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World's Largest Shipowners To Abandon Greece Ahead Of Major Tax Hike

Tyler Durden's picture




 

Once again the reactions of desperate government policies looks like creating an even worse situation thanks to unintended (though entirely foreseeable) consequences. Amid the prospect of sharply higher shipping taxes in Greece - designed to increase revenues and 'fix' the debt-ridden nation, WSJ reports many of Greece’s world-leading shipowners are actively exploring options to leave their home country. With Greece controlling 20% of the world's shipping fleet, the 'quadriga' of Greek creditors' demands to raise taxes (because debt restructuring is out of the question) on such an 'easy target' as the world's largest shipping industry appears likely to backfire as an entire industry's revenues move out of reach of government taxers.

 

As The Wall Street Journal reports,

Dominated by some 800 largely family-run companies that control almost a fifth of the global shipping fleet from their base at the main Greek port of Piraeus, the industry has long been a source of national pride.

 

 

But at the behest of Greece’s international creditors, the newly re-elected Syriza-led government has reluctantly agreed to raise taxes on the long-protected sector.

And the effect of this forced action...

Many in the Greek shipping world say any increase in taxes on shipping operations would prompt a mass exodus of the country’s shipowners. Relatively low-tax global shipping centers such as Cyprus, London, Singapore and Vancouver, Canada, are positioning themselves to benefit.

 

“With all these places from Cyprus to Vancouver coming to Greek owners and trying to get them to move, I hope that everyone realizes there is a real possibility that many people might leave if things are handled the wrong way,” said George Gratsos, president of the Hellenic Chamber of Shipping.

 

...

 

shipping remains a bright spot in the reeling Greek economy, generating €13 billion to €19 billion, or $14.6 billion to $21.4 billion, in annual revenue and employing about 250,000 people.

 

“Shipping makes up 7% of Greek economic output, and logic dictates that the sector should enjoy a friendly business environment and a steady taxation system so it can grow and create more jobs, rather than moves to push it out,” he said.

*  *  *

Senior Greek government officials, who asked not to be named, said the finance ministry is trying to find alternative sources of income to avoid saddling owners with more taxes, but one said that “the exercise is proving very difficult.”

Final decisions on the matter are expected by the end of October.

*  *  *

Maybe someone at quadriga should check on what Greece's debt-to-GDP looks like without its shipping industry. But there is a silver lining... Cyprus may be saved...

“We’re very highly relying on the second option that we have in Cyprus,” Greek owner George Procopiou, who runs one of the world’s largest fleets of tankers and liquefied-natural-gas carriers, told the Cyprus Maritime Conference in Limassol earlier this month.

 

“The friendly environment that we see here in Cyprus for shipping is a great lesson, proving what the cooperation between private and governmental parties can bring.”

 

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Sun, 10/04/2015 - 08:04 | 6627644 fukidontknow
fukidontknow's picture

The ship wherein Theseus and the youth of Athens returned from Crete had thirty oars, and was preserved by the Athenians down even to the time of Demetrius Phalereus, for they took away the old planks as they decayed, putting in new and stronger timber in their places, in so much that this ship became a standing example among the philosophers, for the logical question of things that grow; one side holding that the ship remained the same, and the other contending that it was not the same.

 

-Plutarch

Sun, 10/04/2015 - 08:35 | 6627715 doctor10
doctor10's picture

This is the gift of Brussels to the Greeks, the Shipowners, and the world

Sun, 10/04/2015 - 09:58 | 6627894 TBT or not TBT
TBT or not TBT's picture

Also, those cushy goverrnment worker pensions aren't going to pay themselves.   Parasites gonna parasite.   

Sun, 10/04/2015 - 12:29 | 6628318 Oracle of Kypseli
Oracle of Kypseli's picture

The unintended consequence of politicians buying votes

Sun, 10/04/2015 - 17:51 | 6628443 Pool Shark
Pool Shark's picture

 

 

I'm long Liberia...

