Shipping gets tax shock
LONDON – UK Chancellor of the Exchequer Gordon Brown’s decision to review the tax status of non-domiciled residents could lead foreign shipowners to flee London in droves with the loss of thousands of jobs, shipping bodies said yesterday. Threat to Baltic Exchange City and maritime institutions like London’s Baltic Exchange have warned that London’s status as an international maritime center would be undermined by a change in the tax rules. By basing themselves in London, shipping tycoons like the so-called London Greeks – UK-based Greek magnates who together account for three quarters of the tonnage held by London-based owners – have taken advantage of the current tax regime that allows them to build up their untaxed wealth offshore. Chief executive of the Baltic Exchange, Jim Buckley, said in a statement: «The importance of maintaining the existing arrangements is critical to the future of this exchange, to thousands of jobs in the City, to the British economy and to the continued primacy of London as the world’s leading maritime services center.» A spokesman for Maritime London, which represents the maritime industry, said this was an area that had been looked at by successive governments in the last 50 years and that the risks of taxing non-domiciled people had outweighed the benefits. «The same thing was tried in the United States and the shipping community upped and left within a year or two,» the spokesman said. A Cambridge University report commissioned by the Exchange in 1998 estimated the size of the fleet at risk from a change in taxation of members of the foreign shipping community in London totaled more than 1,000 ships. That, it said, represented about 12 percent of the world fleet at the end of 1996. Loss of jobs to hurt tax revenue The report said a change in taxation could lead to the loss of a third of London’s tanker chartering business and more than 40 percent of its dry bulk carrier business. That would cost around 4,500 jobs and a loss, not an increase, in tax revenue of about 100 million pounds, the report concluded. The withdrawal of foreign shipowners could also hit London shipping and insurance brokers the report said. Currently, expatriates living in Britain can avoid paying tax on income and investments from overseas as long as the majority of their wealth is held outside the UK.
