CF&P Press Release, May 31, 2004

The Market Center Blog

Contact Information:

Center for
Freedom and Prosperity
 P.O. Box 10882
Alexandria, Virginia
22310-9998
202-285-0244

Center for Freedom and Prosperity Foundation

For Immediate Release
Monday, May 31, 2004
202-285-0244
www.freedomandprosperity.org

Foundation Study Documents OECD Deceit:
Paris-Based Bureaucracy Reneges on Commitments for Level Playing Field and Uniform Consequences for Non-Compliance

May 31, 2004 (Washington, DC) The Center for Freedom and Prosperity Foundation today released its latest Prosperitas study, entitled "The OECD's Dishonest Campaign Against Tax Competition: A Regress Report." The paper explains that the Organization for Economic Cooperation and Development (OECD) has engaged in unethical behavior as part of its "harmful tax competition" campaign against low tax jurisdictions. More specifically, the paper documents how the OECD has reneged on both its commitment to get its own member nations to agree to undermine tax competition and its commitment to impose equivalent sanctions on all jurisdictions with market-based tax law.

"Today's study is an expansion and update of a study we released last October to impact the OECD's Ottawa Global Forum," said Andrew Quinlan, president of the CF&P Foundation.  "The study sets the record straight once and for all that there is not a level playing field for the exchange of tax information between jurisdictions. The study also documents the OECD's unethical attempts to gloss over this critical fact."

Commenting on his study, Dan Mitchell stated, "The OECD's opposition to tax competition is misguided, but hardly surprising since uncompetitive, high-tax nations like France and Germany dominate the discussion at the Paris-based bureaucracy. But I am somewhat surprised that the OECD has chosen to renege on its commitments."

Veronique de Rugy of the American Enterprise Institute was equally critical, commenting that, "The OECD's campaign for tax harmonization is wrong, but there is a legitimate policy debate between supporters of competition and supporters of harmonization. There is no excuse, however, for the OECD's descent into dishonesty. The Committee on Fiscal Affairs [the division of the OECD in charge of the anti-tax competition project] has brought shame to the OECD."

The CF&P paper was released in advance of a Global Forum that the OECD is hosting later this week in Berlin, Germany, and will be among the topics discussed at a Tax Competition conference in the same city on June 2nd (details below).

The paper is divided into three sections:

1) Reminder that the OECD initiative is fundamentally misguided. The Paris-based bureaucracy seeks to undermine tax competition in order to prop up the destructive policies of high-tax welfare states. This section explains why tax harmonization is the wrong approach something the OECD would understand if it listened to its own economists.

2) The paper concisely demonstrates that the "level playing field" does not exist. It will show that several OECD nations have policies that qualify them as "tax havens" according to the Paris-based bureaucracy's own criteria. Most important, it dissects the OECD's most recent "Sub-Group paper" published on May 24 and shows that the OECD has violated its commitment to abide by the "level playing field" requirement.

3) The paper shows that the OECD is reneging on the promise to impose "uniform consequences" on nations and territories. The May 24th Sub-Group paper is extensively quoted to demonstrate the OECD's deceitful actions.

Link to full Prosperitas Study:
http://www.freedomandprosperity.org/Papers/oecd-dishonest/oecd-dishonest.shtml

Information on the June 2nd Berlin Tax Competition Conference
         Wednesday, June 2, 2004 -- 3 p.m. to 5 p.m. (reception to follow)
         Radisson SAS Hotel Berlin, Saphir Conference Room
             Karl-Liebknecht-Strasse 3, Berlin, Germany 10178
            
www.berlin.radissonsas.com
http://www.freedomandprosperity.org/press/p05-19-04/p05-19-04.shtml

Executive Summary of Prosperitas Study:
The Organization for Economic Cooperation and Development has a campaign against tax competition largely targeting so-called tax havens.  After being threatened with financial protectionism by the OECD, many low-tax jurisdictions made "commitments" to weaken their attractive tax and privacy laws. But these nations and territories also stated that their commitments would be valid only if all OECD nations agreed to the same flawed rules. Fortunately, this "level playing field" requirement does not exist. In its original form, the European Union's Savings Tax Directive might have satisfied that condition, but the EU failed to convince nations like Switzerland, Luxembourg, and the United States to share confidential information about nonresident investors with foreign tax authorities. Nonetheless, the OECD is still using threats and extortion in an effort to bully low-tax jurisdictions into helping high-tax nations enforce their bad tax laws. In so doing, OECD officials are acting in a dishonorable fashion. They failed to live up to their end of the bargain, but they still want low-tax jurisdictions to surrender their fiscal sovereignty and compromise their economic futures. Moreover, the OECD also is proposing discriminatory sanctions against blacklisted jurisdictions, a policy that is completely inconsistent with previous commitments to impose uniform sanctions on all nations and territories with market-based tax laws. The OECD's anti-tax competition project has always been fundamentally flawed, but it has degenerated into a sordid and discriminatory campaign to inhibit the development of poor nations to serve the narrow interests of rich countries.
http://www.freedomandprosperity.org/Papers/oecd-dishonest/oecd-dishonest.shtml

 

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 202-862-5800,
vderugy@aei.org

###

__________________________________

Center for Freedom and Prosperity Foundation
P.O. Box 10882
Alexandria, Virginia 22310
Phone: 202-285-0244
www.freedomandprosperity.org
cfp@freedomandprosperity.org

 

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