Ligue 1: Super Taxes And Looming Protests

For almost a year now, France has been rife with discussion over taxes on the ultra-wealthy.  Through the summer and into the beginning of this current Ligue 1 season, the tax debates have centered around AS Monaco and the club’s technical headquarters being outside of France in the mini state whereby the club avoids French tax laws but still competes in France’s top national championship.

Another debate though has been raging for a little while longer.  Around September of last year, French President Francois Hollande proposed an incredible tax hike on business and the wealthy in France in a budget effort to “bring back confidence and to break this spiral of debt that gets bigger and bigger.”  In the same stroke, his government surprisingly approved a tax measure that brought a 75% tax on citizens earning over one million euros.

Within months of the announcement of the measure, the “super-tax”, as it was called, would be declared unfair and as a result, unconstitutional by France’s constitutional council. The council found that

its application was unconstitutional because it “failed to recognise equality before public burdens”. Unlike regular income tax, which is levied on households, the 75% rate would have been applied to individuals. This meant an individual earning over €1m a year would have been subject to the tax, but a couple each earning €900,000 would not. The council ruled this was unconstitutional as it could lead to two households with identical incomes being taxed differently.”

French President Francois Hollande - Photo Courtesy of www.baltimoresun.com

French President Francois Hollande – Photo Courtesy of www.baltimoresun.com

Despite this setback, Hollande’s government vowed to redraft and resubmit a new tax proposal that would take into account the issues raised by the council. They followed through, and in March of this past year, in a televised interview, Hollande announced that the new tax would now be applied to businesses in the form of a payroll tax applicable to anyone being compensated one million euros or more.

French clubs, including Paris St. Germain who are owned by a Qatari investment group, have been monitoring the developments of this situation especially considering that most clubs are already operating at a deficit and this tax would only serve to push talent out of the country and dissuade others from entering as it has famed French actor Gerard Depardieu who moved to Belgium for tax purposes.

According to the BBC and Reuters As a result of developments, the professional club’s union in France, the UCPF, has announced that they will go on strike claiming “There will be a weekend without a game at the end of the month (November)” which would affect both Ligue 1 and Ligue 2 matches.

This is not the first time that a strike has stopped play across an entire league.  In 2011, La Liga’s opening round of fixtures went unplayed as a result of disputes between players and the league regarding the guarentee of salary payments regardless of whether the players’ respective clubs go bankrupt or not.  Italy’s Serie A had its opening fixtures threatened in 2010 for disputes between clubs and players regarding forced transfers and training issues.

While similarities are obvious in that games were cancelled or almost cancelled due to protests, that is exactly where the similarities end.  This most recent Ligue 1 protests is unique, as higlighted in detail by the NY Times, in that the dispute is clearly not between clubs and players, in fact clubs and players are standing together in this fight. FIFPro, the international player’s union “show solidarity with the move,” according to its president Philippe Piat.

The strike is about preserving the game in France.  The tax would, if officially applied, be paid by employers and capped at 5% of revenue.  It would affect one hundred and twenty players across fourteen clubs and reportedly generate close to $60.7 million in tax revenue.  It is also reported that potentially up to 12 of the 20 Ligue 1 clubs could be taxed into bankruptcy as a result of the law should it be passed.

The law being passed is in fact the last stage that has not been met.  In order to take effect, the tax must pass the upper house of French parliament.  The vote on that would likely occur in Novemeber which is around when the planned strike would occur.

Multi-milionaire athletes on strike about money is certainly a strange sight, but what makes this strike even more strange is that they stand hand-in-hand with the men paying them.  Together they are facing a government of a country that looks to revive is stagnating euro-zone economy in a standoff isn’t likely to be resolved quickly, and all of Europe will be watching, even more so if they cant watch soccer games.

Reporting on the business side of the world's game.