The Zapatero government is proposing a tax rate hike from 24% to 43% for overseas players who earn more than 600,000 euros ($884,600) a year. Spain is reeling from the recession with 20% unemployment.
This will effectively end the “Beckham Law”, named when the tax rates were amended in 2002 for the English midfielder to make it attractive for him and and other highly sought talent to come to the Liga.
The hike will come into effect from January 1, 2010 and it is not retroactive so high priced talent like Cristiano Ronaldo and Zlatan Ibrahamovic will not be penalized.
You realize the Liga’s power in Spain’s politics.
The Liga’s favourable tax rates coupled with the higher cost of living in England mean the Premiership has to pay their players more to break even with their Spanish counterparts. This season only Man City came close while the rest of the Premiership became less competitive. It is noteworthy that the Liga seems to live in a cocoon, spending hundreds of millions of euros in transfer money even while Spain’s economic woes have deepened. The proposed tax hike has been met with fierce resistance by the Liga honchos and one of the actions contemplated is a strike.
Contrast this with the Gordon Brown government’s 50% tax rates applied to those earning £150,000 (167,000 euros/$247,882) which adversely affects top earning league footballers. It met with little opposition from the Premiership.
Even with the Liga’s apparent thumb in the eye for the economy, matches have been overflowing with fans which points to the drawing power of football as a form of escapism from times of stress. A strike could prove unpopular with millions and the Zapatero government risks losing even more support further increasing the likelihood of future opposition gains.
But just in case, all else fails, there is this.