Contact Information:

Center for
Freedom and Prosperity
 P.O. Box 10882
Alexandria, Virginia 22310-9998
Phone: 202-285-0244
Fax: 208-728-9639
                                            

CFP E-Mail Update, 2000

Update on the Center for Freedom and Prosperity's
Coalition for Tax Competition
Tuesday, December 26, 2000

Happy Holidays!

A short update since I am leaving for vacation tonight.

1) Dan Mitchell's Bahamas Trip is Successful
2) Barbados Trip Update
3) Washington Times Letter to the Editor II
4) Your help is greatly appreciated

1) Bahamas Trip

     Note from Dan Mitchell on his trip -- The trip to The Bahamas was very productive. Thanks in large part to Dr. Peter Maynard of The Bahamas Bar Association and Rick Lowe of the Institute for Economic Freedom, I was able to meet with key representatives from both the government and the private sector. The trip began with a speech to The Bahamas Bar Association and the Bahamas Institute of Chartered Accountants. In the next two days, I met with Finance Minister Sir William Allen and Central Bank Governor Julian Francis.

     During those two days, I also had an opportunity to brief important people from the financial services community. My message in each meeting was very simple and direct: The OECD initiative will collapse if we all band together. Free market supporters in the US Congress are very unlikely to enact any OECD-endorsed sanctions -- particularly with a new President who believes in lower taxes and financial privacy. So long as the persecuted nations hold firm, it is likely that the OECD will be forced to withdraw its proposal.

 

2) Barbados Meetings at the January 8-9 Commonwealth Secretariat/OECD's multi-lateral consultations. Announcement of Center for Freedom and Prosperity activities.

     On a related matter, we have received several requests to attend our Barbados briefing. This expression of support and interest is very heartening and we thank you for your enthusiasm. We had not planned on having a public briefing (to encourage a frank and open discussion, the meeting on January 6 will be for government officials only), but we certainly are willing to put one together on Sunday for those who are interested. Indeed, we can conduct one-on-one meetings just about anytime between Saturday, January 6, and Tuesday, January 9. To be sure, we would not suggest that anyone fly all the way to Barbados just for this purpose. However, if you were looking to take a vacation and wanted to go someplace warm anyhow, we certainly would enjoy having an opportunity to meet you and discuss these matters of mutual concern. If you are interested, please send us an e-mail and we will forward you all relevant information. 

 

3) Washington Times Letter to the Editor II:  Nigel Morris-Cotterill responds to the OECD's Gabriel Makhlouf

     In our last update, I commented on Gabriel Makhlouf's letter to the editor in the Washington Times, which was a response to Dan Mitchell's series of op-eds on the OECD. One of our readers responded to Mr. Makhlouf's Washington Times letter and his reply is reprinted below.

The Washington Times
December 22, 2000
COMMENTARY; EDITORIALS; LETTERS; Pg. A22

Tax evasion may be illegal, but tax avoidance is a right.

     The letter to the editor by Gabs Makhlouf, chairman of the Organization for Economic Cooperation and Development (OECD), was revealing ("Tax evasion is a crime, not privilege of wealth," Dec. 17). 

     The letter proves that the OECD does not recognize the difference between tax evasion, which is - as Mr. Makhlouf states twice - a crime,  and tax avoidance, which is not only legal but a right. I am entirely opposed to tax evasion, and it is right that tax evasion should be prosecuted with the same vigor as any other criminal offense. Everyone, however, has a right to pay no more tax than that which is due under the laws that apply to them.

     In addition, the United Kingdom's Treasury - which Mr. Makhlouf represents - has proposed that all of Europe adopt a basis of personal taxation similar to that of the United States - that is, taxation on worldwide income on a yearly basis. Mr. Makhlouf writes as if these proposed changes already had been made. Such changes will not be accepted in the United Kingdom without a battle.

     The British government already has stated that it cannot hope to satisfy the growing need for state pension provision and that it will be necessary for workers to pay for their own private pensions. This is despite the fact that both employers and employees pay about 10 percent of the employee's gross pay into a fund for pensions and health care. In the United Kingdom, all types of people with pension funds use external accounts and investments to leverage their earnings, postponing (not evading) payment of tax until the money is needed. In this way, private pensions - and savings - can result in greater return than if taxed on the basis proposed by the U.K. Treasury.

     The OECD starts from a premise that any country that charges a low or zero rate of tax on some classes of earnings or growth is in some way behaving in a discriminatory fashion. This is absolute rubbish.

     The OECD fails to recognize that every country has an absolute right to manage its own fiscal affairs. This is a matter of sovereignty.

     What the OECD actually wants - although it vehemently denies it - is "tax harmonization."

     Such a policy would, in effect, put OECD members in control of many of the world's budgets. The OECD does not want small, poor countries to have control of their own finances. Under "tax harmonization," such countries would be increasingly dependent on aid, because they will not be able to establish tax incentives that encourage investment (not, as some would have it, exploitation) from international corporations.

