Wednesday, 2 September 2009

Arsene Wenger points out death-by-taxes

With all the furore around bankers' pay; people have ignored footballers wages. Did you even know that footballers wages when printed in the press are always quoted post-tax? Yes that £150,000 a week John Terry earns is in fact nearly 40% in real money. (2 years ago Labour whined about this, they seem strangely reticent today?)


To the point though, the Premier Leagues had its deadline day fro transfers yesterday and very quiet it was too. Only Manchester City, backed by Oil billions, have spent this summer. Without them, the spending would be nearly 50% down on last year. All the top players are leaving Man Utd and Liverpool and heading for Spain.

Why Spain? Well it often takes an outsider to show a country's folly. Arsene Wenger in this case, an economic graduate, says that in Spain a footballer can pay tax at 25% for 5 years. That is longer than the average contract. They are paid in Euro's too which has been appreciating against the Pound for nearly 2 years now.

The combination of a sickly Pound and impending 50% tax on the rich means that in real money terms, Spanish clubs can pay 70% less to give players the same wages.

Premier League football will be unable to remain the dominant force in Europe when placed at such a disadvantage. German clubs are competing now too. And whilst you may not care much about that, there is a read across to all of our other industries where people are mobile too. In the City it is Hedge Funds, but you can also add IT Contractors and even perhaps Lorry drivers and a myriad of other professions into the mix. High taxes and a weak currency are going to ruin our economy and sadly that is the path the Government is taking us on.


Bill said...

The economy has already been ruined by a useless that failed to stop a bubble and even encouraged our bankers (not that they seemed to need much). I take your point. That said I am not sure how great any exodus will be and what its overall effect will be. As a former investment banker I have watched with incredulity over the last few years as the economy was ramped out of sight. And whilst I don't believe in cutting off your nose to spite your face, an awful lot of what the City purports to achieve is a chimera.

CityUnslicker said...

Bill - I don't disagree with what you say. but high taxes are not the answer and this is a clear and simple story as to why.

People with lots of money don't like paying tax and have the abiltity to move. other countries also wish to attract them.

Economic disaster or not, we live in a globalised world where people can move and will move. Everyone else will be stuck here as the currency collapses and foreign travel becomes a thing of the past.

Bill said...

As well as 40%, I can also remember paying 60% tax. Now whilst I and others did not go abroad as we could have to avoid 60% tax, I acknowledge others did to avoid 60% and 40% tax. I worked with some very materialistic and greedy people, and good luck to them. I do wonder however what the loss to the country is of those who are most price / tax elastic at the margin in terms of tax take and long term good to the economy as a whole. I worked on deals and saw how little tax can accrue to the revenue. The disgrace over the last decade has been the burden felt by the middle and lower echelons and now they are going to pay for the lunacy of their better paid superiors.

sobers said...

Where did you find out that the footballers wages are quoted net of tax? I have never heard that. Do you have a link?

Blue Eyes said...

It's well known that football wages are quoted "net", otherwise comparisons between players in different leagues would be meaningless.

electro-kevin said...

Are the most materialistic always the best ?

I cite as examples:

A) British Bankers circa 2007
B) The British Army ... ANY time

And what good does astronomically high pay do for the England squad's prospects ?

hovis said...

EK I see your point but whilst I do believe the army does wonders on the shoes-string budget and pisspoor political support it is is given. However don't forget in the last few years that many good squaddies have left, (unsurprisingly and I have no problem with them doing so) to higher paying security contracts.

hovis said...

EK I see your point but whilst I do believe the army does wonders on the shoes-string budget and pisspoor political support it is is given. However don't forget in the last few years that many good squaddies have left, (unsurprisingly and I have no problem with them doing so) to higher paying security contracts.

CityUnslicker said...

EK - No materialistic ways are not the best. But in a capitalist society they rank primus inter pares.

Bill - Not everyone can leave. But there is a wider issue of companies leaving due to corporation tax as well as this high tax making high net worths reconsider. Even lewis hamilton lives in switzerland.
I heard in passing the other day the biggest restraint on Switzerland's attraaction is that the private schools are all full!

James Higham said...

1.14 and 1.06 a few minutes ago - euro to pound.

idle said...

I think it an excellent idea that football clubs donate so much money to the exchequer in tax for their players' wages.

The country should be out its financial muddle quite soon, the way we are going. No wonder sterling is stable.

Chelsea had a dutch git called Humphrey Boogarde or something, who was paid 40 grand a week ten years ago, had a three year contract and never even turned out for the reserves. Brilliant! That's £1.4m a year in tax for Gordon and Alistair to piss against a wall.

Anonymous said...

To be perfectly honest, I think this country would benefit from so-called high "earners" leaving the country. It would leave some space at the top for fresh-blood that hopefully knows what it is doing. You only need to look at the figures from UK PLC for the last ten years to realise that our current crop of CEOs and CFOs are hardly top-notch

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