Thursday, 23 August 2012

Greek shipping- pampered, or saviour?

"Shipping is not part of the problem. We are part of the solution"- John Lyras, ex-chairman, Union of Greek Shipowners.

Over the last few months, Greek shipping has come under an intense spotlight since it enjoys a special status within the presently tumultuous Greek economy; its detractors say that shipowners in that country should no longer enjoy the tax free status- granted for foreign income to local shipowners- when Greece is on the verge of economic collapse, needing tens of billions of Euros in aid to stay afloat. Greek shipping, they claim, should pay the same rates as their compatriots in other industry.

However, this will be easier said than done; the main reason being that many analysts predict that Greek shipowners will move elsewhere in Europe or even as far away as Dubai if they are exposed to high taxes. In the process, they say, thousands of Greek citizens will lose their jobs- the National Confederation of Hellenic Commerce says that redundancies may be as high as 60,000. This prediction may well have some merit in it, given that many countries in Europe subsidise shipping, often charging extremely low rates to encourage the essential activity. And, like India, quite a few European countries use the mechanism of tonnage tax to reduce taxation on shipping. 

These include the UK, Germany, Belgium, Cyprus, Denmark, Finland, France, Ireland, Italy, Malta, the Netherlands, Norway, Poland, Spain and Sweden, says PricewaterhouseCoopers. In Germany, even individual investors benefit when they buy mutual funds that invest in shipping; direct subsidies to shipping add up to almost €58 million in that country. 

Transport services allowed for 7.3% of the Greek GDP in 2011. Greek shipowners moved almost 175 billion tax free US dollars into their country in the first decade of this century, says Greek bank data quoted by the Union of Greek Shipowners. Professor Vassilis Fouskas, who is writing a book on the Greek crisis, says that shipping in Greece is an offshore business and Greek shippers will go abroad if the tax burden on them increases. “Greek businessmen can register in Dubai,” he said, adding that many jobs in Greece would be lost if this happens. 

Greece owns the largest fleet in the world, according to United Nations Conference on Trade and Development figures, allowing for 16% of global tonnage. The world's biggest maritime trade fair -Posidonia- held at Athens in June this year saw its organisers claiming that the Greek crisis had not affected Greek shipping. Nevertheless, the then Prime Minister Panagiotis Pikrammenos, while saying at the inauguration that the Greek State "must support and respect the significant potential of the sector which has established Greece at the summit of the global maritime industry," also noted, perhaps keeping in mind the mood of his countrymen, "I also call upon the Greek shipowners to support our country in these difficult times." It remains to be seen, three months later, if a small tax rate is in the offing.


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