Fiscal instruments for safe & sound ship recycling?

Objective of the research of prof. Frank Smeele is to bring forward proposals for promoting safe & sound ship recycling via financial incentive mechanisms. One of the possibilities is to raise a public fund out of which safe and sound ship dismantling can be paid at the end of a (EU flag) ship’s life. Specific conditions could be laid down for allowing the funding of the dismantling, such as certification of the shipyard that dismantles the ship and making the amount of granted funding conditional upon the individual contribution to the fund. Another possibility is to encourage ship owners to provide themselves for some sort of insurance or savings fund, linked to the ship, for the safe and sound dismantling of it at the end of its life. In both cases, tax instruments could possibly help providing the financial incentives to do so. A tax or destination-based tax could be used to finance the (public) fund. A retribution or fee could be levied for the recovery of costs related to granting permits and certifications. And a destination based tax could be used as a big stick or last resort in a dual system, to provide for an incentive for ship owners to settle a fund privately instead of adapting to a public fund. Apart from the benefits and usage possibilities of taxes, there are several burdens of taxations to mention though. Major burden is the unanimity consent within the European Council concerning taxation matters. This Member State veto power holds involving any tax harmonization measure. It may be expected that the definition of a tax for veto power invoking purposes may be interpreted in an extensive manner, at least politically within the Council that is, for the potential autonomy transfer consequences involved. This means the unanimity consent may probably apply to general taxes as well as to destination based taxes and even to retributions. Apart from this major burden other burdens can be mentioned, linked to the obligatory guarantees for tax payers in tax matters, for example setting up and keeping a system of legal protection. Also the levying and collection costs must be mentioned. Because of these burdens, neither a tax or destination based tax, nor a retribution is a useful solution for funding safe and sound ship recycling. In fact, the key seems to be out of the tax field. In that respect, a public-private system could provide for a useful alternative in the intermediate zone between taxation and general public law. A successful Dutch example, the Land Development Act, is therefore being discussed in a separate paragraph. For the sake of completeness, successful Dutch examples of destination based taxes to finance public funds or public provisions are elaborated in the appendix.