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Gibraltar: Blanket Of Silence Over OECD Plans

Panorama

28 February 2001

This story is reproduced by kind permission of Panorama at: http://www.panorama.gi

A blanket of silence is engulfing Government’s plans to combat the ever-nearer deadline by the OECD about harmful taxes. After it became known that the Government was planning to lower taxes in the business sector, but not for over-burdened tax payers, the Government, all of a sudden, went into 'secrecy' mode.

It could be that the Government is looking at the possibility of offering an olive branch to the general body of taxpayers in an effort to sweeten the pill and lessen the risk of unpopularity in a general sense. If anyone was privy to what the Government’s intentions were is the former Minister of Trade and Industry Peter Montegriffo.

In comments made in an article in 'Offshore Investment', which have gone unnoticed, he said quite firmly that 'the current duality in our tax system (which provides nil or little tax for international business and high levels of tax for domestic business) will be replaced by low tax applicable to all business activities.'

Montegriffo went on: This tax reform process is not the result of OECD and EU tax harmonisation initiatives, although it will largely deal with many of the matters raised by them. It responds rather to the view held domestically that a low rate of tax across the board is ultimately a fairer, more appropriate and long lasting regime for an international finance centre. Certain types of income may be exempt from tax altogether.'

He continued, 'five weeks ago, when the opposition DTI spokesman Dr Joseph Garcia, announced that they were to start a process of consultation with the finance centre, in order to formulate policy on the OECD issue, Mr Caruana quickly made it known, at the annual dinner of the Gibraltar Federation of Small Businesses, that the Government was about to produce its own consultation paper. However, nothing has happened since then.'

After opposition leader Joe Bossano and DTI spokesman Dr Garcia had held a meeting with the Finance Centre Council last week, a press statement noted that the Government had refused to supply any information at the recent House of Assembly meeting, while indicating that it intended to comply with the OECD deadline of 30 June by giving the sought-after commitments.

The opposition added that the Goverment also said that a consultation paper is due to be published shortly, and although this is cutting it a bit fine, the view of the Opposition is that it is imperative that the industry and Gibraltar as a whole is consulted and kept informed.
In the meantime, the specialist financial press has carried on printing headlines along the lines of "Deadlock on 'blacklist' talks."

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