     When aid is dependent upon whether a country has an acceptable tax regime (both the French government and the World Bank have stated an intention to work toward this end), the development of small, poor countries will be further retarded.

     Added to the World Trade Organization's efforts to restrict the subsidization of agriculture in these countries, attempts to control these countries' freedom to set tax rates through their access to aid would be lethal.

     There are those who argue against globalization by commercial enterprise. They are missing the point. The real threat to the poor, and to the sovereignty of nations, is from the globalization of government, and tax is the current battlefield.

     What we are seeing is the development of global government by a committee of a small number of rich nations. We are seeing the development of an empire based on economic might rather than armed conflict.

     It is time that we stop it.

NIGEL MORRIS-COTTERILL
Editor
orld Money Laundering Report
www.vortexcentrum.com
Essex, United Kingdom

 

4) Remember, all of our activities -- including the very important Barbados meetings -- are largely publicized by word of mouth. As such, if you know of anyone from a government or the private sector who should attend our Barbados events (or should be receiving our updates), please feel free to forward this e-mail to them. Alternatively, send us their e-mail address.

     Finally, we are a frugal non-profit operation. We operate at very low cost, but it would be very helpful to raise the funds needed for grassroots education. Do not be bashful about contacting us if you are interested in providing financial support. 

Hope you have a wonderful holiday week!

Andrew Quinlan
Center for Freedom and Prosperity
President
202-285-0244
603-971-9137 (efax)
quinlan@freedomandprosperity.org
www.freedomandprosperity.org

 


Update on the Center for Freedom and Prosperity's
Coalition for Tax Competition
Friday, December 22, 2000

1) Press Release: CFP to Participate in Discussion with Targeted Countries in Barbados . . .
2) Dan Mitchell's
Wall Street Journal-Europe Op-ed

1) Press Release

CFP TO PARTICIPATE IN DISCUSSION WITH TARGETED COUNTRIES IN BARBADOS
Dialogue will Center on the OECD "Harmful Tax Competition" Project

WASHINGTON, DC The Center for Freedom and Prosperity (CFP) announced today that it will hold a series of discussions with countries targeted by the Organization for Economic Co-operation and Development (OECD) during the Commonwealth Secretariat/OECD's upcoming multi-lateral consultations. (Full Release)

PLEASE NOTE: Time and Location TBA.

 

2) Op-ed

Wall Street Journal-Europe
December 21
by Dan Mitchell

The OECD's Version of Tax Harmonization

[PDF Version]

     The United Kingdom has been very skeptical of the European Union's push for tax harmonization, and with good reason. Both marginal tax rates and he aggregate tax burden in the U.K. are lower than EU averages, which is an important reason why the British economy is doing better than its neighbors' across the Channel. Needless to say, U.K. policy makers would be foolish to discard this competitive advantage...

     Unfortunately, Mr. Blair's opposition to tax harmonization seems to vanish when the public is not paying attention. He defends tax competition when dealing with the EU, and clearly enjoys the voter support he receives for this position. Yet his government has been an avid supporter of another tax-harmonization campaign -- one that has been launched by the  Organization for Economic Cooperation and Development.

 

Have a Happy Holiday!

Andrew Quinlan
Center for Freedom and Prosperity
President
202-285-0244
603-971-9137 (efax)
quinlan@freedomandprosperity.org
www.freedomandprosperity.org

 


Update on the Center for Freedom and Prosperity's
Coalition for Tax Competition
Tuesday, December 19, 2000

I hope all is well and that you are having a wonderful holiday season.

The following is an update on the battle for tax competition, fiscal sovereignty and financial privacy. Our Coalition is picking up support and it is increasingly clear that we are making a difference. The OECD is on the defensive. They have tried to change their tactics and rhetoric, but their agenda remains unchanged.  The following are a few things to bring you up to date.

Topics . . .

1) Coalition Briefings in Barbados

2) Coalition Briefings in the Bahamas

3) Heritage Foundation lunch on Tax Competition

4) Capitol Hill meetings continue

5) Marshall Langer's Tax Competition article in Tax Notes International

6) OECD's letter to the Washington Times
 

1) Coalition Briefings in Barbados. Due to several requests from black-listed countries, Dan Mitchell and I will be traveling to Barbados for the OECD regional conference. While in Barbados, we will be conducting a briefing (probably the morning of January 6, but more on this next week) on the current status of the "harmful tax competition" debate, including the latest news from the new administration and leaders on Capitol Hill. We also expect that we will help advise low-tax regimes on how best to defend their fiscal sovereignty.

2) Dan Mitchell is going to be in the Bahamas this week to help persuade the government that there is no need to capitulate to the OECD. Dan will be stressing that the threatened sanctions are worthless without US agreement and that all blacklisted countries should insist that the US, UK and other OECD countries play by the same rules (see Dan's and Dr. Langer's articles below). Dan will be speaking before the Bahamas Bar Association and he also will meet with other private sector representatives, government officials, and journalists.

