OECD Commitment Letters Slammed By US Think-Tanks

by Mike Godfrey, Tax-News.com, Washington

25 April 2002

Leading US lobbyists Andrew F. Quinlan of the Center for Freedom and Prosperity, and Daniel Mitchell of the Heritage Foundation announced following the release of the OECD's updated 'blacklist' that the commitment letters signed by many offshore jurisdictions in an attempt to secure removal are 'virtually meaningless'.

In a joint statement released by the CFP, the Heritage Foundation, and the Cato Institute last week, the CFP President vowed that the efforts of the Center would be focused on defeating the European Union's Savings Tax Directive, arguing that as the agreements secured by the OECD are predicated on all countries agreeing to the same rules, this is the next big challenge.

'This announcement of a new 'blacklist' is a non-event,' he concluded. However, he accused the multilateral organisation of 'imperialism' and 'hypocrisy'.

This remark echoes the concerns of the Barbados Nation News, which complained this week that despite the fact that there is little, if any, evidence to suggest that terrorist funds were channelled through the Caribbean prior to the September 11 attacks, high taxing European OECD members such as Germany and France are still pressing the Bush administration to 'go after the tax havens in the Caribbean' again.

Daniel Mitchell, Senior Fellow at the Heritage Foundation reiterated the remarks made by the Center for Freedom and Prosperity chief, but stressed that although the commitment letters themselves are meaningless, there is still a danger that: 'some politicians in low tax OECD member nations will be willing to sacrifice their nations' economic interests to prop up the decrepit economies of Europe's welfare states.'

He explained that if the EU 'cartel' is blocked, then low tax nations will be able to opt out of their 'so-called commitments'.

Veronique de Rugy, Policy Analyst at the Cato Institute, a non-profit public policy research foundation, expressed her support for nations such as Monaco, which had refused to compromise with the OECD on the issue of tax reform.

'Every nation should have the sovereign right to determine the taxation of income earned inside its borders,' she explained, warning that: 'For the jurisdictions that did sign a commitment letter, they must understand that the OECD will not live up to its end of the Faustian bargain.'

Recommended