One of the tax loopholes that the Labour Party promised to close when it was in opposition concerned foreign born multimillionaires who claimed non-resident status although they owned houses and lived most of the time in the UK. The changes made to the tax-system by Margaret Thatcher ensured that foreign-born businessmen provided the funds for the Conservative Party. This enabled Thatcher to change the tax system that resulted in the poor paying a higher percentage of their income in tax than the very rich.
Once in power the Labour Party dropped its plans to close these loopholes and as a result gained the funding from these multimillionaires that previously went to the Conservative Party.
It is estimated that over 300 foreign-born players based in the UK pay very little tax on their income. Yesterday, the Sunday Times revealed they way Cristiano Ronaldo arranges his tax affairs. (This is true of virtually all foreign-born players playing in the Football League). Ronaldo has signed three contracts with Manchester United. The first contract pays the player for matches played in Britain. The money for this contract is kept as low as possible because the player has to pay UK tax on this income.
The second contract is for Ronaldo's â€œglobal image rightsâ€ which covers the money earned by the club to sell his merchandise and television rights. The third contract pays for any appearances outside the UK.
Most of the money paid to players is for the second and third contracts. This money is then paid tax-free to an offshore tax haven.
This is why the highest paid footballers are so keen to play in the UK. Other European countries do not have these tax-loopholes.
As long as the money paid as a result of the first contract is kept very low, the player pays less tax than that paid by the supporters who watch them. Yet at the same time, supporters are told that the main reason for high ticket prices is the cost of player's wages.
Ironically, the owner of the Sunday Times, Rupert Murdoch was born in Australia and also makes full-use of these tax-loopholes and is the main reason why his newspapers supported the Conservative Party during the period 1979-1997 and the Labour Party since 1997.