 

[PS: Liberia should be 3rd on that list as they have over 3,500 ships registered: https://en.wikipedia.org/wiki/Liberian_companies]

Sun, 10/04/2015 - 10:04 | 6627912 greenskeeper carl
greenskeeper carl's picture

Funny, some businesses are, by their very nature, mostly stuck in one place. Large ships are the polar opposite of that. It's difficult to imagine an easier thing to move to another location. Not like you have to build an entire factory or anything. Just change the hailing port in the registration, done.

Chalk is up to another 'who could have seen this coming?' Frankly, it's idiotic to leave something so high value in Greece. Eventually your desperate leftist govt will probably go on a 'nationalization' spree and your ships will become property of the Greek government.

Sun, 10/04/2015 - 09:38 | 6627833 junction
junction's picture

The next question is, how many shipyards does Goldman Sachs own or control in Cyprus? 

Sun, 10/04/2015 - 10:52 | 6628031 BarkingCat
BarkingCat's picture

None. They sold them to the Germans and Chinese

Sun, 10/04/2015 - 07:51 | 6627645 fukidontknow
fukidontknow's picture

.

Sun, 10/04/2015 - 08:02 | 6627661 BidnessMan
BidnessMan's picture

Long Liberia ?

Sun, 10/04/2015 - 11:01 | 6628054 hongdo
hongdo's picture

Liberland

Sun, 10/04/2015 - 08:02 | 6627662 BurningBetty
BurningBetty's picture

I give this article maximum of 7500 reads. Greece? They had all the time in the world to stick it up EUs techocrats asses. Whatever they did from the point of caving in it's their own fault. 

Sun, 10/04/2015 - 11:08 | 6628073 Jaspergers
Jaspergers's picture

I don't disagree with you but that's kind of like saying the US has had 102 years to end the fed.

If you support global fascism you get money power and support. If you get in their way you get Gaddafied.

Sun, 10/04/2015 - 08:06 | 6627667 stilletto
stilletto's picture

Raise taxes and watch the golden goose swim away. Same ignorance from Govts globally. Default on the debt, leave the euro, and let the Germans stew in their own stupidity.

Sun, 10/04/2015 - 08:16 | 6627683 NoPension
NoPension's picture

Let's screw the only thing that works.

It's the government way.

Why, ( and it's sarcasm) does technology shrink the size of every system, but government gets bigger and hires more?

Here's a shock. My son works for the Feds. That's how I know how fucked up it is. The systems and controls ( other than spying) are antique. It gives comfort and security to the existing dinosaurs entrenched. By his estimation, they could upgrade the systems, and do a better job with 25% of the staff. But, government is a jobs program. A nice way to skim the public if you are lucky enough to get in. My son knows, keep his head down, do his job, ( not TOO good, he learned that lesson ) don't rock the boat, and you are set for life. Unless everything goes to shit. But I surmise, the gov will scavenge everything to feed itself.

Sun, 10/04/2015 - 11:18 | 6628100 Nostradumbass
Nostradumbass's picture

"But, government is a jobs program"

Yepper.

+1

Sun, 10/04/2015 - 08:06 | 6627668 MFL8240
MFL8240's picture

Higher taxes is always a way to stimulate business! Sac!

Sun, 10/04/2015 - 08:07 | 6627670 Cautiously Pess...
Cautiously Pessimistic's picture

Oh boy.... the SHIP is going to hit the fan now.

Sun, 10/04/2015 - 08:07 | 6627671 CheapBastard
CheapBastard's picture

I hear Somalia has a low tax rate.

Sun, 10/04/2015 - 08:20 | 6627689 NoPension
NoPension's picture

What in the hell was the Captain and crew of that container ship smoking to sail into a cat 3 hurricane ? This is not 1765. And if the Captain went full retard, the first officer and crew? Makes zero sense.
Hey, OT, but it is a ship.

Sun, 10/04/2015 - 08:20 | 6627690 silverer
silverer's picture

Hey, wow!  I found a horse!  The rest have run away!  Look!  It's a beautiful healthy horse!  The only one left.  I guess we'll have to shoot it.

