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US Administration Repeats Opposition To EU Savings Tax

by Mike Godfrey,, Washington

30 July 2002

Following news late last week that the US Administration is opposed to the EU's information-sharing savings tax directive, and while a sullen silence prevails on the subject in Brussels (more or less shut down for the August holidays in any event), further confirmation of the good news has come from the Washington-based Centre for Freedom and Prosperity.

According to the Centre, a Treasury spokesperson also reaffirmed that Secretary O'Neill has "made clear that the U.S. has no interest in participating in any effort toward tax harmonization and that protection of the confidentiality of taxpayer information is paramount."

To be sure, says the Centre, the Administration is not completely solid on the issue. Some IRS and Treasury bureaucrats are sympathetic to Europe's welfare states and are trying to sabotage President Bush's economic team. That is why it is particularly revealing that a Treasury spokesperson "declined comment on the assertions made by CFP that a highly placed White House official said the directive has no support in the administration." Translated from Washington-speak to plain English, this is an admission that supporters of tax competition prevailed.

In the near future, says the Centre, the US Government will officially inform the European Union bureaucrats of the White House's decision.

The news has come at a crucial moment for Switzerland, which was beginning to waver in its negotiations over the issue with the European Commission because of the importance of the bilateral agreements it needs to have with the European trading block, which completely surrounds it geographically. The EU had tied the issue of banking secrecy to the next tranche of bilateral agreements, but will now presumably have to back off.

The EU, however, tends not to give up on an issue of such importance, and one can be sure that the Union's policy-makers will be working out how to resuscitate their broken Directive as they soak up Mediterranean sun for the next month. Expect Son of Savings Tax in September!

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