Greek shipowners talk up their role to protect tax breaks
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.
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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.