Uncertainty generated by changes in the fisheries policy affects the Icelandic fishing industry. (Photo: adalsteinnjonsson.blog)

Taxes get in the way of the fisheries industry

ICELAND
Friday, July 20, 2012, 02:20 (GMT + 9)

Iceland was unlucky compared to most other fishing industries and experienced a decline in profits from 2001-8 due to the high exchange rates of the Icelandic Krona. Although the Icelandic fish catch has declined since 2008, the value of the catch has doubled, according to Statistics Iceland, mainly because of the depreciation of the Icelandic currency following the 2008 financial crisis, reports Iceland Ocean Cluster.

The financial crisis has also brought the first truly leftist government in Iceland since the 1980s, a government which made changes to the fishing sector last year by, for one, tremendously increasing fishing fees paid to the government in exchange for each kg of fish caught, the group says in a statement.

The government’s new bill also planned major modifications to the current quota system to divide it into two groups, A and B, where group B would be the property of the government and distributed as it saw fit.

Besides, the bill also proposed to limit considerably the ownership of shares of the quota. The government reserves the right to appropriate the quota at any time, as well as implement a sales tax on all shares of quota exchanged between private parties.

Both plans are considered by the industry to be harmful and met with great opposition.

Many said the higher fishing fees would drive many firms into bankruptcy and studies supported this view. Regardless, the government was reluctant to budge, the cluster adds.
 
In mid-June, protests and growing pressure from the fishing industry led the ruling parties to finally announce a meeting with the opposition parties, which bred an agreement.

Iceland Ocean Cluster considers the fishing fees would still be increased, but not by as much as originally planned and with more leeway by extending the adoption period given to the fishing industry. Other changes were postponed until the Icelandic legislature goes in session again next September.

Meanwhile, Iceland’s fishing industry is left with uncertainty that is resulting in fewer investments and other economic losses, the group warns.

According to the cluster, the levels of efficiency reached with the current fisheries management system seem to have come with a price: taxing which may limit future investments and R&D.

Consequently, the changes proposed by the leftist government are still strongly opposed. The government was ready to negotiate last June but the final decision on the changes has been pushed back to September.

By Natalia Real
editorial@fis.com
www.fis.com

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