For Immediate Release
Thursday, April 18, 2002
202-285-0244
 www.freedomandprosperity.org

The OECD Lays an Egg:
Low-Tax Jurisdictions Will Achieve Final Victory When EU Savings Tax Directive is Defeated

The following are statements by Andrew Quinlan, President of the Center for Freedom and Prosperity, Daniel Mitchell, Senior Fellow at the Heritage Foundation, and Veronique de Rugy, Policy Analyst at the Cato Institute, on the recent announcement of the Organization for Economic Cooperation and Development's (OECD) updated "blacklist":

Andrew F. Quinlan:
This announcement of a new "blacklist" is a non-event. The OECD agenda is a combination of imperialism – they targeted small jurisdictions – and hypocrisy – they did not apply the same rules to developed nations. Fortunately, the "commitments" made by low-tax jurisdictions are not binding unless all OECD member nations agree to the same misguided rules. This is why stopping the EU Savings Tax Directive is now a top priority.

This will not happen. Extraterritorial taxation is not in the U.S.'s best interests. The U.S. needs to take this opportunity and reform its tax system to attract more overseas capital, not scare it away. The Center for Freedom and Prosperity will work hard over the next several months to insure that all lawmakers, policy makers, opinion leaders and taxpayers are aware of the threat that tax harmonization schemes from the OECD and EU pose to America's national interests.

Daniel Mitchell:
Under the old Soviet system, Russian workers had a phrase: "We pretend to work, and they pretend to pay us." The same can be said about the OECD's commitment letters. The OECD was forced to accept commitment letters that are predicated on all OECD member nations agreeing to the same anti-growth tax policies. This makes the commitment letters virtually meaningless.

But this does not mean the battle is won. There are some politicians in low-tax OECD member nations that will be willing to sacrifice their nations' economic interests to prop up the decrepit economies of Europe's welfare states. This is why it is so important now to defeat the EU Savings Tax Directive. If this cartel is blocked, low-tax jurisdictions will be allowed to opt out of their so-called commitments.

Veronique de Rugy:
While the commitment letters are meaningless, they are unfortunate since they lend legitimacy to the imperialist actions of the tax-free bureaucrats in Paris. That is why I have high regard for the nations that refused to sign a commitment letter. Every nation should have the sovereign right to determine the taxation of income earned inside its borders.

For the jurisdictions that did sign a commitment letter, they must understand that the OECD will not live up to its end of the Faustian bargain. Low-tax jurisdictions now will be pressed to dismantle privacy laws and become vassal tax collectors, notwithstanding the level playing field clauses in all the letters. They must not allow the OECD's dishonest bureaucrats succeed in this effort – and they should support the efforts to defeat the EU Savings Tax Directive.

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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
 

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