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The association of Greek ship-owners declared itself strongly against the next imposition of extra taxes on large companies. According to the data submitted by representatives of the shipping industry, the sector registered loss of about 260 million euros in 2010 and could not bear the additional tax burden planned by the government of George Papandreou.

This extra levy is grounded on the idea of social responsibility under which all profitable companies should contribute to the recovery of the national economy. It is commented in business circles that the tax was no extra any longer because it had been imposed each year lately.

The 2010 extra tax will affect companies which declare a net profit exceeding € 110,000. After the corporate tax of between 20% and 24% and other deductions the net amount will be reduced by another 4% in favour of the state. The amounts are growing steadily and the most successful companies in Greece declaring profits after taxes more than five million euros will have to pay another 10% in the name of the Greek economy recovery.

Ship-owners noted in a letter to the Ministry of Finance that the imposition of the extra tax on shipping companies was a mistake. They required their sector to be excluded from the measure the aim of which was to collect additional funds from profitable companies. The association of ship-owners insisted on applying the same law under which they were exempted from the additional tax burden in the fiscal 2009.

Unfavorable tax conditions and lack of stability in tax laws were problems for Greece even before the crisis. Its outbreak and the last year’s reform of the tax system have just worsened the situation for large shipping contractors. Changing the flag or in other words, the registration of the vessel in countries offering better tax conditions is an old practice of Greek industrialists in the sector. The flags of Panama, the Marshall Islands, Cyprus and Liberia are among the most preferred by the industrialists because they offer lower taxes and suitable conditions for the development of shipping companies.

Recent changes in Greek legislation proved to be the last straw that broke the camel’s back concerning the Greek-Cypriot cruise company Louis Hellenic Cruises, which announced it was withdrawing from the Greek flag. "The new legal framework that has been put into effect with the repeal of the cabotage makes the Greek ships apparently uncompetitive against foreign ones, especially with the burden of operational costs. Therefore, we have no choice but to abandon the Greek flag," said the official statement of Louis Hellenic Cruises, cited by Ta Nea.

Analysis of the Greek edition Kerdos compares the costs of two identical vessels of the same capacity. The only difference is that the one is under the Greek flag and the other is under foreign flag. The vessel in the example weighs 23 tons, has a capacity of 1200 passengers and staff of 366 people. Under the law, 28% of them or 104 crew members must necessarily be Greeks if the vessel is under the Greek flag. The monthly costs for salaries and social security contributions amounted to € 611,000. The same ship under a foreign flag will employ only 7% Greeks if it wants to serve transport in Greek waters and its costs for wages and social security contributions will be € 378,000. The difference in the price of human labour is significant and makes local shipping highly uncompetitive.