Tension is mounting in the battle between the OECD's tax-rich members and the offshore jurisdictions it has attacked on grounds of 'unfair tax competition'. With just three months to go before the July deadline when the OECD has committed itself to producing a final list of errant jurisdictions, who will then be subject to sanctions, everything is to play for and the rhetoric is reaching fevered proportions.
The list of US legislators who have appealed to Treasury Secretary Paul O'Neill to withdraw US support from the OECD initiative grew further this week when Rep. Donna M. Christensen, a Democratic congressional delegate from the US Virgin Islands, became the eighth U.S. policy maker to ask the Treasury Department to pull support for the OECD's anti-tax competition project. Donna Christensen's letter can be read at http://www.freedomandprosperity.org/ltr/christensen/christensen.pdf.
Donna Christensen's letter followed a similar appeal from Major Robert Owens, Democratic Representative for New York's 11th District, and must put pressure on Senator Hilary Clinton to 'come out' on the issue. The famous Senator, who represents a part of New York with many Caribbean residents, seemed to issue, and then didn't issue, a letter attacking the OECD just two weeks ago.
Meanwhile, back in staid Europe, the OECD has gotten itself into trouble through some leaked minutes that, if genuine, cast it in a highly unfavourable light, and seem to endorse the offshore view of the Paris-based institution as a 'fiscal imperialist'. The 'minutes' caused a furore at the recent meeting of the Task Force in Paris. The document, which purports to be a record of a meeting of the OECD's Fiscal Affairs Committee on 30th January, is certainly didactic and manipulative:
'There must be acceptance of the OECD's interpretation . . .'
'The OECD and members need to crank up their PR efforts to ensure that the political will in capitals remains firm . . .'
When the document was circulated at the Paris meeting, Commonwealth Secretary General Don McKinnon issued a statement expressing concern that the document may indicate that the CFA is not fully negotiating in good faith, saying: ' This minute clearly confirms the suspicion of many that the FAC not only writes the rules, but wishes to be the prosecutor, judge, jury and jailor. They are setting themselves up as the world's financial policeman.'
The OECD tried to convince the media that the minutes were false, but
their denial was, in the words of one observer, very Clintonian. The OECD
spin doctors vigorously asserted that the document did not reflect minutes
of an official Fiscal Affairs Committee meeting, but they did not deny
that the minutes were an accurate reflection of an OECD meeting or a meeting
of OECD officials.
On 1 March (the first day of the Paris meeting) OECD Secretary General Donald J. Johnston issued a response to McKinnon's statement:
'I regret very much the statement you issued today, based on a document presented as "a minute of the Fiscal Affairs Committee of the OECD". We have just obtained from journalists a copy of the document on which you apparently base your comments, and I can assure you that this is not an OECD document.'
Maybe not, but the document nonetheless looks like a participant's notes on a real meeting. And the tone rings only too true.
Another own goal by the OECD is its response to a letter from Congressman Sam Johnson, R-Texas, of the powerful Ways and Means Committee, which controls US funding for the OECD. Written in January, the letter asked some pertinent questions about the OECD's tax initiative, including a request that Secretary-General Donald Johnson should explain why some OECD members were not included on the list of 35 competitive tax jurisdictions when they obviously met all the OECD's self-imposed criteria.
Mr Johnson's pompous and superficial answer, which dealt with none of the Congressman's six questions, led directly to the spate of Congressional letters to Treasury Secretary Paul O'Neill. Seen from Paris, apparently, the Democrats still rule in Washington, and important Republican leaders don't matter.
The OECD probably comforts itself during this hail of adverse publicity by remembering that the targeted jurisdictions are falling into line one by one, as they sign commitment letters agreeing to its terms. This week it is rumoured that Jersey and Guernsey are on the verge of signing-up. But what are these signatures worth? As much, or as little, as Gordon Brown's attachment to the cause of information-sharing in the EU: yes, he says, we will have it, on condition that Switzerland and the US have it too. He can sleep easily at nights, and so can the Isle of Man, which signed a commitment letter agreeing to anything which was also put into practice by all of its competitors.
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