Except for the communist party, no political force in Greece seriously challenges the tax-advantaged model enjoyed by Greek shipping.

The system has become a fixture in the post-war economic landscape and nobody doubts it has worked well for society as a whole.

Everywhere one turns in Greece, from high-brow art museums to children’s playgrounds, one finds a maritime player bankrolling it.

Shipowner foundations have become “one of the main funding sources for civil society activity”, the Foundation for Economic & Industrial Research (IOBE) said in a survey published late last year.

It is, therefore, not a surprise that most attempts to measure the industry’s relative weight and significance to GDP have been made by economists who largely celebrate its role rather than criticise it.

Doing the measurement, however, is far from straightforward.

“Given the multi-territorial nature of the shipping sector and the complex group structures, the estimation of the shipping activity is one of the most challenging tasks in terms of official statistics,” the Bank of Greece said in a 2018 report.

For decades, economists and journalists had been using two gauges in national accounts and central bank balance sheets: the number of Greek seafarers and their wages, as well as the cash flows entering the domestic banking system under the label of “shipping receipts”.

However, both have become problematic.

As Greek seafarer numbers have dramatically declined, so has the volume of their remittances.

Onshore personnel sitting in shipping companies’ elegant offices in Piraeus, Kifissia or Vouliagmeni rose instead.

Given the varied remuneration and employment forms adopted by maritime companies, however, it is difficult to statistically capture that workforce under the correct shipping category and labels.

Show me the shipping receipts

The proxy more frequently used by politicians, industry figures and the press to advertise the contribution to the economy is “shipping receipts” — an item that can be traced in current account balance figures published monthly by the Bank of Greece.

The gauge reached a record €21bn ($22.8bn) in 2022, equivalent to 12% of national GDP.

However, only part of that impressive sum stays within the country.

“Shipping receipts” is just a gross figure recording only inflows — not outflows.

A separate item on the central bank’s current account balance labelled “shipping payments” — which is usually about two-thirds of “shipping receipts” — generally goes unnoticed in public discourse.

A second problem with “shipping receipts” is that, following methodological changes six years ago, they seem to have lost much of their interpretative value.

In 2018, the measure stopped being calculated on actual cash flows.

Instead, they are derived by multiplying the number of Greek-controlled ships by the income they are imputed to have earned, according to monthly time charter rates provided by Clarksons, minus operating expense figures provided by Drewry and other sources.

In more recent years, economists have been using more differentiated and complex approaches to estimate the weight of Greek shipping in the local economy, as well as the direct and indirect benefits Hellas draws from it.

In the latest attempt, the IOBE last October came up with a more realistic-looking annual average figure of €14.1bn for the period between 2008 and 2021.

This is equivalent to about 7.9% of GDP.

That estimation assumes a multiplier factor of 1.2. This means, for example, that every dollar spent by a shipowner on an Aegean villa creates $1.20 of wealth for local providers of building materials and household help.

Taking such multiplier effects into consideration, shipping is thought to be creating 86,300 official jobs in the economy, or 1.9% of the country’s employment.

“Every job in oceangoing shipping supports 4.6 jobs in the overall economy,” the IOBE said.

Modest tax returns

Including multiplier effects in the general economy, shipping’s contribution to Greek public revenue is estimated at €1.9bn a year.

Tonnage tax, the directly levied item that attracts the most attention from the media and critics, is a tiny fraction of that.

Official tonnage tax receipt figures are notoriously hard to find in Greek budget figures but the IOBE thankfully provided a helping hand.

According to the study released by the institute, a total €105.6m in tonnage tax receipts were due for 2022 — an amount projected to rise to €113.9m in 2023 and €117.2m in 2024.

That, however, is not the end of the story. Following pressure from Greece’s European Union creditors, another charge was imposed on the shipping community a few years ago.

It is generally described as a “voluntary contribution” because no maritime company is formally subjected to it, given the special protection the Greek shipping tax regime enjoys in the constitution.

The vast majority of domestic companies have pledged to pay the voluntary contribution anyway, in a consensus hammered out within the ranks of the Union of Greek Shipowners.

This contribution currently takes the form of a 5% tax on imported dividends and capital gains and is set by law to generate at least €60m in tax revenue each year.

Any shortfalls have to be covered retrospectively, after audits carried out by tax officials every two years.

The private non-profit research organisation expects shortfalls.

Based on the latest available figures, the IOBE estimates that the Greek shipping community will declare about €310m in repatriated dividends and capital gains, which translates into €15.5m in tax receipts. That leaves an annual gap of €44.5m.

The sums raised from the tonnage tax and the voluntary contribution look tiny compared with the billions of dollars Greek companies are spending on newbuildings and secondhand tonnage.

Local economists, nevertheless, believe that Greek shipping companies face one of the heaviest tax burdens in the world.

According to a Bank of Greece study, the local tonnage tax was higher than in other jurisdictions even before the voluntary contribution was introduced.

“With the exception of container ships, where the Greek tonnage tax provides for a 50% tax discount, and VLCCs … the tax burden is the highest among the countries under review,” researchers Stelios Panagiotou and Helen Thanopoulou wrote.

The comparison was with nations such as Panama, Liberia, the Marshall Islands, the UK, the Netherlands and Germany.