in at the last minute after Orange pulled out totally and Canal Plus cut its involvement.
So it’s a tough life in France, and now the state is introducing at the second attempt a tax rate of 75% on salaries which exceed €1m a year. The money has to be paid by employers who pay the salary, so the players don’t mind. The clubs do however, and all but two say they can’t cope.
The winging is of the usual type. “Tax us, and everyone will go elsewhere.” This is the same as the approach in Britain to bankers pay. If bankers pay is cut or taxed at higher levels all the bankers will leave we are told. Which for me is all the reason you need to tax every single banker at 125% of salary, but somehow our government doesn’t see it like that.
But the French populace are not taken in by such rubbish. 85% of French voters indicated in the last round of opinion polls that they are in favour of the tax being applied to football clubs.
So being the game of the people no longer, the clubs have decided to go against both the democratically elected state, and the obvious opinion of the people, and strike. And the good that will do… Well, no one has explained that to me yet.
Jean-Pierre Louvel, president of the Union of Professional Football Clubs has said that all games from 29 November to 2 December will not be played. Using the usual sort of language he said, “It’s a historic moment for French football. We’re talking about the death of French football.
“How can you tax businesses that have been in difficulty over the last three or four years? And why have they been [in difficulty]? Because the taxes we’ve been paying are too high. And people ask why we’re not competitive with other leagues.”
Well, err, no, they don’t. The problem is that as in England, overseas states and wealthy Russians can come in and take over clubs. What France doesn’t have is clubs with the world wide marketing income of Man U, or the world wide scouting approach of Arsenal, to balance matters up a bit. So it’s a bit like Scotland, but with two clubs instead of one.
Paris Saint-Germain is owned by Qatar – or at least by a company wholly owned by Qatar. They won’t even blink at the tax. And nor will AS Monaco. Especially not Monaco, for at the moment Monaco don’t pay French tax at all.
But the league has said that AS Monaco must move their headquarters to France by June 2014 – and thus pay French tax, or else be suspended from the league. Monaco is fighting the issue in the French courts – with a result expected from the Conseil d’etat – the highest court – in December. As the law stands French players employed in Monaco have to pay tax in France, the rest don’t.
And so another argument breaks out: that having a league that is recognised as strong is as important as having clubs that are recognised across the world.
It’s not looking too healthy in France just now. Anyway, just in case you are interested, here are some details about the top two…
Monaco: Founded in 1924
- Won seven Ligue 1 titles
- Champions League finalists in 2004
- Former stars include Glenn Hoddle, George Weah and Jurgen Klinsmann
- Managed by Arsene Wenger from 1987 to 1994
- Play at the 18,500-seat Stade Louis II
- Falcao from Atletico Madrid cost around £53m
PSG: Founded in 1970
- Won 3 Ligue 1 titles
- Cup Winners Cup winners once (also finalists once)
- Paid Real Madrid €33.5m for Nicolas Anelka in 2000, after previously selling him to Arsenal for £250,000
- In 1995 George Weah won Fifa World Player of the year. Zlatan Ibrahimović currently in the side
- Play in the Parc des Princes (capacity 45,713)
The books…
- Woolwich Arsenal: The club that changed football – Arsenal’s early years
- Making the Arsenal – how the modern Arsenal was born in 1910
- The Crowd at Woolwich Arsenal FC: crowd behaviour at the early matches
The sites from the same team…
- The Arsenal History Blog from the AISA Arsenal History Society
-
- The Anniversary Files: January to June
- The Anniversary Files: July to September
- The Anniversary Files: October to December
- The Anniversary Files: January to June
75% tax is crazy. You are talking about a big bump in costs when salary to revenue ratios are almost maxed out and many clubs are in the red.
Sure the PSGs and the Monacos of the world won’t bat an eyelid but what about the rest?
Even our beloved Arsenal wouldn’t survive. What is our gross margin again? Want to know what happens when you bump the costs up?
Stop being such a self righteous Robin Hood. Democracy fails when the majority takes advantage of certain rich minority groups thinking all problems can be solved by taking their $$ and making it theirs. When the $$ runs out they come up with more laws to try take $$ from others.
