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How much should players like Zlatan Ibrahimovic be taxed?

updated 3:38 PM EDT, Fri November 1, 2013
Just how much should the wages of players like Paris Saint-Germain's Swedish forward Zlatan Ibrahimovic be taxed in France? Just how much should the wages of players like Paris Saint-Germain's Swedish forward Zlatan Ibrahimovic be taxed in France?
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Taxing question
Hollande's pledge
Out of pocket
Spending spree
Qatari influence
Tax haven
Rybolovlev's roubles
Living the life
Taxing times
Talent drain?
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STORY HIGHLIGHTS
  • French president Francois Hollande wants 75% tax on salaries over $1.35m
  • Proposal has met with the disapproval of French football clubs
  • Paris Saint-Germain and Monaco owned by Qatari and Russian billionaires respectively
  • Striker Zlatan Ibrahimovic would cost PSG an extra $12m a year

(CNN) -- It's said nothing is certain in life except for death and taxes.

For French football clubs it's a new punitive tax law that's worrying them to death. They fear one of Europe's top leagues, newly resurgent following significant investment from mega wealthy Qataris and Russians, could be irreparably damaged by the tax.

On Thursday, French president Francois Hollande told a delegation of professional French football club leaders he wouldn't abandon the government's plan for a 75% tax on salaries reaching more than a $1.35 million.

The clubs have been lobbying hard against the tax, arguing it endangers their future. It's estimated the tax could increase their costs by up to 30%.

And they feel so strongly over the matter that they plan to go on strike.

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So if you're a French football fan don't expect to be watching the likes Paris Saint-Germain striker Zlatan Ibrahimovic or Monaco forward Falcao in action between 29 November and 2 December.

If it goes ahead it would France's first football "strike" since 1972.

Ibrahimovic is one of more than 10 players at Qatari-owned PSG -- France's richest club -- whose yearly pay exceeds $1.35 million.

While the average Ligue 1 player's salary is estimated at just under $800,000, Ibrahimovic reportedly takes home $17.5 million a year.

Many players would already be taxed at France's top marginal rate of 49%, which kicks in at $675,000 a year.

Just for Ibrahimovic's hefty pay packet alone, PSG's costs would increase by nearly $12 million under the Hollande plan.

Since world-class players have their choice of what countries they play in, French teams would have to absorb the increased taxes themselves if they want to attract top talent.

Ahead of this weekend's games, PSG and Monaco are joint top of Ligue 1. But PSG could be at a further disadvantage in future given Monaco are exempt from French taxation laws and the principality club's tax expenditure would be $67.5 million less than the French champions per year.

"The high-income tax of 75%, which was included in the 2013 draft budget of France, will have a disastrous effect on the competitiveness of French football," said the Professional Union of Football Clubs (UCPF) in a statement.

Before the start of the season some of the world's best players -- like Edinson Cavani who joined PSG from Napoli -- If the taxation impasse remains, it is likely French clubs would struggle to attract the very top talent.

"French teams will be at a disadvantage with regard to English clubs who only pay 40% tax," former Monaco chief executive Tor-Kristian Karlsen told CNN.

"That will affect the standard of the league. It might also affect money coming into French football from foreign investment --- potential owners might be tempted to get more value for money elsewhere.

"Monaco and PSG have raised the popularity and exposure of French football outside France," added Karlsen.

"Some in France are still quite skeptical as to why and how they have got involved, but if you are supporter or if you enjoy watching French football they have brought only positive dimensions.

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"As an international observer, it is going to be difficult to uphold the current standard in the years to come if this tax comes in to play."

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French football has a strong tradition of developing young players through its academy system, but a French club hasn't won the Champions League -- Europe's top competition -- for over 20 years, though last season PSG reached the quarterfinals.

"In the short term clubs would have to buy cheaper players for lower transfers and would pay lower salaries to avoid paying the 75%," said Karlsen as he outlined a grim future for French football.

"When the player reaches a level where he starts to attract offers from abroad and will attract wages far above €1 million, or when a player becomes an international or starts to play well in European competition then there is no other option for him than to move abroad."

Karlsen added: "What is a concern for the clubs is that their budgets relate to long-term contracts they have already agreed with players.

"They feel the goalposts have been moved and it makes it extremely difficult for them to continue or plan to be successful in an environment that is already very challenging."

Earlier this week UCPF president Jean-Pierre Louvel unveiled a study outlining the economic benefits French football brings France, given it has an annual turnover of $5.8 billion and there are potentially 25,000 jobs at stake.

"The return on investment for the state is $ .5 billion", said Louvel, who is also the president of second division club Le Havre. "In addition, each euro generated by clubs creates additional 2.5 euros ($3.38) in the country's economy."

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A survey by pollster OpinionWay in October suggested 85% of voters did not think football clubs should be exempted from the high tax rate, which requires approval from the French parliament.

And given France's economic problems -- it has only just emerged from recession -- some members of the French football community remain uneasy about the proposed strike.

"I think that if our corporation goes on strike, we'll have to go into hiding, I mean really go into hiding," Evian coach Pascal Dupraz, was quoted in L'Equipe as telling radio station RTL.

"I'm not totally for (the strike) personally, what worries me of course is that there is this tax, but, all French people suffer from having to pay taxes.

"I just don't understand the anger from the club presidents; I just don't get it at all."

It is not all bad news for French football fans given some observers expect a compromise to be reached.

"I remain confident that some sort of solution will be found before the date of the strike voted for by the club's chairmen," Julien Laurens, a French football expert and writer for Le Parisien, told CNN.

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