Greek shipown­ers talk up their role to pro­tect tax breaks

Kuwait Times - - BUSINESS -

PI­RAEUS, Greece: On the day he took of­fice as Greece’s ship­ping min­is­ter in June 2012, Kostis Mous­souroulis re­ceived a visit from a 90-year-old shipowner. He still re­mem­bers the older man’s words: “Don’t for­get, the best min­is­ter of ship­ping and mar­itime af­fairs is the min­is­ter who is do­ing noth­ing for the ship­ping in­dus­try. He is the one who is leav­ing us alone.”

That’s the way Greek shipown­ers like it. The mag­nates who run one of the big­gest mer­chant ma­rine fleets in the world have long ar­gued that if Greece tried to tax them, they would leave - and that their de­par­ture would dev­as­tate the econ­omy. In re­cent years, as in­ter­na­tional in­sti­tu­tions re­peat­edly bailed out Greece, the lenders have also pushed Athens to beef up its tax take. Shipown­ers have re­sisted any ef­fort to ditch the tax breaks they en­joy, and no govern­ment has dared touch them.

“Ship­ping is a pil­lar of the Greek econ­omy,” says the Union of Greek Shipown­ers, the ocean-go­ing in­dus­try’s main as­so­ci­a­tion. Greece’s sta­tis­tics of­fice says ship­ping con­trib­utes around $9 bil­lion - or 4 per­cent - of the coun­try’s Gross Do­mes­tic Prod­uct (GDP). When you in­clude re­lated busi­ness, the in­dus­try says, the fig­ure jumps to 7.5 per­cent of GDP, or about $17 bil­lion a year. Deep-sea ship­ping and re­lated trades em­ploy more than 192,000 peo­ple, it says. That’s 4 per­cent of all Greek work­ers.

Deb­tra­tio

But a Reuters anal­y­sis of cor­po­rate fil­ings and eco­nomic data sug­gests ship­ping’s heroic role in Greece’s econ­omy is largely a myth. That’s be­cause Greek shipown­ers in­clude in their sta­tis­tics bil­lions of dol­lars which never ac­tu­ally en­ter the Greek econ­omy. If Greece counted only pay­ments to Greek com­pa­nies and in­di­vid­u­als - as other coun­tries do - the deep-sea ship­ping in­dus­try’s con­tri­bu­tion would be equiv­a­lent to around 1 per­cent of GDP.

For Greece, the cost of the tax breaks granted to shipown­ers runs into hun­dreds of mil­lions of euros. Though that is small com­pared with the coun­try’s debt, plenty of other cit­i­zens have had to tighten their belts. The coun­try has cut job­less ben­e­fits by one-fifth, and health spend­ing by a tenth, be­tween 2009 and 2012 in ex­change for bailouts from the Euro­pean Union and In­ter­na­tional Mone­tary Fund. The na­tion’s farm­ers have seen their tax breaks axed and Greece has raised taxes on high earn­ers. Ship­ping mag­nates, on the other hand, have their ex­emp­tions writ­ten into the con­sti­tu­tion.

The shipown­ers “are pow­er­ful in that they ... get the me­dia to write what they want,” said econ­o­mist and former fi­nance min­is­ter Ge­orge Pa­pa­con­stanti­nou. “And im­me­di­ately when you start touch­ing them you start to hear: ‘We are 7 per­cent of the econ­omy we bring 17 bil­lion ev­ery year, 200,000 jobs’ ... That’s not the case.”

Syriza, the gov­ern­ing party of Prime Min­is­ter Alexis Tsipras, ini­tially promised to end the in­dus­try’s gen­er­ous tax al­lowances. Ship­ping Min­is­ter Thodoris Drit­sas con­cedes the way Greece mea­sures its ship­ping in­dus­try is not ef­fec­tive. He said the govern­ment is re­view­ing the tax sys­tem and ex­pects to pub­lish de­tails next year. But while he said changes for ship­ping are pos­si­ble, the govern­ment is re­luc­tant to ad­vo­cate any­thing that would dam­age ship­ping groups. “What is very im­por­tant for us is main­tain­ing the com­pet­i­tive­ness of Greek ship­ping,” he told Reuters in his of­fice across Pi­raeus har­bour from dozens of tree-shaded ship man­age­ment of­fices. The min­istry has a di­lap­i­dated air: Paint peels off the walls and staff ferry doc­u­ments in su­per­mar­ket shop­ping trol­leys.

The Union of Greek Shipown­ers de­clined to com­ment on the Reuters anal­y­sis, but said any sug­ges­tion it used po­lit­i­cal or me­dia in­flu­ence to per­pet­u­ate in­ac­cu­ra­cies about its eco­nomic con­tri­bu­tion was “a com­pletely false al­le­ga­tion.” It used of­fi­cial data and anal­y­sis by re­spected bod­ies, it said. “The Greek ship­ping com­mu­nity stands on its stel­lar track record as the global suc­cess story of Greece. ”The in­dus­try says govern­ment tax rev­enues from Greek ship­ping have in­creased more than eightfold since the out­break of the eco­nomic cri­sis. It said this was due to a num­ber of fac­tors in­clud­ing the fact that in 2013, the in­dus­try vol­un­teered to pay 420 mil­lion euros in ex­tra taxes over sev­eral years. Greece’s cen­tral bank and its sta­tis­tics of­fice ELSTAT, which pub­lish of­fi­cial data on the econ­omy and the in­dus­try, said they fol­low in­ter­na­tional rules on count­ing the econ­omy. Both de­clined to com­ment on Reuters anal­y­sis. The Min­istry of Fi­nance did not re­spond to re­quests for com­ment.

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