Shipping Subsidy In The Form Of A Tonnage Tax

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  • The government of Switzerland is formulating its international shipping strategy for the coming decades.
  • It includes the adoption of a tonnage tax, with the plans laid out creating much debate in the landlocked nation.

A recent news article published in the Splash 247 states that Switzerland, the world’s top commodity trading hub, debates its overall maritime carbon footprint.

A shipping subsidy to parliament

At the beginning of May, the government submitted a shipping subsidy to parliament in the form of a tonnage tax. With regard to the climate damage caused by shipping, the government has indicated it will be relying on the European Union’s planned emissions trading system.

The bill provides that profits from the operation of seagoing vessels will in future be taxed at federal, cantonal and municipal level on the basis of the net tonnage of the vessels and not on the basis of the net profit of the shipping company.

Compared to the preliminary draft of the bill, the government made various changes. In the preliminary draft, it was still a prerequisite that at least 60% of the tonnage of ocean-going vessels must sail under the Swiss or EEA flag. Now it is only required that the flag of the ships concerned belongs to a country that is subject to the four relevant international maritime conventions (SOLAS, MARPOL, STCW and MLC).

The raw materials traded from Switzerland account for more than one fifth of global maritime transport

While it might be hemmed in by mountains, the closest coastline being at the Gulf of Genoa, 160 km south of Chiasso, Switzerland’s position as the leading tax haven in Europe, has ensured it is the world’s top commodity trading hub as well as being home to the world’s largest containerline, the Aponte family-controlled Mediterranean Shipping Co (MSC). The raw materials traded from Switzerland account for more than one fifth of global maritime transport, a staggering figure for a nation that many associate with alpine scenery, milk chocolate and expensive watches.

Publication of white paper

A white paper published last September by the country’s shipowner body, the Swiss Trading & Shipping Association, states Switzerland’s fleet ranks ninth in the world and fourth in Europe in terms of gross tonnage, citing data from the government’s finance department.

The Swiss government has said it will soon set up an ocean department within one of its ministries, which will drive forward and coordinate the cross-sectional task of ocean conservation between the departments and offices involved including transport, economy, environment, and the nation’s maritime navigation office.

A recent government study published looked a the big picture of Swiss maritime emissions. The study concluded that the overall environmental impacts of traded commodities are 19 times higher than the ones caused by total Swiss consumption. They are also 11 times higher for the greenhouse gas footprint.

This order of magnitude cited in the study lends plausibility to the extrapolation that greenhouse gas emissions from Swiss business activities at sea exceed domestic emissions by a factor of seven.

Ocean Responsibility Switzerland is an emerging network determined to get local authorities to crack down more severely on overall marine emissions from all the commodities traded in the confederation.

The stated goal of Ocean Responsibility Switzerland as a broad civil society alliance is to work to ensure that Switzerland assumes its responsibility for the oceans commensurate with the scale of its maritime business activities.

“If Switzerland wants to efficiently assume responsibility for the climate and the maritime environment, this collides with current economic structures, forms of consumption and culture,” the organisation stated in a release, conceding that this task will be difficult and complex.

NGO is calling for a CO2

The NGO is calling for a CO2 tax on international shipments for goods traded out of Switzerland, arguing the EU’s measures are not sufficient for all the goods trading houses handle in places further afield such as Asia. The NGO has also said that it is not in favour of the proposed tonnage tax.

“Currently, container shipping companies are making record profits and commodity trading, which is also involved in maritime shipping, is benefiting from rising prices. Instead of a new subsidy, it would be appropriate to siphon off the war- and pandemic-related excess profits through an additional tax and allocate the funds to ocean protection,” the organisation argued in a release.

The release from the ocean conservancy organisation concludes: “Switzerland – a country without a coastline but with considerable economic weight in the shipping industry and relatively high environmental standards at home – has the opportunity to take a leading game-changing role in these issues. As an alpine nation, the big rivers that find their destinations in the ocean start with us as small and clean sources. So we have good reasons to lead the way with ocean stewardship.”

Switzerland is not the only landlocked European tax haven to have been making shipping headlines of late. Splash reported last July on how tiny San Marino – population 34,000 – had become home to the world’s newest ship registry.

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Source: Splash247

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