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CFP Press Release,  January 27, 2003

For Immediate Release
Monday, January 27, 2003
202-285-0244
 
www.freedomandprosperity.org

Free Market Leaders Denounce New Savings Tax Directive: US Will Not Support EU Tax Harmonization Scheme, OECD Commitment Letters No Longer Binding

Washington DC (January 27, 2003) Tax experts from America's most influential free-market organizations harshly criticized the European Union's new Savings Tax Directive. Andrew F. Quinlan, President of the Center for Freedom and Prosperity, announced, "The bureaucrats in Brussels have substantially scaled back their proposal, but the new Savings Tax Directive is still bad tax policy. The proposal is an unworkable house of cards, and the Center for Freedom and Prosperity will work with the Coalition for Tax Competition to derail this misguided tax harmonization scheme."

The European Union originally wanted all 15 of its member nations, as well as six non-EU nations including Switzerland and the United States, to collect private financial data about nonresident investors and automatically share that information with the tax authorities of other nations. The new proposal, by contrast, gives nations the option of imposing a withholding tax on nonresident savings and sharing the revenue with tax authorities from other nations.

Daniel Mitchell of the Heritage Foundation denounced the new EU proposal, stating, "We are pleased with the defeat of the original EU scheme, but the new proposal is based on the same flawed principles of taxing economic activity in other nations and double-taxing income that is saved and invested. All low-tax, capital-inflow jurisdictions should reject this attack against economic liberalization and tax reform."

Veronique de Rugy of the Cato Institute condemned the new Directive, but also found reason to celebrate, explaining that, "The EU's new scheme clearly fails to satisfy the 'level-playing-field' clauses in the commitment letters sent to the OECD. This means that low-tax jurisdictions around the world can reclaim their fiscal sovereignty and tell the tax-free bureaucrats in Paris to go jump in a lake."

Many free-market leaders were surprised by the EU's willful misrepresentation of the U.S. position. According to Grover Norquist of Americans for Tax Reform, "The EU admitted last month that U.S. information-sharing policies are not compatible with the Savings Tax Directive. And since America does not impose a withholding tax on most forms of nonresident savings and certainly doesn't share any revenue with other nations, it also is clear that U.S. policy is incompatible with the revised Directive. So why are the bureaucrats in Brussels misrepresenting the U.S. position? Do they really think people in Switzerland, Luxembourg, and other nations are too stupid to understand that the Directive is going to drive capital to non-participating jurisdictions like America, Panama, and Hong Kong?"

Defeating the EU Savings Tax Directive has been a major project of the Center for Freedom and Prosperity. The Bush Administration announced last year that the United States would not participate in the proposed tax cartel.

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For additional comments:

Andrew Quinlan can be reached at 202-285-0244, quinlan@freedomandprosperity.org
Dan Mitchell can be reached at 202-608-6224,
dan.mitchell@heritage.org
Veronique de Rugy can be reached at 202-218-4601,
vderugy@cato.org
Grover Norquest can be reached at (202) 785-0266,
friends@atr.org

Link to CFP's dedicated web page on the EU Savings Tax Directive:
http://www.freedomandprosperity.org/eu/eu.shtml

 

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