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Wage and tax competitiveness: The case of Hellenic shipping

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  • Anna, Merika
  • Anna, Triantafyllou
  • George, Zombanakis

Abstract

Shipping and related activities account for a considerable proportion of Greek GDP, rendering proceeds from shipping sector activities indispensable for the Greek economy, especially during the ongoing economic crisis. This study focuses on the mitigating impact of wage regulation and tax uncertainty in Greece upon net receipts from shipping. Using quarterly data for 2002–2017 and employing the General Method of Moments, we find a substantially negative effect on net receipts from shipping as a result of waning wage competitiveness, with the tonnage tax-rate increase aggravating the problem. Our results point to two major policy conclusions: First, excessive wage increases over and above those provided for in international agreements erode the competitiveness of Greek shipping. Second, the pioneering tonnage-based taxation framework of Greece, which has contributed to securing Hellenic shipping a roughly 50% market share in the EU and 16.7% in the world, should by no means be challenged. Given the ease of relocation and the antagonistic fiscal incentives provided in rival shipping centers, the tonnage tax system must be left intact and even be used as a model to help boost the competitiveness of the entire EU fleet.

Suggested Citation

  • Anna, Merika & Anna, Triantafyllou & George, Zombanakis, 2019. "Wage and tax competitiveness: The case of Hellenic shipping," Transportation Research Part A: Policy and Practice, Elsevier, vol. 119(C), pages 255-270.
    • Handle: RePEc:eee:transa:v:119:y:2019:i:c:p:255-270
    DOI: 10.1016/j.tra.2018.11.011
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    2. Olaf M. Merk, 2020. "Quantifying tax subsidies to shipping," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 22(4), pages 517-535, December.

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