IQT fees would increase costs to the industry by £ 4 million, fishing companies warn
Friday, November 29, 2019, 01:10 (GMT + 9)
The Falkland Islands Government (FIG) and the local seafood industry have diferent views about the impact of the changes to ITQ fees approved on Wednesday.
The Falkland Islands Executive Council yesterday approved ITQ fees that will see a 50 percent rise in toothfish and calamari (Loligo) fishery fees, a 20 percent reduction in skatefish fees, and a 5 percent reduction in the restricted finfish fees.
In a press release, the Goverment said that this year more extensive analysis and financial modelling of the fishery has been undertaken. This considered the profitability of the sector, planned investments and the contribution to corporation tax.
"A range of options were set out in an Executive Council paper and the option chosen represents an estimated £ 3.9 million per annum additional income to the FIG.
"MLAs have decided that having rebased the fees this year, there will be no increase in calamari and toothfish ITQ fees for the remainder of this Assembly."
The FIG release states that fisheries portfolio holder MLA Teslyn Barkman said that the sector had made it clear that companies needed to operate profitably, whilst investing in the growth of the fisheries sector including fleet renewal.
"We recognise that the profitability of the sector will need to be closely monitored. Fees are reviewed annually and can be reduced if necessary.”
But the Falkland Islands Fishing Companies Association (FIFCA) claims that to increase quota access fees paid by local fishing companies by 50 percent will increase costs to the industry by £ 4 million.
"Industry are astounded and extremely concerned at this decision which will have implications throughout the sector and in the wider economic climate," FIFCA said in a press release sent to FIS by Mercopress.
"The decision is not supported by any objective analysis and amounts to no more than Government seeing increased strength in the target companies balance sheets in the past three years and deciding to increase the fee burden on them."
The industry complains that Falklands fishing companies already pay some of the highest fees in the world, and says that independently prepared forecasts show that with taxation the Government proportion of sector profit will be well over 40 percent, without this additional fee.
"For much of the past ten years returns have been insufficient to support vessel renewal, but as soon as performance improved the companies involved began programmes of vessel replacement, a typical investment in a vessel is approximately twenty million euros," the press release reads.
"This decision will reduce the level of future returns and undermine investor confidence and will make raising capital all the more difficult for companies in the sector. It damages the Falkland Islands’ reputation for fiscal stability which has been an important factor for the business community and cuts across the Island Plan provisions.
"The implications of this change in Government’s fiscal approach, the realisation that Government feel free to raid the reserves and undermine the future of successful enterprises, particularly at a time of Global and Brexit uncertainty, will be noted by all in business in the Falkland Islands to the detriment of our economy overall," the release ends.