European Commission short-sighted on tonnage tax
Media Release
31 January 2008
The Chamber of Shipping has attacked the European Commission’s recent interpretations of its maritime state aid guidelines as both “short-sighted” and “self-defeating”.
Mark Brownrigg, Director-General of the Chamber, said today that, “The Commission does not have any overriding need to limit maritime state aid in this way. Dividing the shipping industry into operations that carry people and goods from one port to another, and those that engaged in maritime transport linked to other maritime activities, such as cable-laying, dredging or surveying, makes no sense. This approach is new and it has the direct effect of undermining some of the fundamental objectives of the guidelines, which stress the importance of boosting seafarer employment and the maritime skills base in the EU.”
A team led by Chamber President, David Dingle, recently visited Brussels and raised these issues with Commission officials, echoing representations by the European association ECSA. “The Commission needs to get a grip on this now, before even more confidence is lost in the stability of the European shipping taxation regimes,” Mark Brownrigg continued. “There are signs that the Commission is listening but not yet that there is any willingness to look again at where its policies are leading.”
The current proposals to change the UK Tonnage Tax, which are set out in the Revenue’s Technical Note and would remove from eligibility a number of specialised shipping operations or income streams from previously acceptable activities, result from the Government’s renotification of the UK regime to the Commission for approval. They are not a great surprise to the shipping industry – the Chamber of Shipping has been engaged with Government officials in the Revenue and Transport Departments as they worked through the agenda with the European Commission over the last year or so. Without this joint approach the Chamber says that the effects would have been worse.
The UK Tonnage Tax was by far the most fully documented regime when it was examined and approved by the Commission in 2000. However, since then there have been indications that other countries seeking to incorporate certain aspects of the UK system into their own tonnage tax proposals have met with refusal.
Brownrigg said that: “The changes being imposed reflect an underlying hardening of the European Commission’s implementation of its maritime state aid guidelines, and a lack of transparency in their policy development. There was no indication at the time of the last revision of the guidelines in 2004 that the current much narrower view of what is ‘maritime transport’ or qualifying activities was being considered.”
For further information please contact:
Jeremy Harrison, Chamber of Shipping
020 7417 2834