Francois Hollande attends a soccer match in a file image. Photo: Reuters
French football clubs have announced a strike next month to protest President Francois Hollande’s plan to impose a 75% ‘supertax’ on the country’s top earners beginning next year — a tax that they as the employer will have to pay on the part of their employees’ annual salaries that exceed €1 million ($1.4 million). The Union of Professional Football Clubs (UCPF) says players will not take the field for the matches in the two top divisions of the league scheduled for the final week of November.
What has prompted this unprecedented, if typically Gallic labor action, is the union’s concern that the tax will devastate the game in France. “The survival of French football is at stake,” says UCPF president Jean-Pierre Louvel, who also claims that up to 150 players from the top division — around a quarter of the total — would be driven to play for teams in countries with friendlier tax regimes.
The 75% ‘supertax’ was Socialist Hollande’s most symbolic campaign pledge prior to winning elections in May 2012. He probably envisioned a smoother passage for the populist proposal than the one he has experienced. A low-point came in December when France’s Constitutional Council rejected an initial plan for a 75% individual income tax rate. A redrafted version turned an income tax into a payroll tax, shifting the burden to employers.
That legislative sleight of hand may have saved political face for Hollande but threatens to hit many of the clubs hard. The league says professional soccer already contributes €700 million in taxes a year to the government, and that enough is enough. If the clubs were also to be on the hook for the ‘supertax’ on the players they so handsomely employ, that would add a further €44 million to their tax bill over two years. Harsher critics of the tax put the figure at near double that. Whatever the number, it would only swell the €108 million the teams in the top division, Ligue 1, lost between them over the 2011-12 season.
Paris Saint-Germain has 21 players earning more than €1 million a year but, with Qatari owners, they also have deep pockets to absorb the tax. Other top clubs, such as those in Lyon and Marseille, could struggle to stay afloat. Yet, Monaco, owned by the Russian billionaire Dmitry Rybolovlev, who is spending lavishly on top players in pursuit of the Ligue 1 title, would be exempt from the tax as Monaco doesn’t follow France’s tax legislation (itself already a bitter point of contention for the other Ligue 1 clubs).
President Hollande doesn’t mind who pays the supertax as long as it is paid. Nor does he have much sympathy for the financial plight of the clubs. During his election campaign he asked, “do we have a championship whose level justifies such astronomical salaries?”
Millionaires in shorts going on strike over their taxes don’t go down well with the French public, either. Austerity has hit every day life, and looks set to worsen. The government’s 2014 budget bill announced last month imposes more taxes on French households to reduce debt and cut France’s deficit while a lid is being kept on public spending on health, education and welfare.
There is little prospect that the soccer strike will get Hollande to abandon the tax. What is more likely to happen is that clubs will find ways to compensate players outside taxable salaries. Fees for image rights, often paid offshore, is common in the professional soccer world, though as some of the most highly paid players in the Spanish and English leagues have found — Barcelona’s Lionel Messi being the most high-profile example — that can attract the unwanted attention of the taxman, too.
