Washington Conference To Defend Tax Competition

by Mike Godfrey, Tax-News.com, Washington

09 October 2009

The Centre for Freedom and Prosperity is holding a major conference featuring eminent serving and former political leaders, representatives from the offshore finance industry, and academics to discuss the effect that the Organization of Economic Cooperation and Development's drive towards global financial and tax transparency is having on global tax competition, fiscal sovereignty and financial privacy.

The conference, to be held on October 20 at the Cato Institute in Washington, will feature speeches from Prince Michael of Liechtenstein, former US House of Representatives majority leaser Dick Armey, Chairman on the Cayman Islands Financial Services Association Anthony Travers, as well as other speakers from Austria, Panama, the Netherlands, the UK and the US.

"In recent decades, rising globalization has forced governments to restrain their fiscal appetites," said the CF&P. It continued:

"After the Reagan and Thatcher tax rate cuts of the 1980s, other countries were forced to respond with their own tax reforms. The growth of low-tax jurisdictions, or tax havens, has put further beneficial competitive pressure on governments with excessive tax rates. The result is that tax rates on income and capital have fallen significantly to the great benefit of global investment and growth."

"These pro-growth reforms did not come about because governments suddenly realized that low tax rates are better for growth. Instead, politicians cut tax rates to prevent the geese that lay the golden eggs of prosperity from flying across the border."

"Alas, there is now a rising big-government backlash against tax competition. Politicians have made unwise promises for ever-growing levels of redistribution and this is creating pressure for higher tax rates. But higher tax rates are particularly misguided when labor and capital can move to jurisdictions with better policy. This is why high-tax nations are seeking to curtail tax competition and are working through international bureaucracies such as the Organization for Economic Cooperation and Development to create an "OPEC for politicians."

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