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Lionel Messi case: dodging taxes in Spain is easier than dodging defenders Lionel Messi case: dodging taxes in Spain is easier than dodging defenders
(4 months later)
We don't know yet if Lionel Messi, Barcelona's star footballer, is guilty of the offences he is being accused of by the Spanish tax authorities. We don't know yet, and we will not know for a long time, considering the excruciating sluggishness of Spain's judicial system. He may, or he may not, have evaded €4m of tax. But if he did, it's unforgivable.We don't know yet if Lionel Messi, Barcelona's star footballer, is guilty of the offences he is being accused of by the Spanish tax authorities. We don't know yet, and we will not know for a long time, considering the excruciating sluggishness of Spain's judicial system. He may, or he may not, have evaded €4m of tax. But if he did, it's unforgivable.
It's unforgivable because he could have spared himself all the trouble. For example, he could have taken advantage of the recent tax amnesty decreed by the current conservative government and paid just 10% of the money he allegedly holds in South American tax havens. Lots of people, some of them politicians involved in high-profile corruption cases, did just that and now they're off the hook. Or he could have used the previous tax amnesty decreed by the late Socialist government. Or he could have resorted to any of the numerous loopholes that riddle Spain's (intentionally) complex tax law, or benefit from a wealth of tax exemptions. Messi should know that, for a good lawyer, dodging taxes in Spain is much easier than dodging defenders.It's unforgivable because he could have spared himself all the trouble. For example, he could have taken advantage of the recent tax amnesty decreed by the current conservative government and paid just 10% of the money he allegedly holds in South American tax havens. Lots of people, some of them politicians involved in high-profile corruption cases, did just that and now they're off the hook. Or he could have used the previous tax amnesty decreed by the late Socialist government. Or he could have resorted to any of the numerous loopholes that riddle Spain's (intentionally) complex tax law, or benefit from a wealth of tax exemptions. Messi should know that, for a good lawyer, dodging taxes in Spain is much easier than dodging defenders.
But then again … on the other hand, if he is guilty (which we don't know is the case) he can be forgiven for thinking that he would have never been found out. Spain's tax office is conveniently, some could say suspiciously, underfunded. No country in Europe spends less money collecting tax. With a fiscal structure similar to that of Italy, it gathers 13 points less of the GDP. Only a handful of inspectors search for fraud and their focus is the salaried. Big money and big companies, which account for more than 70% of all fraud, are surveyed far less often. In any case, tax inspectors only have 12 months to finish an investigation, and then they have to stop. It's the law. No wonder only 10% of tax fraud is uncovered in Spain. Benjamin Franklin famously said that nothing is certain but death and taxes. In Spain, with the highest life expectancy and the highest tax fraud in Europe, neither is that certain.But then again … on the other hand, if he is guilty (which we don't know is the case) he can be forgiven for thinking that he would have never been found out. Spain's tax office is conveniently, some could say suspiciously, underfunded. No country in Europe spends less money collecting tax. With a fiscal structure similar to that of Italy, it gathers 13 points less of the GDP. Only a handful of inspectors search for fraud and their focus is the salaried. Big money and big companies, which account for more than 70% of all fraud, are surveyed far less often. In any case, tax inspectors only have 12 months to finish an investigation, and then they have to stop. It's the law. No wonder only 10% of tax fraud is uncovered in Spain. Benjamin Franklin famously said that nothing is certain but death and taxes. In Spain, with the highest life expectancy and the highest tax fraud in Europe, neither is that certain.
And if Messi is guilty (which we don't know is the case) he is unlucky too. As a successful footballer he could have had the law tailored to his needs. That's what happened in 2006, when Real Madrid's need to hire David Beckham led to an ad hominem legal reform known as the "Beckham law". It allowed foreign players to pay most of their tax abroad, which amounted to a legalisation of tax evasion, but few complained back then. The law was partially reformed in 2010 but I assume it will be back as soon as the crisis clears. In fact, that same year, when "La Roja", the Spanish national football team, won the World Cup, nobody complained about the fact that the players decided to (legally, but not very patriotically) pay token tax in South Africa for their phenomenal bonuses, rather than in Spain. "They deserve everything", was the line. Many say the same thing about Messi now.And if Messi is guilty (which we don't know is the case) he is unlucky too. As a successful footballer he could have had the law tailored to his needs. That's what happened in 2006, when Real Madrid's need to hire David Beckham led to an ad hominem legal reform known as the "Beckham law". It allowed foreign players to pay most of their tax abroad, which amounted to a legalisation of tax evasion, but few complained back then. The law was partially reformed in 2010 but I assume it will be back as soon as the crisis clears. In fact, that same year, when "La Roja", the Spanish national football team, won the World Cup, nobody complained about the fact that the players decided to (legally, but not very patriotically) pay token tax in South Africa for their phenomenal bonuses, rather than in Spain. "They deserve everything", was the line. Many say the same thing about Messi now.
The result is that some studies calculate tax fraud in Spain to be as high as 23% of GDP, 10 points over the European average and the highest in the EU. It is not the cause of Spain's economic woes, but think of this: if everybody paid their dues, Spain's deficit would be zero. Of course, it won't happen. Interestingly, tax fraud is not a product of the crisis; it began to grow during the boom years, when the underground economy went from 15% in 1985 to 23% en 2008. It is not a relic from the past but part of our recent culture of success. That's why successful people feel entitled to it. And too many people agree; even if they are sometimes selectively angry about it.The result is that some studies calculate tax fraud in Spain to be as high as 23% of GDP, 10 points over the European average and the highest in the EU. It is not the cause of Spain's economic woes, but think of this: if everybody paid their dues, Spain's deficit would be zero. Of course, it won't happen. Interestingly, tax fraud is not a product of the crisis; it began to grow during the boom years, when the underground economy went from 15% in 1985 to 23% en 2008. It is not a relic from the past but part of our recent culture of success. That's why successful people feel entitled to it. And too many people agree; even if they are sometimes selectively angry about it.
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