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.
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.
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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.
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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.”