Shipowner calls for tonnage tax

It would create a more tax-friendly environment Alan Peat RAISING ITS restive head again is tonnage tax - a beneficial type of tax regime intended to encourage local shipowning. This is a limited fixed tax which is based on a shipowner's total freight tonnage handled - not an income tax as is currently the case. Victor Restis, executive chairman of SA Marine Corporation - largest operator in SA measured by deadweight tonnage, and with a 2% share of the dry bulk export market - called for this new tax system at the 7th National Maritime Conference in Cape Town last week. It's the system that prevails in the "flag of convenience" countries - like Panama and Liberia - and, said Restis, "attracts a disproportionately high" number of vessels to register in those amicable tax regimes. "Tonnage tax," he said, "is the most effective incentive to lure foreign shipowners onto the SA ships' registry." Backed up by certain other legislative changes - such as a further easing of exchange control regulations - this would create a "tax friendly environment", and attract investment from the international shipping industry, according to Restis. "It's common sense as any shipowner knows it," Dave Rennie, m.d. of Unicorn Line, told FTW. And it's something that has been voiced with varying intensity since the early 90s, he added. The Floor Report of 1993 and the joint Safmarine/Unicorn study of 1995 were just two of its utterings. "Since then," said Rennie, "we've gone part of the way - one being the register for shipowners in SA." And there's definitely room for a further advance down this path, he added. "Not just tonnage tax for the sake of tonnage tax, but if the motivation behind it is one of developing shipping in SA as a whole, then it's a beneficial idea for all - shipowners, government and the local seafaring community." Good for shipowners "because it creates an attractive tax environment", he added. Good from a government perspective because tonnage tax guarantees the fiscus a steady income, regardless of whether a shipping company is in profit or loss - and also because it would create employment. And third, good for seafarers because it develops a sound source of training and employment for them on the local scene - where, currently, productivity and training are a big challenge for the shipping industry.