So will there be an abundance of players available on the cheap in January?
@ Black Hei
Democracy has failed as it never managed to appear. All reference to it is slight of mind. You disparage Robin Hood and then defend Banksters and Oligarchs. Stay on American sites you corporatist bitch.
Duc,
Alternatively you could stop and consider the impact enforcing losses on companies has. Trendy anti capitalist talk is all very well but it rather neatly sidesteps the actuality of operating a business. And how many other non football employees do these clubs have! And how many local businesses supply them. The knock on impacts are huge. Tax is not always the answer in the real world I’m afraid.
France is at the cutting edge of using taxation to promote socialism and learning when this has gone too far to the point of huge members of the productive elite prefer to vote with their feet.
Of concern here is how all these will affect the competitiveness of French clubs, in attracting and keeping the best stars worldwide and how this will affect the location preferences of current and emerging French stars. Also, what does this do to EUFA’s Financial Fair Play laws supposed to be taking effect soon?
In the short term, Frech football and clubs are being severely weakened by the French government!
“Which for me is all the reason you need to tax every single banker at 125% of salary”
That’s fine. But you couldn’t differentiate bankers from footballers. So you’d have to do the same to Ozil and co – would you really want that to happen?
Hi Clock End Rider,
I agree with you. I live in France and it’s a reflex in France to tax the citizen through its bureaucratic system for everything as a means of generating income. For example, when I bought my house, the previous owners had let their fosse leak raw sewage into a water source for over two decades without interference from the local authorities. When I bought the place, it was a first priority as I’m respectful of the environment. It cost £4000 to sort out and when it was done I had a mandatory visit that cost me £180 to inspect it that lasted 10 minutes. All the works were hidden now and so it was just a man walking over my newly laid lawn at £18 a minute. This is typical of the French system. As soon as it finds you, it makes demands on you. It needs lots of taxes to pay the army of bureaucrats it employs and hinders through Kafka-esque levels of tape which makes their “service” even more expensive for the citizen. I was just responding to the establishment drones unquestioning support of the wealthy over the poor in believing that hindering the 1% is undemocratic (!!???) Our taxes are not a choice. They are taken with an iron fist regardless of your ability to pay or feed / house ourselves. The rich should expect worse but they don’t. They pay less tax than their maids. Anyone who defends that will get a curt rejoinder from me. And my anti-capitalism isn’t trendy. It’s a heart-felt credo.
From tony. ‘As the law stands French players employed in Monaco have to pay tax in France, the rest don’t.’
This would mean that Arsene paid French tax but the players he brought into the club, Glen for example were subject to Monaco taxation. I bet that got up Arsene’s nose!
Here’s the solution for French clubs.
Set up your corporate offices in the US where the effective corporate tax rate is at about 12% . Build some wind turbines to generate electricity , employ 996 (give or take a few)tax lawyers , and with a little bit of luck and a ton of lobbying you might pay nothing in taxes or even get a refund from the government like EG and plenty others.
Problem solved.
That’s GE( General Electric)
Let’s have a sense of proportion.
The article says 75% tax is for those on more than 1 million Euros a year.
How can anyone say they can’t afford it?
The tax is meant to be applied to the players. As I see it at least. It is meant to be a tax on salaries. They can surely afford it. But the reality is that most players will either renegotiate their salaries to keep the same net income, or will look to force a move away.
Hence the clubs will have to foot the extra bill. Whether they can afford to pay, while running as profitable businesses and successful football clubs, is questionable. I think it’s unlikely. So, who will pay? The fans. In the form of increased ticket prices. Or in the form of seeing their football club lose their best players.
So while it is a direct tax, it’ll operate as an indirect tax, with the man on the street expected to foot the bill.
Besides, a very high tax slab is unlikely to be a solution to anything really. It is merely a disincentive to grow. Which causes its own problems.
Not sure that most french clubs will be hurt by this directly, as apart from the top 4 or 5 how many are going to have players on 20,000 per week?
