London Think Tank Criticises OECD

by Jason Gorringe, Tax-News.com, London

03 March 2004

A London think tank has criticised the way in which the Organisation for Economic Co-operation & Development approaches tax competition issues.

The European Policy Forum said yesterday that "whilst much of the OECD's work is infused with the spirit of the market economy and choice, its work on taxation seems to be dominated by a desire to facilitate the interests of tax collection and reduce competition".

Mr Graham Mather, the Forum's President and a former Member of the European Parliament, said that it is looking at the OECD's system of governance to see whether the skewed approach results from a lack of good governance systems within the organisation, and as part of a wider programme of work to establish best practice in non-governmental organisations.

He said: "Our work so far suggests that there have been a number of problems with the way in which the OECD Fiscal Affairs Committee operates.

"The Committee seems dominated by officials preoccupied with the needs of tax authorities.

"The Committee pays little or no attention to its remit to examine taxation issues with regard to economic policy.

"The Committee does not in its work pay 'due regard to the provision of adequate safeguards for taxpayers' and scarcely considers this question.

"The Committee does not reach out to experts in economics and law but instead acts in a self-referential way building up its case simply by referring back to its own previous reports.

"Political scrutiny by elected representatives is weak (by Finance Ministers or tax collecting agencies only) or absent meaning that the rights of sovereign governments and their citizens are abrogated by the decisions of officials from the larger countries which dominate the OECD.

"The technique of publishing blacklists and requiring letters of commitment from states seeking to avoid being included in blacklists is open to question.

"There is a preoccupation with the threats rather than the opportunities of global e-commerce, dematerialisation of money and electronic stored money.

"There is no economic assessment of the correlation between low taxes and job creation and the converse.

"The overall effect is to attempt to foreclose options in tax policy for independent jurisdictions. The OECD's Global Tax Forum has made some protest against these tendencies but itself risks becoming bogged down in a search for a global tax level playing field which is unlikely to be secured and would be an enemy of competition and enterprise if secured.

"The Forum will consider what improvements are needed to OECD systems to correct these imbalances."

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