Government agrees to grant subsidies for shipping

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The Finnish Government's ministerial committee for economic policy decided in June 2000 to favour measures that will improve the prerequisites for the competitiveness of the Finnish merchant shipping fleet. The government will submit bills to parliament on subsidising shipowners in the form of lower taxes and contributions. The sector's social partners, who had called for such measures, seem relatively satisfied with the decision.

The Finnish government agreed in June 2000 to draw up a subsidy package that should prevent the "outflagging" of the Finnish merchant shipping fleet. In the spring 2000 sectoral collective bargaining round, both the Finnish Seafarers' Union (Suomen Merimies-Unioni, SM-U) and the Finnish Shipowners' Association (Suomen Varustamoyhdistys, SVY) appealed jointly to the government in the hope of obtaining additional subsidies for Finnish shipping. The shipowners had threatened to "flag out" their ships (ie transfer the ships to foreign ownership, possibly leading to the use of foreign labour) if the subsidy demands were not accepted. The demands were made on the grounds that subsidies should be at the same level as in other EU countries, in order for the Finnish fleet to be competitive (FI0005149F).

According to the ministerial committee for economic policy, the government will submit a proposal to parliament for a law amending income tax legislation, so that the shipowners would be exempted from paying income tax on the results of shipping activities. A fixed tax, based on net tonnage, will be introduced instead of the current company taxes. Normal company taxes should be paid on the companies' overall profits. The government will further propose an amendment to the Act on the Register of Cargo Ships in Foreign Transport so that, as from 1 July 2000, owners of cargo ships registered in Finland's foreign merchant ship register will receive, in addition to the amount of the present subsidy for cargo ships, a subsidy equivalent to certain employers' pension and social insurance contributions.

SVY has reacted quite positively to the government's decision, stating that it will now be possible to avoid outflagging in the case of cargo ships. However, as far as passenger vessels are concerned, the threat still remains. SM-U regards as positive the fact that the government has at last decided to take steps in order to keep Finnish shipping under the Finnish flag. According to the trade union, profitable marine passenger traffic does not need any subsidies.