Press Report
Sanctions 'all but dead'
Barbados and other jurisdictions,targeted by the OECD over harmful taxation practices, are gettingsupport from a key member of the Paris-based organisation.
A Reuters report out ofLondon quoted the Commonwealth Secretary-General as saying yesterdaythat the withdrawal of US support for an OECD clampdown on internationaltax havens means the July deadline for sanctions on those countriesis all but dead.
The London-headquarteredCommonwealth consists of 56 mainly former British colonies, includingover half of the countries blacklisted by the OECD last year.It also has four OECD members Britain, Australia, Canadaand New Zealand.
US Treasury Secretary, PaulO'Neill on Thursday effectively torpedoed efforts by the 30-memberOrganisation for Economic Co-operation and Development to endharmful tax practices in 35 countries it had branded last yearas "tax havens".
In its current form, O'Neillsaid, the OECD's drive was far too broad and should be refocusedmuch more narrowly on limited exchange of information about taxevaders.
The Paris-based OECD, arich nations club, which includes the United States as well astop tax havens Switzerland and Liechtenstein, had threatened toslap sanctions on the 35 offshore centres in July if they hadnot mended their ways by then.
"It is hard to see a sanctions regime now being imposed,although that is a matter for individual OECD members, given thelack of support from Washington," Commonwealth Secretary-General,Don McKinnon told Reuters by telephone from Australia, where heis visiting.
McKinnon insisted he wasnot defending illegal tax evasion, but had always called for improveddialogue between the OECD and tax havens, or offshore financialcentres (OFCs), to develop a common position on the issue.
He was generally satisfiedwith O'Neill's intervention. "I am pleased that we are notlooking like a bus heading off a cliff. This will have a dramaticimpact on the thinking within the OECD.
"I am basically supportiveof the OECD, but on this issue it has gone too far too fast andwas not taking people with it." He said it had been clearthe new US administration of President George W. Bush would havea different approach to the issue of OFCs than the outgoing Clintonregime, as it has on a number of other international issues.
"The first clear signof the US pulling out was the removal of a paragraph about it(tax havens) from the recent G7 communiqué," he said,referring to a meeting of the Group of Seven leading industrialcountries at the end of April.
"We knew then therewas going to be some serious change."
The OECD has been tryingto eliminate harmful tax competition by getting OFCs to co-operatewith foreign tax collectors and end special tax regimes for foreigncompanies or individuals.
But some in the Bush administrationhave branded it the "world's tax policeman" and saidthey are unhappy with attempts to enforce global tax harmonisationand impose tax rates on sovereign states. (Cana-Reuters)