$100m in lost sports taxes

Bolt among few big-earning stars who pay up

BY HG HELPS Editor-at-Large Investigative Coverage Unit icu@jamaicaobserver.com

Sunday, July 18, 2010

MANY of Jamaica's sports stars do not pay taxes on income earned locally, cheating the treasury of an estimated $100 million a year, finance ministry officials said.

But tax officials were happy to point out that Jamaica and world superstar speedster, Usain Bolt was not among the recalcitrant ones.

The payment or non-payment of taxes was brought into sharp focus last week after Bolt, the world's fastest man, said he would not participate in the Aviva London Grand Prix meet next month, if a controversial United Kingdom tax rule remained.

Bolt, regarded as a millionaire in any currency, insisted that he would have to pay more in taxes to the British Government than he would take home after his race.

The triple World and Olympic sprint champion, is among a small number of active sports personalities who file tax returns and pay their taxes annually, State Minister for finance Senator Arthur Williams confirmed.

"Bolt is one of the few compliant ones. He pays his taxes," the junior minister told the Sunday Observer in an interview. "In principle I support taxes being paid by sports people. They are workers like anyone else," Williams said.

Williams' comments backed those of finance minister Audley Shaw in a statement months ago lauding Bolt who enjoys ambassador status, for setting an example and living up to his statutory obligation, while vowing to go after sports personalities and artistes who were not paying taxes.

The appearance fee for the six-foot, five-inch Bolt leapt from an average US$250,000 at the start of last year, to over US$500,000 in some cases.

Bolt would file taxes based upon earnings in Jamaica, like his Digicel endorsement deal, in which he advertises for the telecommunications company.

His manager of many years, Norman Peart spent most of his professional life as a tax auditor and would likely guide the sprint star along the lines of compliance.

Apart from Bolt, the next highest earner is Asafa Powell, who can claim in excess of US$100,000 in appearance fee for meets.

Frontline athletes like Veronica Campbell Brown and the temporarily suspended Shelly-Ann Fraser, can command between US$30,000 and US$50,000 for some meets.

Athletes generally earn huge sums from overseas promotional deals, like product sponsorship, but it is still unclear if Jamaica's ministry of finance benefits from any of the applicable taxes on earnings, as Jamaica does not have direct tax treaty arrangements with many of the countries involved.

Many of the meet organisers make arrangements for applicable taxes to be deducted from earnings for athletes who fall above the income tax threshold of those host nations, but others are not required to pay taxes at meets where the earnings fall, in some cases, below US$8,000.

A ministry of finance official who asked not to be identified because he was not authorised to speak with the Sunday Observer, estimated that Jamaica would rake in an additional $100 million, if every professional sports personality paid his or her taxes.

But the president of the Jamaica Amateur Athletics Association, Howard Aris appeared in the dark about how many Jamaican athletes pay taxes to the Government, saying that the paying of taxes was left to the individual athlete.

"We (JAAA) have nothing to do with that ... no responsibility or jurisdiction. Each athlete is responsible for filing his tax returns," Aris said.

Not everyone in the sporting fraternity is happy about the payment of taxes, one being MVP Track Club's coach Stephen Francis, who argued sometime ago that the Government was taking too much from sportsmen, while doing little for them.

Francis' charges, some of Jamaica's leading track athletes, would be among the highest earners in the island.

Most of their earnings come from external sources, including the Diamond League meets where money is often paid out in appearance fees and prizes.

Some sports personalities declared they would rather be assessed and even taken to court, rather than voluntarily submit tax returns to the Government.

"The Government's tax system is a killer. I see people having to pay so much in taxes...They pay income tax of 25 per cent, they pay education tax, housing tax, and then the wickedest one of all, the GCT (General Consumption Tax)," commented one sports star.

Another said that she was not averse to paying income tax on her overall earnings, but was concerned about how money collected by the State machinery was being spent by officials.

"The money being collected by Government, I am not convinced that it is being used properly. You sometimes hear these stories about misuse of funds by public officials and I don't want to hear that I am paying taxes and then my money which I run so hard to get, is going into someone else's pocket, rather than being used to fix roads and that sort of thing," she said.

Neither wanted to be identified.

But with the tight financial constraints, the tax authorities are trying to implement ways of forcing non-compliant individuals to pay up or face the full force of the law.

Earlier attempts at getting better compliance rates fell flat with hardly anyone paying attention to the finance ministry's tax compliance division drive to contact sportsmen and women, with a view to finding a way to collect taxes from those who qualified.

The tax division sent out correspondence to certain sports associations, asking them for contact details like addresses, e-mail addresses and telephone numbers of sports personalities whom the department regarded as persons of interest.

Now, tax authorities say they are willing to make even greater efforts to get the tax dodgers. For example, they are eyeing the national premier football league which accommodates 12 clubs operating in a semi-professional and professional manner.

Tax collectors see clubs giving players and officials fixed fees throughout the season which runs from August to May. But clubs often keep players fees close to their chests, although reports have surfaced that some premier league players who are regarded as stars, can earn up to J$150,000 a month, making them eligible to pay taxes, having gone past the tax threshold of $441,168 per annum.

Globally, Jamaica has about 30 professional players listed, most playing in the United Kingdom and the United States, earning from a minimum US$2,000 to US$100,000 monthly. All of them pay taxes at the source country of earning.

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