Sun, 10/04/2015 - 08:24 | 6627697 ThrowAwayYourTV
ThrowAwayYourTV's picture

Isn't there anyone Loyal anymore?

Oops! Sorry my countrymen, I'm not going to make a fist full of dollars so fuck you.

Sun, 10/04/2015 - 08:45 | 6627725 Fukushima Fricassee
Fukushima Fricassee's picture

 "we are going to fuck you with taxes so we can steal whats left".

                     Government                              

                Fixed it for you,  statist misguided chump

Sun, 10/04/2015 - 09:39 | 6627835 HowdyDoody
HowdyDoody's picture

Corporations = Government.

Who do you think buys politicians? They certainly don't buy themselvs.

Sun, 10/04/2015 - 09:41 | 6627845 ThrowAwayYourTV
ThrowAwayYourTV's picture

Yet everyone wants free healthcare, pensions, government loans, education, grants, food assistance, housing assistance, yatta, yatta yatta, but nobody wants to pay for it.

 

Sun, 10/04/2015 - 10:31 | 6627979 Al Tinfoil
Al Tinfoil's picture

Two sayings come to mind:
1. "The art of democracy lies in having others pay your living expenses"; and
2. "The downfall of democracy comes when the people discover they can vote themselves benefits".

Add politicians who promise "free" goodies, banksters, the MIC, MSM, the 1% holding 90% of the wealth and income, and modern propaganda methods, and what could go wrong?

Sun, 10/04/2015 - 11:17 | 6628096 HerrDoktor
HerrDoktor's picture

We shall fist fuck you with dollars

Sun, 10/04/2015 - 08:24 | 6627700 Arnold
Arnold's picture

http://stockcharts.com/h-sc/ui?s=%24BDI

 

 Very long Mothballs

Sun, 10/04/2015 - 08:42 | 6627722 Fukushima Fricassee
Fukushima Fricassee's picture

Move it all to South Korea

Sun, 10/04/2015 - 10:31 | 6627978 Monteriano
Monteriano's picture

Denmark. Hotter women.

Sun, 10/04/2015 - 21:41 | 6628740 Fukushima Fricassee
Fukushima Fricassee's picture

You have never been to Korea , I see ,  and the bonus in asia is capitalism that has been lost in the west .

Sun, 10/04/2015 - 08:48 | 6627724 Grandad Grumps
Grandad Grumps's picture

And, so herein lies the curse of privately owned central banks on the world. Once a government becomes indebted to the banks, the banks own the government and can kill the country at its whim... if the country cannot function independently in an increasingly global world. Banks prevent independent countries from participating in the global economy by boycotting them from bank run activities. The bank is a 7th grade girl on a power trip.

Even the US government is controlled by the central banks.

Why did the US attack Iraq, Afghanistan, Libya and now Syria? It is simple. So that the central bankers could install a BIS ties central bank in each country and control those countries in the future. You can expel the invading force, but it is much harder to get rid of the bank once it sinks its rancid claws in you. Most people have no clue that the bank is the real and more dangerous enemy.

Why will sex slaves or criminals, who hate their existence recruit more sex slaves and criminals? They feel they have no choice.

If Russia really wants to help the world then they should probably be attacking Basel. Defending Syria against the bank is good, but eliminating the BIS would most likely both throw the world into chaos and at the same time give other governments the opportunity to get rid of the vampires controlling them.

Sun, 10/04/2015 - 08:45 | 6627730 Philo Beddoe
Philo Beddoe's picture

Whatever happened to that Y-Anus chap? I had to ditch this place for a bit due to all the misplaced man love.  I see Trump has taken his place lately. 

Sun, 10/04/2015 - 08:54 | 6627744 Core112
Core112's picture

The article misses one fundamental point: Greece's shipowners haven't been paying low taxes until now - they have been paying no taxes whatsoever. Even a basic taxation of 3-4% (ridiculously low, compared to what the average Greek taxpayer is forced to pay) would make a huge difference to the country's income. It's about time this preferential treatment stopped.

