Greece shouldn't look to its shipping industry to help raise the tax revenues it desperately needs to secure a bailout deal, an industry expert has warned.
Tony Foster, chief executive of Marine Capital, a fund management firm that oversees investments in the global shipping business, told CNBC that the chances of the Greek government getting more tax revenues out of the shipping industry were "absolutely nil."
After a Greek referendum on Sunday in which the majority of Greeks voted against more austerity measures, as required by the country's bailout program and creditors. Greece is now expected to submit more proposals on how to cut spending and raise tax revenues on Tuesday, in a bid to find a new deal with lenders.
Both Greece's government and its creditors have singled out the Greek shipping industry -- which employs 200,000 people according to the National Bank of Greece – as an industry ripe for more taxation. Among the revenue-raising proposals are a higher tonnage tax, scrapping of special tax allowances and implementing a taxation framework for commercial shipping.
However taxing the shipping industry is a risky gamble, given the important part that shipping plays in Greece's struggling economy.
Shipping is one of Greece's few healthy industries, however, accounting for 7 percent of the country's economy. In addition, the Hellenic fleet is the world's most valuable at $106 billion, according to VesselsValue.com, accounting for 19 percent of the world's tankers.
Yet the Greek shipping industry, like many country's maritime industries, could take advantage of the fact that it can register both the ship's flag and ownership in other countries where there are lower taxes and fewer regulations.
Panama, for instance, has a huge shipping industry despite its small size, with a nation of just 3 million people. Panama has registered more maritime vessels than any other country in the world, according to the Panama Offshore Legal Service firm, with "more than 8,200 maritime vessels registered and flying the Panama flag."
That's because of its favourable shipping taxation laws: in Panama, foreign ship owners pay no income taxes and there are no minimum tonnage requirements before someone can register a vessel.