Special Report: Greek shipowners talk up their role to protect tax breaks

Wed Nov 25, 2015 8:43am EST
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By Tom Bergin

PIRAEUS, Greece (Reuters) - 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.

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."   Continued...

Cargo ships are seen sailing under storm clouds in the sea near the port of Piraeus in Athens, Greece in this March 5, 2015 file photo.    REUTERS/Alkis Konstantinidis/Files