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Tramp shipping: The role of taxation in international resource allocation

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  • Thomas P. Mayr
  • Raymond H. McGrath

Abstract

This paper analyses the role of taxation in the international allocation of resources within the tramp shipping industry. It is argued that taxation is responsible for the majority of the variation between the cost structures of tramp ship owners of different nationalities with implications for national competitiveness and the incentive to invest. The variation in the cost of taxation among eight prominent maritime nations is demonstrated using a framework which quantifies the total tax charge faced by the owners -- corporate, if any, and personal. In the most highly taxed regime it is shown that taxation could potentially increase the time charter hire required for a new, Panamax dry bulk carrier by as much as US$ 4600 per day, 43% above the break-even rate for a similar investment in a tax-free environment. However, where shipping income is subject to taxation, the support affored through fiscal non-neutrality or the absence of anti-avoidance measures may mitigate the tax burden even when tax rates are relatively high.

Suggested Citation

  • Thomas P. Mayr & Raymond H. McGrath, 1997. "Tramp shipping: The role of taxation in international resource allocation," Maritime Policy & Management, Taylor & Francis Journals, vol. 24(3), pages 261-283, January.
    • Handle: RePEc:taf:marpmg:v:24:y:1997:i:3:p:261-283
    DOI: 10.1080/03088839700000030
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    Cited by:

    1. Oxley, Philip R., 1998. "Compliance costs for the bus industry: The impacts of the Disability Discrimination Act, 1995, on local bus services," Transport Policy, Elsevier, vol. 5(2), pages 83-91, April.
    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.
    3. Manolis G. Kavussanos & Andrianos E. Tsekrekos, 2011. "The Option to Change the Flag of a Vessel," Chapters, in: Kevin Cullinane (ed.), International Handbook of Maritime Economics, chapter 3, Edward Elgar Publishing.
    4. Elschner, Christina, 2013. "Special tax regimes and the choice of organizational form: Evidence from the European Tonnage Taxes," Journal of Public Economics, Elsevier, vol. 97(C), pages 206-216.

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