Where it will hurt is where the next tv deal would be worth less as it may not be seen as such a marquee league.
There are laws and regulations and sometimes more .Just once in a while you get the chance to thumb your nose at them and sometimes more ……
A Chinese immigrant went hunting one day in Ontario and bagged three ducks. He put them in the back of his pickup truck and was about to drive home when he was confronted by a game warden who didn’t like the Chinese.
The game warden ordered the Chinese to show his hunting license and the Chinese pulled out a valid Ontario hunting license. The game warden looked at the license, then reached over and picked up one of the ducks, sniffed its butt, and said,” This duck ain’t from Ontario.
This is a Quebec duck. You got a Quebec hunting license, boy??”
The Chinese reached into his wallet and produced a Quebec hunting license. The game warden looked at it, then reached over and grabbed the second duck, sniffed its butt, and said “This ain’t no Quebec duck. This duck’s from Manitoba.
You got a Manitoba license??”The Chinese reached into his wallet and produced a Manitoba hunting license. The warden then reached over and picked up the third duck, sniffed its butt, and said “This ain’t no Manitoba duck. This is from Nova Scotia. You got a Nova Scotia hunting license??”
Again the Chinese reached into his wallet keeping calm with patience and brought out a Nova Scotia license. The game warden was extremely frustrated at this point, and he yelled at the Chinese “Just where the hell are you from??”
The Chinese smiled , turned around, bent over, dropped his pants showing his butt and said, ”You sniff and tell me,……. you are the expert!!!”
A Chinese immigrant went hunting one day in Ontario and bagged three
ducks. He put them in the back of his pickup truck and was about to
drive home when he was confronted by a game warden who didn’t like
Chinamen.
The game warden ordered the Chinese to show his hunting license and
the Chinese pulled out a valid Ontario hunting license. The game
warden looked at the license, then reached over and picked up one of
the ducks, sniffed its butt, and said,” This duck ain’t from Ontario.
This is a Quebec duck. You got a Quebec hunting license, boy??”
The Chinese reached into his wallet and produced a Quebec hunting
license. The game warden looked at it, then reached over and grabbed
the second duck, sniffed its butt, and said “This ain’t no Quebec
duck. This duck’s from Manitoba.
You got a Manitoba license??”The Chinese reached into his wallet and
produced a Manitoba hunting license. The warden then reached over and
picked up the third duck, sniffed its butt, and said “This ain’t no
Manitoba duck. This is from Nova Scotia. You got a Nova Scotia
hunting license??”
Again the Chinese reached into his wallet keeping calm with patience
and brought out a Nova Scotia license. The game warden was extremely
frustrated at this point, and he yelled at the Chinese “Just where the
hell are you from??”
The Chinese smiled , turned around, bent over, dropped his pants
showing his butt and said, ”You sniff and tell me,……. you are the
expert!!!”
Opps ,sorry – double cut and paste – my bad !
Duc,
I am with you on this. When we get talk of tax increases on the rich, we never get told that they are getting taxed progressively. For your first £X you pay nothing, for the next £Y, you pay a certain %, then for the next £Z you pay an extra %. It makes sense and it is fair.
The excuse used to sympathise with the oligarchs is that they would go elsewhere or just make less money to avoid the higher end tax. The former is fairly true but I don’t see any reason why civilised societies should be having a race to the bottom on which of them is least fair in order to persuade their rich people from running elsewhere. On the latter, I give you the words of that great communist and famous anti-corporatist, Warren Buffet, who famously said (and I paraphrase here) that no investor ever gives up a money making opportunity because of the tax they are going to pay on their profit.
I can understand pro-corporation politicians doing the bidding of their pay masters (and quite often, contemporaries) but I still can’t understand people of poor and average means complaining about the meanness of taxing higher end incomes.
The fact that 85% of the French populace (including majority footy fans, I suppose) are in support of this decision says a lot about the sophistication and intelligence of the French people. It’s good to know that not all countries have the self-loathing teabag wearing morons that are bringing the US to her knees.