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Rooney and Revenue

7/4/2020

 
By John Considine
Picture
Wayne Rooney made a bit of a splash at the weekend with his criticism of those who want players to take a pay cut.  UK government ministers and others were criticised.  There is an economic logic to his argument.  The PFA also piled in on the economics by pointing out that a £500m pay cut would cost the UK Exchequer £200m and, therefore, the National Health Service (NHS).  It might be worth considering these claims.

Where does the money that end up in a player's bank account come from?  The owners.  Not the National Health Service (NHS).  Do those looking for players to take a pay cut want the owners to benefit?  Before anyone thinks I'm not being fair, they should consider similar thinking in other areas.  Scotland decided that a minimum unit price for alcohol was a good idea.  The EU pointed out that minimum pricing per se would put the profits in pockets of the alcohol industry.  Moreover, the authorities were proposing to do the very thing that is prohibited in Competition Law.  If the drinks industry came together to agree a minimum price then there would be prosecutions.  Why did Scotland not just increase taxation on alcohol?  And it is not just Scotland.  Ireland is following a not dissimilar line.

Would the Exchequer lose €200m on a €500m pay cut?  Now we are into the world where accountants get paid handsomely to help their clients to avoid tax.  Do the players pay 40% in taxes?  Richard Brooks devotes a substantial amount of space to the issue in The Great Tax Robbery. Another book, Football Leaks, illustrated how one of the greatest footballers of this era has had his problems with tax evasion as well as tax avoidance.  His challenger for the title of best footballer has also had his problems with tax.

How much tax would the owners pay on their €500m windfall?  The PFA seem to suggest that the owners would not be paying much tax.  The clubs are also likely to be "tax efficient".  Moreover, a number of Premier League clubs have decided to use government supports to help pay their non-playing staff.

Before we condemn the Premier League for not seeking to enlarge the public purse, we should remember the following lines from the Duke of Westminster case.  "Every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax."  The politicians legislate and the public vote them into office.  The UK decided against Corbyn.  The US is deciding against Sanders.  Wayne Rooney has a point but he is not going to get much sympathy.


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