As for this

Syriza-led government has reluctantly agreed to raise taxes on the long-protected sector

taxing shipping companies was part of Syriza's program back in January. Yet another proof that Syriza has turned into the new PASOK. Very sad.

Sun, 10/04/2015 - 09:30 | 6627814 Anopheles
Anopheles's picture

Yet Greece still receives taxes on the secondary economic activity that the shipping produces.   The government still wins. 

But as you are seeing, if they raise taxes on the shipping, the government will get zero secondary income and a loss of a huge number of jobs. 

 

 

Sun, 10/04/2015 - 11:12 | 6628085 cwsuisse
cwsuisse's picture

This is very true. Any decision should depend on the options the ship owners have. As long as they can re-register their ships in zero tax havens it does not make sense to drive them out of Greece. 

Sun, 10/04/2015 - 12:38 | 6628340 layman_please
layman_please's picture

thanks for pointing out the most important thing about this whole story. the constitutional tax exemption was implemented to lure back the shipping businesses of the world richest shipping typhoons from greece, such as onassis and niarchos, mainly from the tax havens such as panama, monaco etc. they have invested a lot into greek economy since the 1960's, so it's unfair to say they haven't provided anything. as well the secondary taxation on the shipping economy.

maybe this can serve as an example, proving that if such a small country as greece, can dominate the global shipping economy, maybe the governments all over the world should step back from all areas of economy and let business flourish, instead of taxing everything to death. i'm aware that then there would be no tax haven advantage, but nevertheless, that would just leave fair competition. 

but of course, the obvious thing to do is not to curtail any greek government spending, at least in no serious fashion.

Sun, 10/04/2015 - 13:19 | 6628472 Anopheles
Anopheles's picture

The UK did the same thing with the banking sector.  They gave banks and financial institutions a tax holiday.  The result?  London is now the second largest banking centre in the world. It brings in billions of dollars and millions of direct and indirect jobs supporting that sector. 

Otherwise London would be a backwater banking centre just like the majoirty of other cities in the world. 

Sun, 10/04/2015 - 09:03 | 6627759 Cautiously Pess...
Cautiously Pessimistic's picture
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.  Ron Reagan

 

Sun, 10/04/2015 - 09:09 | 6627771 Zero-Hegemon
Zero-Hegemon's picture

Let's see how many of those 250,000 Greek jobs are immediately offshored to other ports. Probably not too many, as most are probably land-based support for the port equipment, vessels, cargo, and crew. It will take longer for those jobs to migrate and then the ports will probably hire local anyway.

Sun, 10/04/2015 - 09:21 | 6627797 agent default
agent default's picture

So 250,000 will out right lose their jobs.  End of story.

Sun, 10/04/2015 - 09:26 | 6627805 Anopheles
Anopheles's picture

What's most important is the tax revenue the governemtn receives rather than the number of jobs.  You are right that many of the land based jobs will remiain, however those ships aren't built or maintained in Greece.   Many of those jobs aren't land based but ship based. 

Sun, 10/04/2015 - 09:15 | 6627781 hotrod
hotrod's picture

Dealer has sucked the life/$ out of the addict and now wants him to steal from others.  Dealer needs to be taken out.

Sun, 10/04/2015 - 09:30 | 6627813 julian_n
julian_n's picture

The Laffer Curve strikes again. 

And who could have imagined that a mobile asset like a ship could get moved to a lower cost home?

Sun, 10/04/2015 - 09:42 | 6627849 HowdyDoody
HowdyDoody's picture

Steelworks were moved from US / Pittsburgh to China for lower corporate costs (= greater CEO benefits). Who would have thought steelworks were mobile assets.

 

Sun, 10/04/2015 - 09:49 | 6627866 VW Nerd
VW Nerd's picture

RE:  Throw Away Your TV,

I understand your point illustrating corporate carpetbagging, but remember loyalty swings both ways.  All social contracts between government and citizens have been broken by the government FIRST. Greece included.  Chase off all the pigs eating at the public trough first, then ask for loyalty.  

