OTTAWA - Canadian ship operators are urging the government to deep-six a "punitive and unnecessary'' 25 per cent duty on new ships purchased abroad.
Fleets are aging and "it has become clear that Canadian shipyards cannot build the new vessels required in a cost-competitive and timely manner,'' Don Morrison, president of the Canadian Shipowners Association, stated Monday.
The tax is holding back environmental improvements and the competitiveness of Canadian shippers, says the association, representing Algoma Central Corp. (TSX:ALC), Canada Steamship Lines, Groupe Desgagnes Inc., Rigel Shipping Canada Inc., Seaway Marine Transport and Upper Lakes Group Inc.
"The 25 per cent import duty is a failed policy,'' Morrison argues.
"If it was meant to offset offshore subsidies, those have long been removed. If it was meant to promote building new ships in Canada, we are now 23 years and counting without a new Great lakes cargo ship built in this country.''
The association proposes immediate elimination of the duty on new ships, with the levy remaining for 10 years on used vessels before being scrapped.
The group says the duty should remain indefinitely on ship repairs "to protect Canadian industry's ability to service vessels.''
The shipowners say the Canadian shipbuilding industry is now focused on work for governments, which "leaves no Canadian shipyard in a position to build the renewed fleet CSA member organizations require,'' estimated at $10 billion worth over the next decade.
As the shipping operators are forced to buy new ships offshore, "the 25 per cent duty is merely adding costs to Canadian consumers and delaying the renewal of the Canadian fleet.''
