SSG No 20 - Shipgaz

Tax package born
by horse-trading
From time to time politicians
do the wrong thing for the
wrong reason. Sometimes
politics gets in the way of
reason and results tend to be
unpredictable and often unintended. The
new Norwegian tax package for shipping
is a case in mind. It’s not at all surprising,
bearing in mind that the current government
is the most left wing ever in the
country’s history.
The minister of finance, Kristin Halvorsen,
who is also the chairperson of
the Socialist Left Party (Sosialistisk Venstreparti),
is completely bent on cracking
down on high earners, in this case the
shipowners. Officially she says she needed
the money to balance the budget, but
it sounds hollow.
Based on official figures, shipowning
companies have to pay NOK 14 billion
in deferred taxes calculated at book value.
This is a two thirds of the total amount
of NOK 21 billion as one third can be
invested in a government environmental
fund. The carrot is that when owners
begin to pay their back-tax they will have
the privilege to join a Norwegian tonnage
tax system in line with that in the European
Union. Those owning companies
in the tax system choosing to leave the
country will have to settle their tax bill in
full before they leave and based on market
value rather than book value.
The back-tax payment and the introduction
of a new tonnage tax system are all
part of a new maritime strategy from
the leftist government. The government
wants lower NOx and CO2 emissions
from Norwegian ships, but at the same
time it deprives the owners of the funds
to invest in new, environmentally friendly
vessels. An example shows that NOK
14 billion would buy 200 new gas-driven
offshore vessels, which would reduce
NOx emissions by 90 per cent and CO2
by 20 per cent. This is only one of many
inconsistencies in the new strategy.
When the current government took
office its program was and still is embedded
in the so-called Soria Moria declaration.
In this declaration shipping and
maritime industry at large is a priority.
Government agencies
do not inspire innovation.
Rather, they prevent it,
at least in Norway.
But alas, matters change and the threeparty
government are now questioning
the very basis for some of the strategies.
For this is a government of the left and
it relishes the fact that they control 65
per cent of the Oslo Stock Exchange by
value.
The government has no coherent industrial
policy for the maritime sector and
frighteningly scant knowledge of the
dynamics of this sector. They do not,
apparently, see the connection between
strong shipowning companies and the
future of the maritime industry. We have
noted this before; the shipowning companies
are the maritime industry’s home
market, where new products are developed
and tested. Without this home market, the
maritime industry will suffer.
As expected the maritime industry
– including the shipowners – is far from
enthusiastic about the new maritime strategy,
although everyone applauds the new
tonnage tax regime. Otherwise there are
only words like innovation, environmentally
friendly shipping, funding through
numerous government agencies etc. We
have been here before and with this government
we will be here for some considerable
time.
Government agencies do not inspire
innovation. Rather, they prevent it, at
least in Norway. The Norwegian maritime
industry has been a success story for a
good many years and the shipowning
companies are an integral part of what is
widely known as the maritime cluster. But
since the advent of oil and gas in Norway
the maritime cluster seems to have faded
in importance. Most national politicians
do not fully understand the marine sector
and especially not shipping.
Never have so many talked such nonsense.
But the Labour Party has understood
that Norwegian shipping must have
operating conditions on par with their
international competitors. However, the
only way to get an EU style tonnage tax
system accepted by the Socialist Left Party
was to make shipowners settle deferred
taxes in what must, surely, be the biggest
political horse-trading in Norwegian history.
The government will never admit to
horse-trading, but there is always a price
to pay for the Labour Party if it is to carry
it’s two, smaller government partners
along.
Norwegian shipowners have long since
waved goodbye to stable and predictable
governments.
p e t t e r a r e n t z
Editor, Norway
Phone: +47 33 40 12 00, E-mail: petter@shipgaz.com
SCANDINAVIAN SHIPPING GAZETTE • OCTOBER 26, 2007 11