(12.02.2000 - Juhani Artto) Shipping companies in Finland pay higher than average taxes for a European Union Member State. Employment-related social security contributions are also higher than those of competitor countries in Europe.

The country's leading shipping companies have long threatened to outflag their ships if the government failed to lower costs to the European Union level. In January two major companies, Finnlines and Fortum, announced their intention to outflag 18 ships. If implemented, the plan would mean axing the jobs of several hundred Finnish seamen.

The companies, Seamen's union and Ministry of Transport agree on the need to lower costs by reducing the impact of taxation and social security contributions. In several European Union Member States the shipping companies pay virtually no tax at all and social security contributions are borne by the State.

The obstacle in Finland has been the Ministry of Finance, which has opposed any cuts in State income from the shipping industry and any increases in the social security contributions borne by the State. Experts estimate that the reforms demanded by the industry lobby and Transport Ministry would cost EUR 7-8 million.

Since the beginning of this year the European Union has had new regulations on outflagging. A shipping company now has the right to outflag its fleet into other European Union countries without selling the vessels concerned.