CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. New Reports Undermine Senate Anti-'Offshore' Program

New Reports Undermine Senate Anti-'Offshore' Program

by Mike Godfrey, for, Washington

08 May 2007

While the Democrat-controlled US Senate continues its attack on 'offshore' - called 'empty political theatre' by the Center for Freedom and Prosperity - a new report from the Commonwealth Secretariat shows that large onshore countries such as the US and the UK have no moral or legal edge over offshore financial centres.

Commenting on the report, 'Assessing the Playing Field - International Cooperation in Tax Information Exchange', a study undertaken by Camille Stoll-Davey of Oxford University and published recently by the Commonwealth Secretariat, Malcolm Couch, Deputy Chair of the International Trade and Investment Organisation stated: “It’s time to stop treating small countries with finance centres as different.”

Crouch said that the conclusions of the report come as no surprise since the International Monetary Fund has already acknowledged that compliance levels for offshore centres, on average, tend to be more favourable than those onshore.

The report was based on an analysis of objective data compiled by the Organisation for Economic Cooperation and Development. It finds that in key areas such as a willingness to exchange tax information or to identify who is behind companies or trusts, OECD member countries do not operate to a higher standard than offshore financial centres and in some cases they operate to a lower standard.

"Large countries should stop stigmatising small and developing ones”, added Couch. "There is no factual basis for that approach. Instead, we should all continue to work on a cooperative and fair basis and to participate in the OECD’s Global Tax Forum to help each other tackle criminal and terrorist financing and tax evasion."

Another new report issued last week tells the same story. Entitled "Tax Havens: Myth Versus Reality," the Prosperitas study is designed to be a user-friendly resource for policy makers and journalists seeking both sides of the story.

The study points out that many nations belonging to the OECD are tax havens according to the definition concocted by the Paris-based bureaucracy. Moreover, the just-released IMF study, for instance, identified the UK as a tax haven. Austria, Belgium, and the Netherlands, says the study, also are tax havens since they have bank secrecy and/or other provisions that make them a magnet for financial capital. And the United States is perhaps the world's foremost tax haven. In an exercise of gross hypocrisy, the OECD does not blacklist its own member nations.

Andrew F Quinlan of the Centre for Freedom and Prosperity points out that last week's Senate hearing included not a single person representing the interests of taxpayers, and was designed to blame so-called tax havens for the tax gap. Offshore jurisdictions are routinely vilified, he says, largely because they are perceived as a threat by politicians, leftist organizations, and other advocates of bigger government and high tax rates. In almost all cases, however, attacks on these low-tax jurisdictions are either baseless or distorted.

The study says that there is no IRS estimate of the scale of supposed "offshore" tax evasion. Says the study: "To be sure, there doubtlessly is some evasion, and it probably is assumed in one or more of the other categories in the IRS estimates, but the supposed problem is relatively trivial. A former Democratic staffer named Jack Blum concocted an estimate of $70 billion. When former House Majority Leader Dick Armey asked CRS to get the methodology for the number, Blum confessed, for all intents and purposes, that he made it up."

Says Quinlan: "The Finance Committee's one-sided hearing is designed for all intents and purposes to create momentum for policies that will harm American competitiveness. If lawmakers genuinely wanted to reduce tax evasion they would lower tax rates."

Dan Mitchell, Senior Fellow at the Cato Institute, added: "Tax havens boost America's economy by providing a way for foreigners to invest trillions of dollars in US markets. Tax havens also help America by providing tax-efficient platforms for US companies and investors competing to earn market share in the global economy."

In an introduction to the Commonwealth Secretariat report, Ransford Smith, Deputy Secretary-General of the Secretariat, states: “The international financial services sector must foster an environment of fair play that takes full account of the interests and vulnerabilities of small developing states. To reduce global inequality, international standard setting exercises need to promote a level playing field and fair competition between small developing countries and large rich nations. The issue of double taxation and tax information exchange agreements needs to be addressed by the development of a methodology that recognises the divergence in tax structures across jurisdictions and allows all countries to utilise the same tools.”

The report calls on large countries to open up access to the international network of double taxation treaties to small countries, and criticises OECD members for offering small countries tax information exchange agreements without mutual benefits.

The ITIO is a forum for small and developing economies and represents countries across Europe, the Caribbean, Latin America, the Pacific and Asia. It works for a level playing field in the trade in services, particularly in the development and implementation of new regulatory standards. This includes, but extends beyond, taxation issues and entails dealing with a wide range of international bodies.

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »