When the British government last April announced a tax rate rise, some people involved with English football believed the new scheme will hurt the Premier League's competitiveness.
Aiming at tackling the worst recession since the Second World War, the new rate will increase from 40 per cent to 50 per cent for some 750,000 people who earn more than ?150,000 per annum. It will take effect from April next year.What worried the people concerned most in the Premier League, where an average player earns ?1.1 million a year according to the Guardian, was that the higher tax rate could make it harder for clubs to recruit top players and potentially drive out those players unhappy at paying out more in tax. The tax hike, on one hand, is good for the English national team. With a supposed lack of foreign players, clubs will now be forced to scout for Englishmen. On the other hand, supporters would become the victims of the new taxation system. Players would demand higher wages as well as higher transfer fee, which is now already outrageously high. The clubs will have no choice but to increase ticket and merchandise prices to cover the costs. So, fans will have to pay for the players' tax increase. Moreover, higher tax rate may lead to some "fishy" tactics on the part of footballers and clubs. To prevent migration of foreign talent, the richest football league in the world is looking for various measures. Clubs fear that the more favourable tax rates in other European countries could undermine the Premier League's attraction.In Europe, although players are paid less than in the Premier League, their take-home pay is in some cases higher because of lower income tax rates, according to Daily Mail. In Spain, under a so-called Beckham law introduced in 2005 to attract wealthy foreigners to work there, expatriates playing in La Liga for up to six years pay only 25 per cent. Germany has a top rate of 45 per cent, while Italy's is 43 per cent and France 40 per cent.Last week, millionaire footballers were planning to evade the controversial new tax rate by asking clubs to pay part of their seven-figure salaries in the form of interest-free loans. According to accountants at Baker Tilly, the firm which advises 40 top players at clubs including Arsenal, Liverpool, Bolton and West Ham, is in discussion with footballers over the issue.The plan would allow millionaire players to initially pay as little as 2.5 per cent tax on some of their earnings.The attempt to dodge the tax angered footie fans, who say the wealthy players are, in fact, overpaid. It was also doubted how it will work as the loan has to be repaid. Otherwise it could be seen as illegal tax evasion.If former Manchester City owner Thaksin Shinawatra, who sold his Shin shares to Singapore's Temasek without paying a single baht in income tax, was still the club owner, he would have been a good adviser for his players, including other English clubs.
Cr: The Nations