BVI URGED NOT TO GIVE IN TO OECD
The government of the BVI is being encouraged to hold out and not give in to the OECD.
Mr. Andrew Quinlan, President, Centre for Freedom and Prosperity, a Virginia, USA-based lobbying organization, led a delegation, including senior U.S congressional staffers, on a mission to the BVI April 8th -11th. Their aim is to try to stop international attempts to put new restrictions on small nations that are offshore banking centres.
The Organization for Economic Cooperation and Development is seeking to eliminate tax competition between nations by forcing all countries to participate in a world-wide tax system. Tax competition occurs when jurisdictions are forced to be more fiscally responsible in order to attract economic activity, or to keep economic activity from fleeing to a lower tax environment.
The 30 OECD is comprised of 30 industrialized economies, most of which are high tax European nations. Many of the politicians from these nations resent low tax countries for luring away savings, investment and entrepreneurship. In order to try to impede tax competition, they have directed the OECD to undermine the process of tax competition.
The OECD has determined that 41 jurisdictions around the world, including the BVI, are tax havens. These are jurisdictions that have both strong financial privacy laws and low or zero rates of tax.
The OECD wants its member nations to be able to tax income that is earned in these low tax countries and is demanding that the so-called tax havens change their laws to help foreign governments collect more revenue. If the low tax countries do not acquiesce by July 2001, the OECD will declare that they are "uncooperative" and ask member nations to subject these regimes to financial protectionism.
Nine of them, including the Cayman Islands, Bermuda, Cyprus, Mauritius and San Marino, have so far made the political commitment the OECD is seeking. In the BVI, the Financial Services Department continues its efforts to ensure that this jurisdiction is brought up to international standards.
"Our main strategy is to talk to the countries targeted by the OECD, letting them know that there's allies in the U.S that are fighting for them.What we're really fighting against is the free flow of information that we believe should be private," said Mr. Quinlan.
Tax competition should be celebrated, not persecuted. It forces politicians to be more responsible, pushing tax rates down and allowing people to enjoy more of the money they earn, said Dr. Dan Mitchell, the Centre's Chairman. He said in the case of the United States for example, tax competition is a particularly good thing, drawing savings, investment and skilled labour into the economy.
The Centre argues that the OECD proposal will mean higher taxes, slower growth, will undermine tax reform and is a threat to free trade. Further, it said the OECD proposal violates national sovereignty, is an attack on privacy, a threat to American interests, is bad for the developing world and a threat to this hemisphere.
The Centre points out that the OECD has no legislative powers and therefore cannot impose sanctions nor order its members to implement financial protectionism against low tax countries. In order for the OECD to succeed, it must convince all of its member nations to participate in a coordinated attack on low tax countries. Most importantly, the OECD needs the active support of the world's largest economy - the United States of America. If America chooses not to participate in the financial attack on low tax countries, the OECD initiative will collapse.q
So far, the Centre has received tremendous support from Capitol Hill. Letters to Treasury Secretary O'Neill have come from Congressman Dick Armey, Majority Leader; Don Nickles, Assistant Majority Leader of the U.S Senate; Jesse Helms, Senate Foreign Relations Chairman; Judd Gregg, the sub-committee Chairman who actually appropriates money through the Senate to the OECD and from 26 members of the Congressional Black Caucus, led by Charles Rangel and Maxine Waters.
The Centre for Freedom and Prosperity is an independent, non-profit organization established five months ago to promote and preserve economic liberty in the global economy. The Centre has been explaining to lawmakers why competitive international markets are desirable and why the campaign to undermine tax competition is so misguided.
More specifically, the Centre wants to urge government officials
to reject efforts to create international tax cartels, press
policy makers to oppose this assault on financial privacy and
lobby politicians to preserve fiscal sovereignty.
The third member of the Centre for Freedom and Prosperity is
Veronique de Rugy, PhD., who directs outreach to the academic
and overseas communities.
We think that over time, and hopefully within the next 30-60 days, we'l l convince the lawmakers in the U.S and also the Bush administration to dump this Clinton policy, Quinlan told the Island Sun.
While here, the U.S officials briefed the BVI Chief Minister and other officials of government and the Association of Registered Agents on the Centre's activities and in particular their participation in recent OECD meetings. He said while each country needs to decide what's best for them, they always urge them not to give in to the OECD.
From the BVI, the officials will attend a forum in the Cayman Islands at the end of the month and to the OECD Ministerial meeting in Paris mid May. Between now and the next four months, they will also meet with officials from the White House, the Treasury and more members of Congress to keep pushing their agenda. There is no one in the U.S, on the left, on the right, in the senate, that supports this initiative; that's why we think we're going to win this and I hope that countries like the BVI the countries that have stood this long against the tyranny of the OECD can stay on a little bit longer against them, Mr. Quinlan declared.
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