Congressional Black Caucus protests OECD actions
USVI Delegate to Congress Donna Christian-Christensen is among
26 signatories to a letter to the United States Department of
Treasury expressing concerns about the OECD harmful tax initiative.
"We are writing to express our deep concerns about an issue
that will undermine the ability of developing nations and one
of our own territories to strengthen and diversify their economic
and reduce poverty," the letter, dated March 14th, stated.
The letter is addressed to the Honourable Paul O'Neill from 26
of the 38 members of the Congressional Black Caucus (CBC).
The Organization for Economic Cooperation and Development (OECD), of which the United States is a member, has initiated a process designed to eliminate so-called harmful tax competition. Within one year, if these harmful tax practices are not eliminated, sanctions are to be issued. The practices in question are said to be the facilitation of foreign owned entities to do business in these locations, no or nominal tax on relevant income of these entities, lack of information exchange and lack of transparency.
However, Delegate Christian-Christensen, Delegate Eleanor Holmes Norton and 24 other Representatives, contend that the initiative threatens to undermine the fragile economies of some of the U.S's closest neighbours and allies, as well as the U.S. Virgin Islands. "These countries are already grappling with reduced tariffs and declining preferences for their industrial and agricultural products," the CBC stated.
They argue that wealthy OECD nations should not have the right to re-write the rules of international commerce on taxation simply because they are upset that investors and entrepreneurs are seeking higher after-tax returns. "The primary concern that we wish to address is that the initiative will impose serious economic harm on developing nations"
According to the Congressional Black Caucus, the free flow of capital plays a critical role in improving economic conditions in poorer nations. Workers benefit from increased job opportunities and higher wages. Governments also benefit because, even at low rates of tax, there are both direct and indirect increases in revenue. These are funds that are critically needed to provide education, health care and other social services. The OECD should not be encouraged to use a high-handed approach and to act in bad faith by ignoring the principles of transparency and fairness in this matter.
They are calling on Treasury Secretary O'Neill to take a close
look at this issue and reject this misguided initiative. In doing,
we will be protecting our own interests and also protecting the
interests of less fortunate nations around the world.
Every one of the 26 signers belongs to the Democratic Party.
Perhaps the most eye-catching name on the letter belongs to Representative
Charles Rangel, the senior Democratic member of the Committee
on Ways and Means. Rangel has
proven himself to be a champion of minority rights not only in
the United States but also around the world.
Finally, the CBC also signs on to the same argument raised by
each of the other Republican lawmakers who have sent their own
letters to O'Neill: the OECD effort to stamp out tax competition
is not in America's national interests.
U.S. Senator Richard C. Shelby, R-Alabama, and U.S. Representative
Roscoe Bartlett, R-Maryland, each also argued that line in their
respective letters they sent to O'Neill in mid March. The United
States benefits greatly from the "healthy
competition between nations," Shelby pointed out in his
19 March letter. "Indeed, our attractive tax and privacy
policies for foreign investors have helped attract trillions
of dollars of capitol into our economy," he wrote.
He said he was "very concerned" that the OECD is trying
to put a stop to "this beneficial influx of capitol."
Bartlett said the OECD's real agenda is to "make it easier
for Europe's welfare states to tax income on a worldwide basis."
The United States should defend all nations' right to adopt
market-based tax and privacy laws, he said, "particularly
since many of our high-tax competitors would like to use the
OECD attack on low-tax countries as a precedent to undermine
America's comparative advantage."
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