Taxation of India’s Professional Cricket: A Proposal

Tax professional cricket: Hockey’s debacle shows the distortions in India’s sports markets

by

Subroto Roy

First published in The Statesman, April 1 2008, Editorial Page Special Article http://www.thestatesman.net

All cricket involving professional international-level players, whether Indian or foreign, that comes to be broadcast to Indian audiences or played before Indian spectators, deserves to be subjected to a new, severe, discriminatingly specific excise-tax. Cricket below professional international level would be unaffected. Revenues received by the Union or State Governments from a new “International Cricket Tax” should be specifically “earmarked” to subsidize other sports as heavily as possible. Individual Indian athletes, gymnasts, swimmers, archers etc. as well as Indian teams in soccer, hockey, rugby, volleyball and other sports would be encouraged and enabled to train or compete at sporting events around the world using revenues raised from taxation of professional international cricket involving India. Had our Ministry of Finance or any other New Delhi ministry any serious sense of the economics of public finance, they would have proposed such a simple device of national policy years ago, certainly after the Hansie Cronje gambling scandal broke.

National policy

The distortions of our sports markets have come to be highlighted today by the collapse of Indian men’s hockey coinciding with Indian men’s cricket ballooning from a little international success and a lot of greedy consumer-fed wealth. The public is hardly aware of it but Indians have in fact done very well recently in several international sports ~ especially women’s and men’s boxing, women’s weight-lifting, athletics, archery, table-tennis, swimming, women’s hockey and men’s soccer. Yet youngsters around the country face extremely distorted decisions between investing their time and energy in any sport other than cricket ~ on the outside chance they might hit gold like a Sachin Tendulkar or MS Dhoni or Irfan Pathan and improve their families’ material well-being for ever more, rather like buying a winning lottery ticket.  As a general rule, the structure of economic incentives should be such that a physically talented 10 or 11 year old male or female child should be indifferent between choosing among different sports in which to specialize, cricket being one possibility. Physical fitness through sport along with proper nutrition for all children in the country needs to be the general national goal.

Notwithstanding its virtues, joys, pleasantries and sportsmanship, cricket cannot be considered a nation-building sport for India’s masses. Cricket in England and the West Indies has long declined in face of more vigorous mass sports like soccer and basketball (“West Indian” athletes emigrating to North America). Australia and New Zealand love cricket but they tend to love and excel in many sports and cricket to them is just another ~ if cricket suddenly vanished they would merely move more towards rugby, swimming, tennis etc.

In India, Pakistan, Sri Lanka and Bangladesh as well as South Africa and Zimbabwe, cricket does have some political nation-building role via the secular symbolism involved in choosing a representative national team on merit ~ but that still does not make cricket the single most suitable sport for mass physical or moral upliftment among scores of millions of poor children.

Cricket is similar to baseball and American football in requiring quite a lot of equipment per player; in requiring relatively high technical specialized training (opening batsman, spin-bowler, pitcher, quarter-back); and in not providing all who play it a “total body workout” within a short length of time. One may need to be fit to play cricket but playing cricket in and of itself is not the best route to physical fitness.

Professional international cricketers thus need to be provided with a lot of support ~ gyms, massages, fitness sessions, physiotherapy etc. Field games like rugby, soccer, hockey or basketball do provide “total body workouts”, do not require nearly as much equipment per player and call for much less technical specialized training.

For sake of national policy-making, relevant comparisons should not be made at first class or professional levels but rather on the level of school playing fields, village playgrounds or urban parks and open spaces on any bright day where a bunch of lads have nothing better to do than create a game for themselves. In India as around the world, all that a dozen or more lads need to make a game of it is a ball that can be kicked between them. America’s inner cities have a single basketball hoop around which a game comes to be played.

The high life-time earnings of professional international Indian cricketers arises ultimately from television advertising of mass consumer goods and services ~ aerated sweet drinks, mobile telephone services, chocolates, potato-chips, soaps, shampoos, detergents etc. There is in general nothing wrong with such outcomes of a free process of contracts. The late libertarian philosopher Robert Nozick in Anarchy, State and Utopia gave a classic case of the great basketball player Wilt Chamberlin earning a vast income and wealth because very large numbers of people were freely choosing to part with their money to watch his genius at play.

America, however, has had a long history of sports during which sporting markets have become very competitive in the economic sense. Indian cricket reveals monopolistic trends. Selection at national level, hence to an international professional career of about a decade or so, contains a strong random or arbitrary element to it. At the same time, since the early 1990s professional cricketers in India (unlike those in other countries) have refused to gracefully retire even after poor performance and have had to be chucked out after titanic political struggles that sometimes find mention in Parliament. There is hardly any of the “free entry” or “free exit” that define competitive conditions in an industry.

India’s international cricketers play under India’s Flag and sing the Indian National Anthem; the economic externalities involved are so obvious and the monopolistic or cartel power of Bombay’s cricket and TV businesses so severe that even nationalization of the sport at professional international level might have been considered ~ except for the sheer incompetence our government displays at handling any nationalized industry properly. Thus taxation of cricket and earmarked transfer of those revenues to other sports in India may be the most effective way to move towards a proper structure of incentives.

Sin taxes

Though our Finance Ministry seems quite unaware of it, excise taxes are supposed to be “sin taxes” only ~ e.g. on tobacco and alcohol to try to reduce their consumption and, if demand is inelastic, to extract as much revenue as possible out of them to put to healthier purposes. One reason consumption of professional international-level cricket in India has become unhealthy has undoubtedly to do with the gambling that takes place behind the scenes on innumerable aspects of the game. Placing a severe “sin tax” on professional international cricket will reduce its consumption and hence reduce the gambling deriving from it too. Even the masses who do not gamble but merely watch it on TV for vicarious pleasure and entertainment may need a jolt to prevent addiction. The way to implement a severe discriminatory tax on professional international level cricket in India may be by government control or nationalization of the public arenas in which it comes to be played as well as of course control of the television-broadcast rights. One of our many problems has become that our politicians and senior bureaucrats long to mingle freely with big business and cricket and Bollywood icons themselves; amidst all the glamour and fun that they would much rather be part of, they are unable to think about the public interest less obscurely than they might have done.

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