AEA Relief and Development Commission is a member of the Micah Network
25 July 2012
From Amanda Jackson, Micah Challenge, Head of Policy and Campaigns
I live in London, which is gearing up for the Olympics starting in 10 days. Media stories concentrate on either: scandal (troops needed to provide security, two hour queues at Heathrow) or sentimentality (15 year old gymnastic heroine, torch relay unites nation).
But what you won’t read in the papers or see on TV is a true scandal. Corporates with monopoly rights at the Olympics venues won’t pay any tax on their profits. Indeed, top athletes won’t pay tax on winnings either...
So the Olympic Games which is due to cost UK taxpayers between £9.3billion (the government’s figure) and £12billion (Parliament’s Public Accounts Committee estimate), will provide huge benefits to corporates.
The same thing happened at the 2010 World Cup in South Africa. According to Ethical Consumer magazine, FIFA persuaded the South African government “to create a tax-free bubble around the entire World Cup event, which meant that the financial benefits of the World Cup flowed out to the corporate sponsors, with little or no lasting benefit to the South African economy.”
Powerful sporting bodies, which are in fact huge corporations, have the ability to extract this sort of cooperation from national governments, denying income to their citizens even though one of the major selling points for hosting global sporting events is the economic benefit. Just last week, Prime Minister David Cameron claimed the Games would generate £13 billion over four years (Reuters), a figure disputed by most economists.
But there is no disputing that the UK government will lose out on millions in taxes. How many millions? A useful comparison may be the football World Cup hosted by Germany in 2006, when companies and players did pay tax. The German football association (DFB) paid €101 million (£88 m) in various taxes on its activities. Germany also raised €7 million (£6.1m) from taxing non-resident players’ earnings. (Ethical Consumer).
Then there is the income due to come the way of the IOC projected to be around £2.7 billion. The UK government will lose around £600 million in taxes.
So that makes the total loss in tax revenue around £694 million!
But that’s not all. LOCOG (the London Organising Committee of the Olympic and Paralympic Games) is also exempt from taxation.as are the bonuses which will be paid to executives.
The UK government is allowing and even encouraging tax evasion on a massive level. That is a much bigger scandal than any you will read about drugs, security or transport delays.
None of this gets reported in major media.
There is however some good news that proves the benefit of speaking out. The Tax Justice Network and Ethical Consumer along with other groups, managed to gather 100,000 signatures on the issue of Olympics tax avoidance in a few days. This put so much pressure on McDonalds that the company has offered to waive its tax exemption. It is not yet known how much tax this will yield but it is a victory for public pressure.
You can add your voice to the call for corporate sponsors to pay tax on their Olympic earnings here.
I am not a Games hater – I will be watching Usain and Sally and all the unknowns, delighting in sporting achievement. But I won’t believe the hype and I will protest the greed.
Please join us: