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Taxing FIFA: Asides from having their board room modelled on the war room from doctor strangelove, are there any other reasons as to why FIFA should be taxed?

Some have called it the best football World Cup ever. And it has indeed been incredibly exciting.[1]Yet the circumstances which brought us the event (and will bring us future ones) are very troubling. For a year now, there has been widespread anti-World Cup protests and riots in Brazil crying against the high cost of the event for Brazilian citizens. Investigationshave revealed the slave conditions migrant workers building the 2022 World Cup infrastructure are subject to in Qatar. At the same time, there has been renewed criticism directed at FIFA, football’s international governing body. There are corruption scandals, FIFA’s dismissive attitude to the Brazil riots, their inaction on the Qatar front, and then there is the tax issue.
FIFA demands from any country who wishes to bid for hosting the world cup full tax exemptions for itself and its subsidiaries and tax breaks for its official sponsors. Estimates are that tax exemptions in Brazil, for instance, will cost up to half a billion dollars.  To many this sounds outrageous (see video).  And so it does to me.
John Oliver on Last Week Tonight tells us perfectly why we should hate FIFA
But why exactly is it outrageous?
Some, including FIFA and the Brazilian government, have argued that the country hosting the World Cup stands to greatly benefit economically from the infrastructure investments and tourism, a benefit that surpasses the amount of tax exemption in question.  Whether such forecasts about the benefits to the host country are correct is highly contestedas these rosy forecasts do not take into consideration many indirect social and economic costs (worker deaths, security costs, crowding out other tourists, etc…)An indication that hosting events such as the World Cup is unattractive even to the richer countries is the fact that only three European countries bid to host to the European Championship in 2020.

But is the issue only a question of mutual benefit? Surely we don’t expect countries to provide corporations or investors with full scale tax exemptions on the account that they generate net benefits to the economy. Countries are perhaps often forced to provide incentives for investors and corporations due to tax competition but this is reason to call for more global tax harmonization. And whereas companies and investors competing against one another may, in at least some way, be justified to seek conditions that render them competitive FIFA has no competitor. It is the sole body responsible for organizing the World Cup. And, it is a non-profit organisation.
Perhaps it being a non-profit organization can actually justify the tax exemption. After all , it is common, and we often think laudable, to exempt non-profit organization from taxes. The fact that FIFA actually makes a lot of profit (in 2012 it was $ 89 million)  often raises eyebrows, but I don’t think this is in itself the issue. What makes an organization non-profit is not that it doesn’t make profit but that it does not distribute its profits or dividends to shareholders and instead uses its profits to further achieve or promote its goals.

We definitely have some good reasons to exempt some non-profit organizations from taxes irrespective of the profit they make or the net economic benefit that accrues from their activities. We do, for example, want to have organizations that track human rights abuses. Evidence that they make huge profit or that their net financial benefit locally or internationally is negative is not reason against exempting them from taxes as long as we know that their profits are being invested to pursue their aims. To the contrary, the more profit they make the better!
Protecting and tracking human rights abuses is an aim we want to pursue even at a large financial cost. Yet, it is not clear that this applies to the variety of aims pursued by the variety of non-profit organisations. It is certainly not clear when it comes to FIFA whose aim is to promote sports and football. Yes, there are the commitments to anti-racism and anti-discrimination, but there is little done to prove them more than slogans. Perhaps if serious effort were being done to promote those aims; if FIFA for instance were to be a driver for labor law reforms in countries like Qatar; or if it were successful in promoting other humans rights (say the right of children in poor countries to play in safe environments) then this could be good reason to exempt them from taxes. That said, even if such were the case, the tax burden ought not to fall on the hosting country but be fairly distributed on the international community.
Absent such aims, the question of whether promoting football is a ‘worthy’ pursuit, perhaps like the question of promoting some forms of art, ought to be settled democratically. This would exclude non-democratic countries from bidding for the world cup, but that doesn’t strike me as an outrageous conclusion.

[1] Until the last of three teams I supported returned home, that is.

I am a PHD fellow at the Institute of Philosophy at KU Leuven. I am working on questions of distributive justice and in particular on principles of justice that are relevant to the European Union.


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  1. Hi Siba, thanks for this interesting (and timely!) post. My impression is that FIFA does a kind of conceptual free-riding on the fact that we don’t have more fine-grained distinctions between for-profit and non-profit. I agree with you that *in principle* it is no problem for a non-profit organization to actually generate profit, but in this case I am not very convinced. FIFA is not using this money to hold more world cups, and I have no idea what else they do with the money, other than sitting on it and paying high salaries to its executives. So the whole idea of retaining profits and reinvesting them in the purpose of the organization seems problematic in this case, don’t you think? Other things being equal, it seems to me that FIFA should not be making net profits overall, but rather contribute to the costs of individual events such that their profits are not more than what they need to keep the whole organization running.

  2. Thanks for the thoughts, Siba. I am fairly sympathetic to your argument. Accordingly, I wondered if I might open a question with you on whether there is any kind of argument that would justify FIFA being tax exempt? I post the question in relation to Lisa’s comment because I suspect that if there is any such argument to be offered it does involve the not-for-profit status and the link to the other activities for which FIFA uses its revenue. So, although one of FIFA’s main jobs is organizing the international football, they do claim to do much else, particularly in terms of developing sports infrastructure in developing countries and in emergency scenarios (e.g., post the 2004 tsunami), something, it is suggested, is a directly valuable development goals, contributes to community and social capital development, enhances broader development goals, and helps children overcoming trauma (for details, see http://www.fifa.com/aboutfifa/footballdevelopment/projects/index.html). Thinking outside FIFA, there is also a broad argument often offered that building international sports communities are good for engendering peace. I have very little idea about the effectiveness of these programmes and I presume that there must also be some question of ‘what genuinely constitutes development assistance?’. But I also imagine that many tax-exempt charities are engaged in not dissimilar activities. So, my question is whether you think there is any mileage in constructing an argument for tax-exemption along these lines? If so, what claims particularly seem in need of justification? Do we need clear criteria on what constitutes being engaged in development, what level of empirical evidence on effectiveness do we need to validate the claim that a group is involved in such activity…? (Although it is not a central issue here, I would also be interested in what conclusions follow from certain answers to these questions for other charitable organisations?

  3. Thanks Siba for the great post and the wonderful clip from John Oliver. I am broadly sympathetic with your claim but find there is a more important reason to be critical of FIFA with regard to its structural injustice. The fact that 13 European countries can qualify (out of approx. 30) whereas only 5 African countries can qualify (out of 48). Its similarly exclusionary to Asia but less so to America (both North and South) – in other words FIFA majorly structurally benefit the richer Western nations. FIFA claims that European teams are better but if we look at the current European teams almost 50% of their players are not born in Europe but were offered citizenship (another injustice) simply in order to join the European teams and be paid amounts that are beyond the budgets of poorer states. What adds salt to these wounds is that this structural injustice leads to a variety of racist claims that African players and teams are less successful because they are less driven, motivated etc. For more on this see: http://www.theguardian.com/world/2014/jun/11/world-cup-africa-football-teams-under-perform

  4. Lisa, Andrew, thanks for the comments and questions.
    As Andrew points out, Fifa presents its aims as going beyond organising sporting events and extending to development project, peace building, and what I have mentioned on antiracism/discrimination . On the one hand there is the question of whether they are doing so effectively (how much of their profit is going into that) and whether to do so they need the billion dollar reserve. But then there is Andrew's question of whether, assuming they are doing so effectively, this justifies the tax exemption.
    With regards to the effectiveness, I haven't done in anyway thorough research on that, but what I have read here and there seemed highly skeptical.
    The second question on whether, assuming they are effective in promoting some of these goals, this justifies tax exemption is a complex one. At the end of my post I have tried to mention some considerations that I thought would be relevant in answering this question, but I obviously barely scratched the surface (namely that it depends on the nature of the goals the organisation pursues: I would say goals related to human rights justify exempting non-profit organisations from taxes. Organising world cups would not fall into that category, but the other activities goals Andrew mentions and the suggestions I made on pushing to reform labor laws, creating safe play environments for children, anti-racism etc.. would). And indeed I saw that this opens the door to a discussion about non-profit organisations in general.
    I need to think more about your question Andrew, perhaps others could also help in thinking this through, but here are some further thoughts on how to think about the Fifa case.
    1- The tax exemptions do not have to be all or nothing. So assume we agree on what counts as development assistance, one idea would be to exempt from tax only those profits and activities that are being invested into development projects.
    2- The tax exemptions is a burden that is eventually shouldered by the particular host country (and Switzerland) whereas it seems to me that the cost of development projects ought to be distributed fairly among all states because the development projects do not just target the host country. In that regard, I am not sure that tax exemptions on World Cup activities is the best approach.

    I should think more about this and get back to you with further ideas! Do you have any thoughts?

  5. Anya. Thanks for your comment. I thought the John Oliver clip was wonderful too. I hadn't thought before about the reasons less countries qualify from Africa or Asia vs. Europe, and didn't know that it was Fifa which allocated the spots based on quality assessments. So thanks for pointing this out. I am not really sure, however, what to think of the (nationalised) players issue. Of course we can think that Fifa should invest much more in developing football clubs in poorer nations so that they could offer their players attractive and competitive conditions. But we also want to retain the freedom of players to choose where they want to pursue their careers. I don't necessarily find it problematic that a very large percentage of players are foreign born. Partly because I dislike any nationalistic elements in football and I think the diversity of players in teams is a positive thing. What do you think?

  6. Hi Siba, tax exemption *in general* are a much wider issue for which one might also have to take into account the specificities of different countries and their political and economic systems. But I am not even sure whether this is needed for the case of FIFA because various considerations would maybe lead to the same result. I fully agree with your point 1) above: I would find some form of cost sharing most plausible. On your point 2): I find it more difficult to judge this, because we live in such a non-ideal world in this respect, i.e. in a world in which many countries do not do their bit to contribute to the fight against global poverty. So in theory, I’d be open to the idea of additional mechanisms for redistribution, even if they come about in somewhat absurd ways (such as via tax exemptions for World Cup activities). But Brazil is a country that has so many problems of its own that I find this specific case problematic. If a very rich country with a strong internal safety net for their own poor citizens (say Norway) decided to give tax exemptions to FIFA, and if FIFA really used their profits in effective and legitimate ways in order to fight poverty, that could be an improvement of global justice, all things considered. But the first condition doesn’t hold, and I am not sure about the second either.

  7. Siba, this is very interesting. Like Lisa, I find your first condition very compelling. I think I also agree with you about the second. In a sense, it seems to speak to an issue about ‘fit’. That is, we can imagine the costs of development projects: being borne by (1) the world cup host, which may be (a) wealthy or (b) developing, or (2) all states (presumably progressively so); and being spent in (i) the country hosting the world cup or (ii) wherever the need is greatest (or somehow otherwise fairly distributed).

    As I understand it, your thought is that because FIFA (says that it) addresses development of kind (ii), the costs of development should be borne by (2), not (1), and, thus, not mobilised through tax exemptions for FIFA in (1), or, indeed, through tax exemptions for FIFA anywhere.

    Perhaps what Lisa says adds another possibility along the lines of (1a) also being a legitimate source of funding (ii), because, in a way, it tracks what would be the case in (2) funding (ii). I guess we might think that this case parallels what is happening in the case of charities too. As Lisa says and I think you mean to agree, I am inclined to find that mechanism somewhat ‘non-ideal’, presumably made legitimate, if it is, by the absence of better mechanisms for the cost being borne as specified by (2). Probably this case is also not applicable to Brazil, I take it because that would be more like (1b) funding (ii) which seems less normatively ‘fitting’ – it does not track (2) funding (ii).

