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Fiscal regulations and investment in fisheries on the French Atlantic coast

Investment in fisheries is poorly known and is often described in a simplistic way by theoretical models. In the real world, entrepreneur motivations can be influenced not only by pure economic profit results, but also by financial considerations related to fiscal regimes and tax policies. The important role of subsidies for the dynamic of fisheries in many countries is well known and widely acknowledged.

The aim of this analysis was to identify some of the drivers of the steady disinvestment experienced by the fishing fleet of the French Atlantic coast, and particularly to assess the role fiscal regimes may have played in this respect. Several decommissioning schemes were enforced during the 1990s as part of the European Multi-Annual Guidance Programs for capacity reduction, and the net capital value of this fleet was reduced by half between 1990 and 2005. The analysis dealt with the 16–20m fleet segment, which suffered most from this buyback plans. A sample of 39 skipper-owners of boats within this size range was studied.

Evolution of capital value of French Atlantic coast fishing fleet, by vessel size class

Variations in levels of investment were studied as functions of nine parameters :
- owner age (reflecting the different career phases of skipper-owners).
- vessel age
- fishing gear (bottom trawl or passive gear like pots or nets)
- share of benthic species in the catch (Norway lobster, monkfish, flatfishes,…)
- share of pelagic species in the catch (sardine, anchovy,…)
- value of landings (weighted by vessel size)
- fuel costs (weighted by vessel size)
- financial cost (weighted by vessel size)
- long term interest rates

The statistical analysis shows that five variables significantly influence investment: benthic species catch, owner age, vessel age, and to a lesser extent financial costs and fishing gear. Investments are higher for fishing units targeting benthic species, owned by older skippers and having higher financial costs; they are lower for the oldest vessels fishing with bottom trawls.

The most significant result is that the highest investments are those of the oldest skipper-owners. This counter-intuitive behaviour is explained only by the general decision-making context and particularly by the fiscal regime, which is made of two main features.

The first one is the dispensation regime on sales of fishing vessels. Owners can fully depreciate their vessel in 6 to 10 years, i.e. less than half of their estimated economic lifetime: the sale of a vessel thus generates a high capital gain, which is normally liable to income tax at a high rate (nearly 60%). But the crisis of fisheries lead the government to decide a partial tax exemption on capital gain in case of reinvestment in the fishing sector. This fiscal measure explains why older fishermen invest more, as they re-invest in a smaller unit.

The second one was the buyback schemes intended to reduce overcapacity n European fishing fleets, through which the government compensates owners whose vessels were scrapped and who left the sector.

Owners therefore could choose between staying in the fishery under the fiscal incentive to re-invest, or to leave it with the benefit of the scrapping premium of the successive buyback schemes. Positive economic results explain that investment decisions of end-career owners have been more influenced by fiscal measures than by fleet reduction incentives (and that these buyback plans failed to reach their objectives).


Trawlers in the harbour of Le Guilvinec, south Brittany
(Photo  : Fédération Bretonne de la Coopération Maritime)


The paper

Le Floc’h P., Daurès F., Nourry M., Thébaud O., Travers M., Van Iseghem S., 2011. The influence of fiscal regulations on investment in marine fisheries: A French case study. Fisheries Research 109 : 257–264.


The authors

This work results from the collaboration of French scientists (IUEM/Amure, Université d'Angers) working in France and Australia.


The journal

Fisheries Research is an international journal published since 1981 by Elsevier in the field of fisheries and fishery resources: fishery biology and ecology, gear technology, management, social and economic aspects. Papers deal mostly with marine fisheries, but the journal also publishes works on freshwater, brackishwater or lagoon fisheries.



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