UK shipping industry may face wave of tax

Britain’s shipping industry could be in line for heavier taxes, one of Gordon
Brown’s former top aides has forecasted.

Chris Wales, once the chancellor’s chief tax policy adviser, believes that
environmental damage caused by the industry had been under-estimated, and has
called for a review.

At a conference organised by the tax group Confederation Fiscale Europeenne
he said: ‘An additional linkage to meeting certain environmental targets would
surely be a worthwhile addition to the eligibility criteria (currently linked to
crew training objectives – see below).’

His comments caused outcry from The Chamber of Shipping, a group representing
shipowners and managers.

‘Shipping is the most environmentally friendly mode of transport, and every
effort should be made to encourage the transport of goods away from the road and
air and onto the sea,’ it told the Financial Times.

Earlier this decade, Wales was instrumental in a tax amendment that granted
the industry a generous tax regime in order to boost commerce, but now believes
a policy U-turn is necessary.

Britain’s shipping industry was in long-term decline before the new tonnage
tax was introduced in 2000. Tonnage tax calculates the tax payable according to
the tonnage of a company’s ships and was floated in order to create a simple
low-tax regime. It also linked the eligibility for the regime to training
objectives for the crew, in a bid to boost the number of British seafarers.

The reform helped spur a sector turnover increase from £4.7bn in 2002 to
£11.7bn in 2005.

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