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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.

But alas, matters change and the three-party 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.

//Petter Arentz