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Opportunities for Brazil as it Hosts FIFA world cup 2014

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OPPORTUNITIES FOR BRAZIL AS IT HOSTS FIFA WORLD CUP 2014
Brazil may consider itself lucky for landing the coveted prize. It has been selected to host
2014 FIFA world cup and as most people would agree, this is a once in a lifetime opportunity for
any country. However the matter becomes precious as well as precarious when the country is a
troubled zone like Brazil where public believes country should spend more on providing services
to its people than hosting the World Cup.
So why would people get angry over something that they should otherwise be excited
about? It is simple to understand. When Brazil decided to host the World Cup, little did it know
that it would need excessive amount of funds to spend on making arrangements for the event
before all that money can be recovered! To raise funds however, the money comes from
taxpayers pockets. And this made the public enraged when slowly and gradually the prices of
everyday public services started rising. Initially there was a 10 cent rise in bus and train fares but
before the government could calm the public down, Brazilians took to streets protesting against
everything from corruption to poor public services to lack of proper security and more. Slowly it
all boiled down to the core issue: Government needs to spend on important things like public
projects instead of hosting a World Cup for which it has no money.
Brazilians maintain that the only one to truly benefit from this sporting event is FIFA
itself which will be earning around $4billion from the event. But Brazil will make money too
from tourists who will pour in to watch the event live and in the long run, public will also stand
to benefit from changes in the infrastructure as it is being developed to cater to the needs of
millions who will enter Brazil during the World Cup.

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But before Brazil can make even a dime, it needs money and a whole lot of it to spend on
development and maintenance of its infrastructure. The cost can go upwards of $1 billion as it
did for South Africa three years ago. When FIFA makes $4-$5billion, FIFA argues it’s not all
profit. And whatever it makes, it needs to spend over a 4 year period till the next sporting event.
The host country could earn by taxing FIFA but sadly Brazil gave up that right as well
when it asked for the rights to stage the massive event. In the end Brazil tends to lose everything
while FIFA benefits the most as former Brazilian player Romario explains, "FIFA will make a
profit of four billion reais ($1.8 billion) which should provide one billion ($450 million) in tax,
but they will not pay anything…They come, set up the circus, they don't spend anything and they
take everything with them…The real president of our country is FIFA…FIFA comes to our
country and sets up a state within a state." (Sinnot, 2013)
FIFA must pay the hosting country some percentage of its profits in the form of taxes. But
FIFA is registered as a non-profit in Switzerland and for this reason, seeks exemption everywhere
it goes. The same happens with Olympics but hosting countries have fought for their rights to get
something back as taxation and often won the case. Critic Christopher Gaffney explains, "FIFA
should be obliged to follow the pre-existing tax laws in the host countries that apply to
international sports non-governmental organizations and their corporate partners," said Gaffney.
We saw a response in the lead up to London 2012 that the British were revolted that the
International Olympic Committee's partners were not going to pay taxes. A boycott ensued and
the companies agreed to pay taxes on their Olympic related profits. There are, of course, always
government subsidies to attract businesses, but legislative elements like the General Law of the
World Cup in Brazil go far beyond this and effectively redirect public money into Swiss bank
accounts." (Sinnot, 2013)

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With Gaffney such brazen criticism of FIFAs actions, FIFA was quick to respond and
said that it basically doesn’t get any revenues from public funds of the host country. All the
revenues come from ticket sales and merchandise sale. However what it chooses to ignore is the
fact that poor host countries often have to raise money to develop their infrastructure and that
money does come from public. So basically FIFA does indirectly take a huge amount of money
right out of the pockets of the average taxpayer in host country. (Warshaw, 2013)
One well known European taxation expert, Professor of European Tax Law Han Kogels
studied that documents that FIFA submits at the time of bidding. When bidding for 2018 World
Cup was underway, Netherlands was among the three top bidders. Kogel read the documents
submitted by FIFA and was horrified to find out that, “In that bid book model of the FIFA as
commercial organization, it claimed a privilege of 100% tax freedom (no corporate tax, no
income tax, no VAT, no excise duties, no local tax, not any other taxes), irrespective of regular
national tax law, European tax law and international tax law…"I was (and still am) not aware of
any other international commercial sport event being subsidized through full tax exemption at
the cost of (other) taxpayers, and did not see any justification for such unequal treatment of
FIFA." (Sinnot, 2013)
With all these protests aside, FIFA argues that tax exemptions should not be a problem for
the host country as it will stand to benefit from changes in infrastructure and from tourism
growth. Quoting a report by Ernst & Young Terco FIFA contends that this sporting event would
bring in an additional R$ 112.8 billion ($50 billion) into the Brazilian economy by 2014 out of
which with R$ 28 billion (12.4 billion) will be spent on development whole the remaining
amount will go back to the population as income.

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OPPORTUNITIES FOR BRAZIL AS IT HOSTS FIFA WORLD CUP 2014Brazil may consider itself lucky for landing the coveted prize. It has been selected to host 2014 FIFA world cup and as most people would agree, this is a once in a lifetime opportunity for any country. However the matter becomes precious as well as precarious when the country is a troubled zone like Brazil where public believes country should spend more on providing services to its people than hosting the World Cup.So why would people get angry over something that they should otherwise be excited about? It is simple to understand. When Brazil decided to host the World Cup, little did it know that it would need excessive amount of funds to spend on making arrangements for the event before all that money can be recovered! To raise funds however, the money comes from taxpayers pockets. And this made the public enraged when slowly and gradually the prices of everyday public services started rising. Initially there was a 10 cent rise in bus and train fares but before the government could calm the public down, Brazilians took to streets protesting against everything from corruption to poor public services to lack of proper security and more. Slowly it all boiled down to the core issue: Government needs to spend on important things like public projects instead of hosting a World Cup for which it has no money. Brazilians maintain that the only one to truly benefit from this sporting event is FIFA itself which will be earning ...
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