    I guess what these cases leave open is if (i) were adopted as the aim (e.g., if FIFA channelled its profits from tax exemption into development in Brazil). I guess that would be an alternative response to your worry about the fit between the costs being borne by (1) and being spent in (ii). As in, rather than making the fit better by moving the costs of (ii) to being borne by (2), it would move the costs being borne by (1) to paying for (i). The obvious question here would be why we should hand over responsibility for development funds being used in some country to FIFA. It would seem that any state with some reasonable claim to legitimacy should be the actor that collects and directs the funds, thus suggesting the tax exemption does not follow. Although, here, again, there seems an interesting parallel in terms of what we might, then, say about charitable organisations in the country.

    (Presumably it also leaves open the option of (2) paying for (i), but I do not see any way in which that could generate an argument for tax exempting FIFA in the world cup host country (or see the idea as very plausible).)

    Do you think something like this taxonomy helps us get at some of the issues? If so, I would be interested to hear what you think about two cases: the structure of argument that Lisa suggests – (1a) granting FIFA exemptions to fund (ii) – and the alternative ‘fit’ model – (1b), such as Brazil, granting tax exemptions to fund (i). Again, I guess much depends on empirical matters, but it would be interesting to hear whether you think these cases might work under certain empirical assumptions. And what might follow for charitable organisations?

  8. I agree that its fantastic that teams are actually not 'national' – its been something very prominent in the news in Belgium this past month but I do think its problematic to say that the players are free to choose where they want to play as the inequality between teams, support, advertising, etc makes it such that anyone with any real talent who wants to make a career must come to Europe and is then fast-tracked to citizenship. I was told that the salaries and profits of some of the top European players (e.g. Messi – who of course if from Argentina) is more than the entire budget of most African teams. This seems outrageous to me. If FIFA is making any profit, it should be used to rectify this imbalance by supporting these poorer teams etc.

  9. Anya, I don't think we disagree 🙂

  10. Andrew, Lisa great questions. And Andrew, yes, I think the taxonomy is extremely helpful. Let me try to answer your questions.
    So the first argument is that (in an unideal-world) we may be justified in requiring rich countries hosting the world cup to forgo their tax revenue because this allows Fifa to fund development projects worldwide. So what we can have is a some sort of wealth criteria and countries which fall above it would exempt Fifa from taxes (regardless of whether the already give their fair share of global aid) but not countries falling below it. I am troubled by the arbitrary aspect, but am perhaps willing to accept it. That said I still wonder whether there isn't a fairer way to go about this. I am thinking for instance of taxing countries (in a radically progressive manner) for their participation in the world cup [we can justify taxing only participating countries because the fact that they participate might reflect that they have more than others benefited from being members of Fifa (see Anya's point), and perhaps because they make the choice to enter the cup in the hope of making gains (by winning the champion's prize].
    But let us assume we accept the argument Lisa makes (that we can require (1a) to exempt Fifa in order to fund (ii). Then the question is whether this would also apply to other charitable organisations. I don't see a reason not to. In fact I think it is more justifiable in the case of charitable organisations than Fifa because the arbitrary element is weaker. Most large organisations (whose tax exemptions are substantial) have offices spread across the rich world and that sense the burden might be longingly spread across the richer countries.
    As for the second question, as to whether we can justifiably request a poor host nation to exempt Fifa from taxes because Fifa will use those taxes for development projects in that particular country. I agree with you Andrew that there is something perverse in handing over responsibility to Fifa, unless for instance Fifa is better placed than the state to carry out those project (which I assume is what can justify tax exemption to local charities). But even if that were the case, might it still not be a better option for Fifa to pay taxes, and then for the government to rechannel those funds back to Fifa (or would that be too inefficient? maybe I am being over cautious because I am unable to shed away doubts that Fifa would actual reinvest all the profit it makes from tax exemptions into the country itself).

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