France to impose 75% tax on French football clubs
Anna Sonny, 1 November 2013
French President Francois Hollande has refused to back down on imposing a 75% tax on French football clubs, despite planned strike action at the end of this month. After a meeting yesterday with French football officials Hollande insisted that the tax was necessary to reduce France’s public deficit. France needs to raise tax revenues after news came earlier this year that the country will miss its deficit target for 2013.
President Francois Hollande has not had an easy ride since coming to power last year. He has the lowest approval rating on record for any French President and is widely seen as lacking authority, which manifested itself more recently in his U-turns on fiscal policies designed to help lower the deficit.
A proposed eco-tax on trucks was suspended this week after protests from farmers and truckers in Brittany. But opinion polls show that 85% of French voters back the tax on football clubs; the possibility of raising tax revenues with public backing means that Hollande is unlikely to budge on this policy.
The 75% tax on salaries over €1m was one of Hollande’s flagship pledges in his campaign last year. Although the constitutional court ruled out applying the tax to individuals, the president decided employers should pay it instead.
Fourteen of the 20 Ligue 1 clubs will be affected by the tax – the worst-hit will be Paris Saint Germain (PSG), France’s top club. PSG is owned by part of Qatar’s state, which financed the €20m purchase of Swedish striker Zlatan Ibrahimovic in 2012. Second in the league is Monaco – the club is backed by a Russian billionaire but will be exempt from the tax as it does not fall under French tax laws. While PSG receives €200 million euros a year and may be able to cope with the tax, France’s other clubs, including Marseille, Lyon, Lille and Bordeaux, are mostly loss makers; already struggling in this economic climate, they will find it hard to compete for players with PSG and Monaco and other foreign rivals.
The €100m transfer of Gareth Bale in September this year from Tottenham to Real Madrid drew criticism and raised questions about whether a struggling country like Spain could afford the world’s most expensive deal in history in such an economic climate, and with one of Europe’s highest youth unemployment rates.
It seemed that football inhabited a separate sphere from the rest of austerity-weary Europe. But France’s super tax shows that Hollande is not willing to protect it from the financial pressures of the economic crisis.