Some have called it the best football World Cup ever. And it has indeed been incredibly exciting. 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. Investigations have 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 contested as 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.
 Until the last of three teams I supported returned home, that is.