Usain Bolt is wrong to oppose our tax laws

The sprinter won't compete in Britain again because he doesn't want to pay more tax.

Amid the drama of the Jamaican team's world record time in the 100m relay, which I was fortunate enough to witness in person, few noted Usain Bolt's post-race comments on tax. Asked why he did not compete in Britain more often (he refused to appear at Crystal Palace in 2010, for instance), Bolt cited our tax laws. "As soon as the law changes I'll be here all the time," he said.

Bolt's objection is to a law that allows the government to take a cut of his sponsorship and endorsement earnings as well as his appearance fee, which is currently taxed at 50 per cent. For instance, were he to take part in 10 meetings worldwide, with one in Britain, the Inland Revenue would tax him on 10 per cent of his worldwide sponsorship earnings. None of which is objectionable. Without tax funded events such as those in Britain, Bolt, who earns around £10m a year, would have no platform on which to perform and, consequently, no sponsorship. Those countries that don't tax non-resident sports people, as Britain does, should do.

The law was waived for the Olympics at the behest of the IOC (one wonders if we would have seen Bolt otherwise) and the government is now under pressure to permanently suspend it. But given the revenue it would lose from those athletes who do grace us with their presence, it is understandably reluctant to do so. Instead, it is Bolt who should reverse his stance and accept that it is legitimate for him to pay a proportion of his worldwide earnings to the British government. After all, having spending £9bn on the Olympics, we could do with the money.

Bolt's management complain that "his tax liability in the UK would exceed his appearance fee". Yet if true, that is only because his sponsorship earnings are so exorbitant to begin with. In any case, is it utopian to hope that athletes might be motivated by something other than money?

Update: Here's what the Treasury had to say on the subject in this year's Budget.

HMRC will revise its practice on the taxation of non-residents sports people to take training days into account when calculating the proportion of worldwide endorsement income subject to UK tax.

Jamaica's Usain Bolt reacts after winning the men's 200m Olympics final. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Ruling the waves: should the UK own its offshore wind?

A new report from Labour Energy Forum makes the case for greater public ownership in the offshore sector.

Rule, Britainnia! Britons never, never, never shall be slaves to EU policy again. So goes the thinking of the Brexiteers. But little mention is made of the foreign companies ruling our waves – via offshore wind.

According to a new report by the Labour Energy Forum, over 90 per cent of the UK’s offshore wind is owned by non-UK entities. Plus, over 50 per cent of is controlled by public, often state-owned entities, like the Danish wind company DONG.

In contrast, UK public entities own less than 1 per cent of the total wind farms already built or under construction. That translates to just one single wind turbine: a lonely creature, barely off the beach at Levenmouth in Scotland.

At a time when UK already generates more energy from offshore wind than any other nation and the costs are tumbling, does this ownership model put Britain at a disadvantage?

The government's Department for Business, Energy and industrial Strategy avoids answering this question head-on. Instead it focuses on how overseas investment can benefit service businesses: “Over £11bn of investment in new UK offshore wind farms is due to take place over the next four years with around half of the expenditure in planning, building and running offshore projects going to British companies,” a spokesperson told the New Statesman.

But what about future profit? If offshore wind is eventually able to power domestic demand six times over, as the Offshore Valuation Group predicts, how can the UK public reap the rewards of potential sale abroad?

“The UK has such enormous resources we should be leading, not lagging,” says the Labour Energy Forum’s report author, Mika Minio-Paluello of Transition Economics. Theresa May’s sale of the UK’s Green Investment Bank in April ended the coalition’s experiment in public sector ownership of the green economy, and since then their ambitions have been “limited”.

It doesn’t have to be this way. Minio-Paluello has spent a lot of time in Germany and seen the benefits of the public ownership route. The city of Munich never privatised its local energy supply system, she says. They are now working towards a 2025 target of 100 percent clean energy by building offshore wind farms, including around the UK. “They hadn’t farmed the staff out to the private sector or made as many cutbacks, which meant they could engage with [the renewable transition] as a society as a whole.”

The potential gains for the UK are substantial: from more control over where money is spent and who is employed, to greater tax revenues. “Offshore wind is already breathing life back into ports like Grimsby,” the report says, “but more stimulus and direction is needed. Especially as the fossil-fuel sector gives way to the clean energy economy.”

Yet is the UK already too far behind to catch up and compete with Europe's energy giants? Creating a fully independent public offshore wind company that builds its own wind farms is not a realistic short-term goal, Minio-Paluello says. But you have to start somewhere; the important thing is to be an active partner in the process.

Some UK local authority pension funds have already put money into the Green Investment Bank’s offshore wind fund – yet the hands-off approach means they have no direct influence on how the projects are carried out, staffed and supplied. A more involved option could see UK public bodies operating within the sector in partnership with more established companies. Even as non-operating partners, such bodies could still set requirements on local content and job creation – something that is especially important considering the low union density within the sector at present, the report notes.

A joint enterprise between the non-profit company Energy for Londoners and the Danish energy giant DONG, for example, could build a new windfarm with part UK public ownership. This is not fundamentally different from the councils who already invest in onshore wind and solar farms, Minio- Paluello suggests, “it’s just bigger”.

Such a scheme would allow the UK entities to build up their experience and staffing in the sector, opening the door to grander ambitions in the future. Plus it could bring down energy costs: public companies like DONG and Vattenfall have already led the way towards building subsidy-free sites, while access to cheaper capital can be passed on as savings to the consumer.

Without such interventions, some fear a return to the ill-winds of the Thatcher era, when the revenues from the North Sea Oil boom were squandered and government stakes sold off. “I think it’s quite possible that in 30 years we will look back and ask why did we privatise all our offshore wind sector?” Minio-Paluello says. 

The Labour Party is starting to explore the options, and campaigns like Switched On London and Manchester’s Energy Democracy are also doing their part. But a wind of change must blow from Westminster too – and soon.

India Bourke is an environment writer and editorial assistant at the New Statesman.