Hollande Holds Firm on Taxing France’s Soccer Stars at 75%Gregory Viscusi
French President Francois Hollande, who this week gave into pressure and suspended a tax on trucks, refused to back away from his pledge to tax high-earning soccer players.
Hollande met today with presidents of French soccer clubs over his plan to impose a 75 percent levy on earnings of more than 1 million euros ($1.38 million). Football teams, which would pay the levy on behalf of their players, say they’re losing money and can’t afford it.
“We didn’t get the impression that we were listened to at all,” Frederic Thiriez, head of French major league soccer, said after the meeting. “There was no movement at all.” Thiriez said the league will carry through on its threat to not play a round of matches in late November. “We have a month to convince,” he said.
Hollande announced the 75 percent tax in February 2012 as part of his presidential campaign to appeal to his Socialist base. It has become a symbol of his government’s record-high rate of taxation.
A first attempt to put the tax into law was rejected by the constitutional court in December because it applied to individuals and not households.
Hollande later revived the tax, making it apply to salaries and be paid by employers rather than individuals. That means that soccer stars are subject to the levy while tennis players are not. The total amount paid is limited to 5 percent of a company’s revenue.
For some unprofitable clubs, the extra burden is a threat to survival, according to the Ligue de Football Professionnel, France’s top soccer league, which estimates the extra cost as 44 million euros.
Hollande in the meeting “stressed the idea of this exceptional tax of 75 percent on high earnings, which will be applied for two years,” according to a statement from his office. “The need to improve the state’s accounts fully justifies this effort asked of all companies that make the choice of paying salaries at this level.”
In the 2011-12 season, the 40 clubs of the first and second divisions had losses of a combined 108 million euros on revenue of 1.6 billion, the LPF said in its most recent annual report. Nine of the 20 first division teams lost money that season.
The league last made an overall profit in 2007-8.
Only five of the 20 top clubs have no players earning more than 1 million euros, while Monaco is excluded because it’s fiscally separate from France.
Swedish forward Zlatan Ibrahimovic earns 16 million euros a year at Paris Saint-Germain, one of 12 players at the reigning French champions making over 1 million euros a year, according to the Le Parisien newspaper.
Two day ago, the French government postponed a planned ecological tax on trucks after farmers in Brittany protested.