The Great Olympic Tax Swindle
Tim Hunt looks at how tax avoidance schemes now lie at the heart of the modern, corporate-dominated, Olympic Games.
In July and August this year Stratford, East London, will become a temporary tax haven. New tax rules ushered in as part of the winning Team GB bid include ‘a temporary exemption from UK Corporation Tax and UK Income Tax for certain non-resident companies’. Thousands will be exempt from taxation from competitors to media workers (including journalists, technicians and producers) to representatives of official Games bodies and technical officials (including judges, referees and classifiers) along with the athletes themselves.
Many of the corporate sponsors are no stranger to the more traditional tax havens. In addition it is exempt from paying tax in the UK on any monies earned from the London Games. Currently the IOC is projected to earn revenues of £2.7 billion from the London Olympics and the total amount of lost tax revenues is estimated to be over £600 million.(7) LOCOG itself (the London Organising Committee of the Olympic and Paralympic Games) is also exempt from taxation.
The body is chaired by Paul Deighton, a former Chief Executive of Goldman Sachs during the period the bank were using offshore schemes to pay executive bonuses.(5) LOCOG itself is also using much-criticised employee benefit trusts, often registered in Jersey or Guernsey, to pay organiser’s bonuses once the Games are over.(6)
With the additional sums that LOCOG could have been liable for, the total figure lost approaches £700 million. This calculation doesn’t even take into account the potential tax income from the profits of corporate partners who will also enjoy the generous tax breaks previously mentioned.
So, despite putting severe weight on London’s public infrastructure, those profiting from the games and many of those working at them will be exempt from tax. The perpetrators of the tax schemes are, in most cases, serial offenders and local legislators (in this case the UK Government), who, under the fear of being passed over in favour of other countries, pass new legislation to legalise tax avoidance.
This tactic of ‘reduce your tax thresholds or we’ll take our business elsewhere’ has long been used by financial elites in tax havens but it is now being extended, albeit on a temporary basis, to countries with usually strong legislators via major sporting events from the FIFA World Cup to the London Olympics.
5. Private Eye Issue1313. 4th May 2012
6. LOCOG Annual Report 2011
7. Liz Ellen PROTECTING SPONSORS AT THE LONDON 2012 OLYMPICS. January 2010
Full the full article please refer to The Ethical Consumer Website
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