3) Dan Mitchell hosted an important lunch at the Heritage Foundation in Washington that had the justice minister of Liechtenstein as its guest speaker. The main topic was the OECD's assault on sovereign nations. The meeting was very productive with more than thirty participants including representatives from low-tax countries, Washington policy experts and influential Capitol Hill aides.  The justice minister shared with us some inside knowledge on the negotiations with the OECD.

4) We continue to have meetings with Capitol Hill staff.  We intend to work closely with the new Administration.  Current top Bush economic advisor and former Federal Reserve Board member Larry Lindsey supports low tax rates and understands the need for financial privacy. We will work with the new Administration and build on Mr. Lindsey's stated positions.

5) Marshall Langer, a world famous international tax planning expert, has published an excellent article on the US's and UK's double standard on tax havens in this week's Tax Notes International. A "pdf" version is on our web site at:

http://www.freedomandprosperity.org/Articles/tni12-18-00.pdf

6) The Washington Times has published a letter to the editor by Gabriel Makhlouf, Chairman, OECD Committee on Fiscal Affairs, Director of International Tax Policy, Inland Revenue for the United Kingdom (text below). Mr. Makhlouf's letter was in response to Dan Mitchell's two part series that ran two weeks ago (see links below).

From the tone of the letter I can tell that we are getting under the OECD's skin.  If their letter is any indication, they do not have an effective argument against our market-friendly work.  As is the tradition at the OECD, instead of having a rational discussion, they try to smear and revert to name calling. Makhlouf's entire argument is based on the need to fight tax evasion. Yet as visitors to our web site have seen, Dan Mitchell's article in the December 3 edition of the Washington Times explains how to fight tax evasion while still protecting civil liberties and financial privacy.  The OECD 's myth of tax competition and tax evasion going hand in hand is just not true: Links to Dan's December 3, 7 and 8 articles:

http://www.freedomandprosperity.org/Articles/twt12-03-00/twt12-03-00.shtml

http://www.freedomandprosperity.org/Articles/twt12-07-00/twt12-07-00.shtml

http://www.freedomandprosperity.org/Articles/twt12-08-00/twt12-08-00.shtml

**********************

Chairman Makhlouf's letter to the editor:

"The Washington Times," December 17, 2000

Tax evasion is a crime, not privilege of wealth

     Wealthy individuals who duck taxes by hiding their money in tax havens are stealing from their honest neighbors by forcing them to pick up their share of the tab for the government services demanded by a nation's voters. They also are restricting the ability of governments to reduce tax rates for all citizens.

     The Organization for Economic Cooperation and Development (OECD) believes it is the duty of democratically elected governments to defend the interests of honest taxpayers, those who make up the vast majority of citizens. This is why the United States and other governments that are members of the OECD have launched a drive to eliminate harmful tax practices at a global level.

     Daniel Mitchell, however, opposes this effort and defends the rights of tax dodgers in two Commentary columns in The Washington Times last week ("OECD's perpetual tax grab," Dec. 7, and "OECD's glass house," Dec. 8). In the name of "freedom" and "prosperity," Mr. Mitchell advocates the protection of wealthy individuals who ignore their tax obligations in the countries where they reside and work by hiding their money in tax havens.

     Mr. Mitchell's characterization of the OECD's project as "financial protectionism" or as anti-competition is just plain wrong. The project is about promoting fair competition: competition that is transparent and nondiscriminatory.

     Fair competition calls for cooperation on a worldwide basis. In particular, it means asking offshore financial centers to cease giving cover to tax evaders. At a meeting in Barbados on Jan. 8-9, 2001, representatives from OECD countries and offshore financial centers will meet to discuss how to tackle this challenge. The OECD countries will explain the reasons underlying their request for cooperation from the offshore financial centers.

     International cooperation should deter tax dodgers from ignoring the tax obligations imposed by their democratically elected governments and ensure the equal treatment of all taxpayers. Not only does greater compliance with the tax laws ensure fairness, but it also makes it possible to bring tax rates down. That, certainly, is the hope of most citizens in OECD countries.

     Tax evasion is a crime. Promoting criminal activity is something that civilized democratic societies condemn unreservedly.

GABS MAKHLOUF

Chairman,
OECD Committee on Fiscal Affairs
Director of International Tax Policy
Inland Revenue United Kingdom

**********************

Please feel free to pass this on to other interested parties and/or contact me if you have any questions about the Center.  I also hope you will consider supporting our efforts.

Thank you and have a wonderful holiday weekend!

Andrew Quinlan
Center for Freedom and Prosperity
President
202-285-0244
603-971-9137 (efax)
quinlan@freedomandprosperity.org
ww.freedomandprosperity.org

 

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