Center for Freedom and Prosperity Strategic Memorandum
[PDF Version]

To:      Public Sector and Private Sector Leaders of Low-Tax Jurisdictions

From:  Dan Mitchell, Heritage Foundation

Date:  June 11, 2001

Re:      OECD Strategy

"Information exchange" is phase two of the battle, and this refers to setting the conditions under which it is legitimate for governments to suspend financial privacy and divulge confidential information to other governments. Generally speaking, proponents of tax competition, financial privacy, and fiscal sovereignty believe information exchange is acceptable when:

• Governments are cooperating in the fight against criminal activity;
   
• Governments respect due process legal protections when seeking information; and
   
• Governments implement appropriate safeguards to protect information from disclosure, including appropriate penalties for those that disregard the safeguards.

This type of cooperation, with adequate protections of individual rights, is an agenda that presumably can attract wide support. Information exchange is not acceptable, by contrast, when:

• Governments are trying to enforce their tax laws on an extra-territorial basis;
   
• Governments engage in fishing expeditions that violate protections against unreasonable search and seizure; and
   
• Governments ignore the dual-criminality principle and do not respect each jurisdiction's sovereign right to determine what is a crime.

This brief memo only scratches the surface of an important issue, but there will be further updates as this phase of the battle develops. Rest assured, however, that the Center for Freedom and Prosperity and the Heritage Foundation will work with other organizations and individuals to ensure that the Bush Administration understands the proper role of information exchange.

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