I do not believe in the positive effects of introduction of tonnage

By: Thomas Ström 11/25/15

Earlier this fall, the minister of infrastructure Anna Johansson gave notice of the government proposing an implementation of a Swedish tonnage tax system.
As I – and many with me – see it, this is at least 20 years too late. It should have been done much sooner.

The background to the proposal is that Swedish shipping companies operating internationally should be able to compete on equal terms with carriers in other European countries. The minister of infrastructure Anna Johansson emphasizes that the tonnage tax system will result in more Swedish-owned ships. The minister also says that the tonnage tax system will be of great importance for the jobs and that it is a step forward in Sweden having the EU’s lowest unemployment rate in 2020.

These assertions I find hard to believe. The government has to be more transparent in this.

Sure, it’s good with a tonnage tax system. The problem is that it’s implemented way too late. The damage is already done. The Swedish carriers have “flagged out” most of their ships, while forced to accept and learn to live by the normal working tax.

Moreover, the proposed tax change is optional. Either you choose to pay taxes the way it’s done today or you can start with the tonnage tax system, whose setup the remaining carriers are pensive about. I don’t believe that this will lead to a dramatic increase of Swedish-flagged ships. I hope I’m wrong.

Neither do I believe that the proposed system will bring many new jobs, certainly not as many that it would affect the employment in a dramatic way.

The boats that are affected from the proposition are freight boats, and normally there are 10-12 persons working on them. That’s not a lot. For there to be any impact on the employment, Sweden has to reach 10 000 freighters, compared to today’s scarce 500. Also, most Swedish carriers rent manpower from countries outside of Scandinavia. The commanders are often Swedish, Norwegian or Danish. In other words, there are not many new job opportunities.

I know that within the Swedish shipping there’s an estimation that the introduction of tonnage tax will provide 300 new Swedish-flagged vessels and 17 000 jobs over the next ten years. This is based on the effect tonnage tax had in other countries. But that was a long time ago.
Within the maritime industry there’s a saying that a job opportunity on board equals four jobs on land. The question is if that really holds up.

But of course, if we would get 10 000 Swedish freight ships, that would mean more momentum in our Swedish ports. In practice, this will mean that a freight boat will put to at Gothenburg’s port every two minutes. That’s about as much traffic as in Singapore. In Singapore there are nearly 1 250 cranes. In the largest port in Scandinavia there are five! 

 


Photo: Derell Licht/Flickr