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World Bank Urged To Be Honest In 'Tax Haven' Study

by Mike Godfrey,, Washington

19 November 2007

The Center for Freedom and Prosperity Foundation, the free market think tank, has sent a letter to World Bank's President Robert B. Zoellick expressing concern about an upcoming study on the 'development impact of off-shore financial centers'.

The CF&P Foundation wants to ensure that the study's results are not influenced by an ideological bias against tax competition and fiscal sovereignty, and it argued that the World Bank should consider compelling evidence pointing to the positive effects that low-tax jurisdictions have had on global prosperity.

In his letter to Zoellick, Andrew F. Quinlan, President of the CF&P Foundation, suggested that: "Tax rates have been dramatically reduced in recent decades as tax competition has encouraged nations to adopt pro-growth policy in an effort to attract and retain capital. These lower rates have helped boost global economic growth – a result that is helping to lift tens of millions of people out of poverty."

Quinlan went on to argue that offshore financial centers "are a key part of this process" as their tax-neutral platforms encourage global investment and finance activity and because their fiscal regimes increase tax competition, thus pressuring uncompetitive nations to lower tax rates and reform tax systems.

"The World Bank should not undermine tax competition," Quinlan's letter continued. "Instead, the World Bank should embrace tax competition for its ability to stimulate pro-growth policies that encourage investment and innovation."

According to the CF&P, the World Bank has launched the study on offshore financial centres under pressure from the government of Norway and the Tax Justice Network (TJN), which the Center describes as "openly hostile to tax competition" and "unambiguously" in favor of higher tax rates and bigger government.

"The World Bank has been widely criticized for failing in its core mission of promoting economic development, so it is unclear why resources should be misallocated to appease Norway's leftist government," the CF&P has stated.

"There's a clear risk that the study will be used as a launching pad for the tax harmonization schemes long sought by the Organization for Economic Co-operation and Development (OECD), United Nations (UN), European Commission (EC) and other international bureaucracies hostile to fiscal sovereignty and economic freedom," it warned.

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