Portal de Periódicos da CAPES

Tonnage tax: is it working?

2005; Taylor & Francis; Volume: 32; Issue: 2 Linguagem: Inglês

10.1080/03088830500083547

1464-5254

Heather Leggate, James McConville,

Maritime Navigation and Safety

Abstract The introduction of the tonnage tax for shipping companies has been a response to the declining fleets in many European countries. There are strategic and commercial reasons why a maritime presence is desirable, not least of which is to maintain an important skill base. Although regimes have differed they all offer some form of preferential rates of tax for those ships on the register. In certain cases this tax subsidy has been linked to a requirement to train seafarers, notably in the UK. This article analyses the impact of the tonnage tax system and its success in achieving its objectives of fleet expansion and employment with particular reference to the UK. CountryOfficersRatingsTotal in 2000Total in 1995The Philippine50,000180,000230,000244,782Indonesia15,50068,00083,50083,500Turkey14,30348,14462,44780,000China34,19747,82082,01776,482India11,70043,00054,70053,000Russia21,68034,00055,68047,688Japan18,81312,20031,01342,537Greece17,00015,50032,50040,000Ukraine14,00023,00037,00038,000Italy9,50014,00023,50032,300Totals206,693485,664692,357738,289Grand total403,672823,384 Notes EUROPEAN Commission, 2004, State Aid Guideline to Maritime Transport, January. LEGGATE, H. K., 2004, The future shortage of seafarers: will it become a reality? Maritime Policy and Management, 31, 1, 3–13. BIMCO/ISF, 2000, Manpower Update Report 2000. Top ten countries are as follows: Tonnage tax: is it working?All authorsHeather Leggate * & James McConvillehttps://doi.org/10.1080/03088830500083547Published online:02 September 2006Table Download CSVDisplay Table WU, B. and VEIGA, J., 2004, EU seafarer careers impact of EU enlargement on the seafaring labour market in seaways. The International Journal of the Nautical Institute, July, 4–27. The EU countries comprise the old 15 countries and the ten new countries that gained membership in May 2004. While the concentration is on tonnage tax it should also be noted that there are other forms of state aid relating to labour costs. Such aid generally removes the obligations of either seafarers or their employers to contribute to social protection and taxation. Generally this means a lowering or removing of taxation and social security contributions within the industry, with the objective of bringing them closer in line with the world norm. As with the tonnage tax the application of such schemes is unevenly distributed across the EU. ‘British Shipping: Charting a New Course', Transport White Paper, December 1998. Inland Revenue Tonnage Tax Manual TTM01001 Origin and brief chronology of tonnage tax. Independent Inquiry into a tonnage tax, A Report by The Lord Alexander of Weedon QC, July 1999. Future of the UK Shipping Industry, Report from the House of Commons Select Committee for Environment, Transport and Regional Affairs, July 1999. Schedule 22 paragraph 3, Finance Act 2000. Schedule 22 paragraph 2, Finance Act 2000. Schedule 22 paragraph 4, Finance Act 2000. Rates of tax vary depending on the total profit of the company and the number of companies in the group. Schedule 22 paragraph 27, Finance Act 2000. Schedule 22 paragraph 29, Finance Act 2000. Op. cit EC State Aid Guideline. Conditions are that: 1. The financial year must be specified as a period when the flagging requirements apply. The government will specify a financial year if, in the preceding three calendar years, the proportion of vessels within the tonnage tax regime in any EU Member State has reduced. 2. Less than 60% of the tonnage of the operator's fleet is already flagged under a Member State register. 3. The operator's fleet contains a lower proportion of EU Member State registered tonnage than during the period when it entered tonnage tax (Post-Implementation Review of Tonnage Tax A Report by the Inland Revenue and Department for Transport, December 2004). MCCONVILLE, J., GLEN, D., DOWDEN, J., 1997–2003, United Kingdom Seafarers Analysis 1997, 1998, 1999, 2000, 2001, 2002, 2003 (London: Centre for International Transport Management, London Metropolitan University). International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1995 (STCW 95) revised and replaced STCW 78 and was fully implemented on 1 February 2002. This basically required officers to revalidate their certificates of competence every five years. STCW 95 broadened the range of certificates under its jurisdiction and applied the revalidation requirements with more rigour. This had the effect of increasing the number of officers of a higher age range revalidating under the terms of the new single convention. Op. cit [19 MCCONVILLE, J., GLEN, D., DOWDEN, J., 1997–2003, United Kingdom Seafarers Analysis 1997, 1998, 1999, 2000, 2001, 2002, 2003 (London: Centre for International Transport Management, London Metropolitan University). ]. Recent Department for Transport figures indicate that 39% of those employed on tonnage tax vessels are UK officers. Op cit. Alexander Report, paragraph viii. Paragraph 42, Post-Implementation Review of Tonnage Tax. A Report by the Inland Revenue and Department for Transport, December 2004.