Greek ship owners who remitted more than $175 billion in untaxed earnings to the country in 10 years say they would relocate the businesses if a new government scraps the fiscal exemption, risking as many as 60,000 jobs.
The country’s estimated 762 vessel owners pay no tax on international earnings brought into Greece under rules incorporated in the country’s constitution since 1967. The Syriza party, which opposes Greece’s international bailout and is shown by polls as vying for first place before a June 17 election, says it wants to abolish the tax break.
Greek maritime companies and others in related service and supply industries employ 200,000 workers, of whom almost a third could lose their jobs if local ship owners were to leave, according to the National Confederation of Hellenic Commerce. As well as vessel managers, work in insurance, ship repair and other industries would also be at risk, according to Vassilis Korkidis, the confederation’s president.
“Shipping is an offshore industry, and any act against it is like shooting yourself in your own foot,” Ted Petropoulos, founder of Petrofin Research, said by phone yesterday. He worked in his family’s shipping business in the 1970s and also held positions at lenders including First National Bank of Chicago before starting the ship-finance consulting firm.
Greek vessel owners remitted 15.4 billion euros ($19.2 billion) to the country in 2010, Bank of Greece (TELL) figures in the Union of Greek Shipowners’ annual report for 2011 showed. Remittances between 2000 and 2010 came to 140 billion euros, according to the data.
Alexis Tsipras, leader of Syriza, said in a June 1 election speech he would seek to abolish tax breaks for owners. His office referred questions today to Gabriel Sakellaridis, head of finance at Synaspismos, one of the groups making up Syriza, who didn’t immediately return a phone call and e-mail seeking comment.
The Greek-controlled fleet numbered 3,325 vessels, or about 15 percent of the global total, the union said. There were 762 companies managing ships from the country last year, according to Petrofin.
George Economou, president of DryShips Inc. (DRYS:US), said he’s “totally unconcerned” about possible changes to the tax exemption. The company owns a fleet of 58 dry-bulk ships and tankers, according to first-quarter results released May 29.
“I wouldn’t even worry about it,” Economou said in a May 30 interview. “Your corporate office can be anywhere in the world, so they would lose a percentage of GDP.”
Greece to Vote
Greeks are voting again this month after an election in May failed to produce a viable governing majority. New Democracy, the largest pro-bailout party, led Syriza by 22.7 percent to 22 percent, according to an ANT1 TV poll on June 1, the last date surveys were made public.
“We need Greek shipping,” Korkidis of the confederation, said yesterday by phone from Athens. Unemployment could rise to between 20 and 30 percent in the maritime industry from less than 8 percent now if owners relocated to places such as Dubai or Singapore to avoid a new tax, he said.
“Employment will drop in agriculture, hotels and restaurants, retail trade, food manufacturing and in general, in all other sectors that primarily serve household demand,” Svetoslav Danchev, a researcher for the Athens-based Foundation for Economic and Industrial Research, said by e-mail today.
Job losses through office closings, cuts in the use of auxiliary services such as cargo handling, and fewer remittances would be felt throughout the economy, said Danchev, who completed a study commissioned by a Greek ship owner on the industry’s importance for the nation.
Vessel owners worldwide enjoy a degree of fiscal immunity because most countries levy taxes based on fleet size rather than revenue, said Victor Restis, Greece’s fifth-largest shipper.
“You cannot squeeze and tackle a person that is in international shipping trade and finance and say, ‘I will tax you,’” said Restis, who controls a fleet of more than 200 vessels. “The answer is ‘sure, tax me. Find me.’”
Tax benefits for owners of international vessels who chose to base themselves in Greece were no better or worse than those offered by other European nations including Germany, Malta, Cyprus and the Netherlands, Theodore Veniamis, the union’s president, said in a June 8 interview in Athens.
A lack of government involvement helped Greece’s maritime industry to remain competitive, according to Michael Bodouroglou, chairman of Paragon Shipping Inc. (PRGN:US) The Voula, Greece-based company operates 11 dry-bulk vessels and has three more under construction as well as two container ships, its website shows.
“If we have tax officers visiting shipping companies, they would eventually stop being as efficient as they are now,” Bodouroglou said in a May 30 interview. “The most important characteristic of this business is that we’re lucky enough to have very little interaction with the state.”
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