Wealthy Shipowners To Bail Out Greece Economy

[PAULSTANL3Y]

Greece: Wealthy Shipowners To Bail Out Economy

The deal comes after shipowners were forced to accept a tax imposed on vessels sailing under foreign flags earlier this year.

12:45pm, Friday 19 July 2013

The merchant marine is responsible for 48% of Greece's balance of payments

The owners of Greece's wealthy shipping industry, under fire over low tax bills amid recession and austerity, have agreed to help out the struggling economy.

The government says the agreement with the Hellenic Shipowners Association will bring in about 140m euros (£120m) a year.

According to an official statement, 441 shipping companies with 2,769 ships will make voluntary payments over a three-year period.

Prime Minister Antonis Samaras said: "The agreement for your voluntary participation in the state budget with 90% of the fleet sailing under a Greek flag, and 65% of the fleet sailing under a foreign flag, is truly moving."

The government estimates it will be worth about 75m euros (£64m) for the rest of 2013 and up to 140m euros in a full year.

The Merchant Marine Ministry said in a statement: "The signing of the agreement confirms the willingness of the shipping community to voluntarily contribute, for three years, to the national efforts in stabilising the country's economy."

Greek shipowners are leaders in their sector internationally, controlling about 15% of the world's merchant fleet, but only about a third of their vessels sail under the Greek flag.

Greece is going through its sixth consecutive year of recession amid brutal austerity cuts and pressure for more jobs to be slashed in the public sector.

This has increased resentment against the shipowners because vessels registered under foreign flags generate profits in low-tax regimes, and in Greece the shipping sector benefits from special tax advantages.

Earlier this year, the shipowners were forced to accept a tax imposed on vessels sailing under foreign flags.

Greece's merchant marine sector accounts for more than 48% of the country's balance of payments, topping the list between 2009 and 2011, followed by tourism.

The announcement of the voluntary payments comes after the Greek parliament approved a package of further reforms putting thousands of public sector jobs at risk.