[150815.EN.BIZ] Greek Bailout Terms Dictate Shipping Sector's Free Ride Has Ended

GREEK shipowners, long shielded from high taxes, now have to face tonnage duties to play their part in lifting the country from insolvency, reports the Wall Street Journal.

At the behest of international creditors, the leftist Greek government has agreed to raise taxes on the long-protected sector that has been so much a part of Greek culture that its tax breaks are embedded in the constitution.

The industry is dominated by a small circle of family-run companies that control almost a fifth of world shipping, who are now accused of not paying their fair share.

"The country's shipping community must be ready to lift the heaviest of burdens to help the country out of economic crisis," said Shipping Minister Thodoris Dritsas.

But Greek owners and their allies say higher taxes will to drive away a business that employs more than 200,000 people and contributes around 7.5 per cent of Greece's gross domestic product.

Yet Athens is sticking with its tonnage tax - a flat, annual rate that is harmonised across the European Union. Greece also would gradually abolish some tax benefits.

Shipowners say Greece will become one of the most expensive countries in the EU, in terms of tax, to own a ship.

Higher taxes also come at a bad time as the sector has suffered low freight rates brought on by too many big ships chasing not enough cargo worldwide. But it is still hiring at good wages in a country where overall unemployment tops 25 per cent.

Source : HKSG.