Sun, 10/04/2015 - 11:12 | 6628060 Your Creator
Your Creator's picture

a tax on companies is a tax on you, because the citizens ultimately pay when they buy the companies products. Don't let governments pull the wool over your eyes.  The citizens are the ones who pay most of the hidden taxes.

Sun, 10/04/2015 - 14:51 | 6628737 Anopheles
Anopheles's picture

Progressives and socalists are blind to that simple FACT.   They think by taxing someone ELSE, they are getting something for "free". 

Sun, 10/04/2015 - 11:10 | 6628076 cwsuisse
cwsuisse's picture

The EU is intentionally converting Greece into an economic desert. Unfortunately the Greek population invited the final destruction of their country by electing Tsipras. 

Sun, 10/04/2015 - 14:50 | 6628731 Anopheles
Anopheles's picture

The Greek population invited destruction of their country well before Tsipras with decades of (economic) socialist governments. 

So today, Greece has 3 options

a)  pay up

b)  pay up

c)  go belly up and STILL have their external debts hanging around their necks. 

Sun, 10/04/2015 - 11:15 | 6628094 HerrDoktor
HerrDoktor's picture

Lots of room to set-up in Syria

Sun, 10/04/2015 - 11:44 | 6628190 all-priced-in
all-priced-in's picture

I bet the shipping companies will move to Chicago -

 

 

/s/

 

 

Sun, 10/04/2015 - 12:16 | 6628273 Sudden Debt
Sudden Debt's picture

I used to invest in the shipping business because it was so volatile but those fuckers where so crooked that I just stopped doing that in 2008.

One day it's a profitable shipping company, the next day all the ships where sold for  a penny on the dollar to another company owned by the same owner and they're suddenly floating under a different flag.

And poof... your stocks become worthless and those fuckers sold new shares of their new company for a mayor profit which they used to expand their fleet.

Shipping is a nasty business with a lot of crooked bastards who own it all.

So in just a matter of hours, the enitre Greece fleet will soon be floating under Panamanian flag. And they'll make billions of profits in the process.

Just watch as the Greek stockmarket will soon drop another 90% untill there's nothing left.

Sun, 10/04/2015 - 12:28 | 6628313 roadhazard
roadhazard's picture

wow, Russia didn't even make the chart.

Sun, 10/04/2015 - 21:38 | 6629675 Faeriedust
Faeriedust's picture

1) Shipping is the most mobile of assets, so of course any plans to tax shipping have to take capital flight into account.  If American companies can offshore building cars to be sold in America, Greek companies can certainly offshore fleets of ships which mostly carry goods between China and everywhere in the world EXCEPT Greece.

2) That said, shipping in Greece pays no taxes.  Period.  They have special perogatives. And they shouldn't.  A very MODEST tax shouldn't drive them to the expense of picking up stakes, especially since the owners are Greeks who should have some fondness for their homes.

3) Perhaps if countries stopped competing to give businesses special perks like low or no taxes, we would all be better off.  Corporations have succeeded in getting us to cut our own throats in sacrifice to their Almighty Profits. Doesn't anybody else here see something profoundly STUPID in this?

4) Having RE-ELECTED Tsipras after he absolutely and totally failed to deliver on his promised resistance to the Troika, the Greeks have lost the Sympathy Card.

5) That said, the Troika shafted them, and supporting documents referenced here during the crisis made it very clear that the entire fiasco was CREATED by speculative runs and panics triggered by open fear-mongering initiated by Schnauble and Straus-Kahns, followed up by Soros.  The Greeks were no Saxon models of fiscal Puritanism, but they were literally destroyed by sniping and bad actors.  Their best bet was to openly default, return to a state-issued drachma, and leave the Eurozone.  They lacked the balls to do it.  So again, the world's tiniest record-player plays "My Heart Cries For You", until someone puts the Partisan Song on instead.

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