SPECIAL Report
Top US politician criticisesOECD
By Stephen Breen, The Royal Gazette -Bermuda
One of the most influential politiciansin the United States is lobbying the US Government to block theOECD crackdown on "tax havens", The Royal Gazette canreveal.
House of Representatives Majority leader Dick Armey is urgingthe US Treasury to oppose the Organisation for Economic Developmentand Cooperation bid to clampdown on what it considers "harmful"low tax jurisdictions.
Bermuda escaped inclusion on the OECD `hit list' in June afteragreeing to make unspecified changes, but 35 other jurisdictionswere given 12 months to agree to open up their tax regimes by2005 or face sanctions.
The Republican Congressman has written to Treasury Secretary LawrenceSummers warning that the 29-nation OECD move threatens the sovereigntyof these jurisdictions and could lead them to withdraw cooperationfrom the US in the fight against drugs.
In the letter, seen by The Royal Gazette, he writes: "Thiseffort is designed in effect to create a tax cartel and, if theOECD succeeds, our nation will face the risk of higher taxes anda weakened economy while developing nations will be hamstrungin their attempts to promote economic growth."
The Texas Congressman has been campaigning for a "flat tax"to be introduced in the US to replace income tax.
He continued: "It is not the role of the OECD to tell theUS - or any other member country - how to conduct tax policy,particularly when those changes would increase the tax burdenon individuals and businesses.
"The OECD is even trying to impose its will on nations thatare not members of the organisation, calling for draconian measuresagainst so-called tax havens. Sovereign nations should be freeto determine their own tax policies.
"(US) citizens would not respond well if other countriestried to dictate our tax laws, and it hardly seems right for usto participate in a campaign to force other nations to changetheir tax laws.
"What incentives will these nations and territories haveto support US criminal investigations if we threaten their abilityto maintain pro-growth policies?
"If developing nations are not allowed to create an attractiveinvestment climate their economies will doubtless suffer. Theend result would be less cooperation and fewer resources deveotedto fighting international crime.
"Mr. Secretary, I hope you are not committing the US to actionsthat are unlikely to receive the approval of Congress. In upcomingyears, we intend to implement tax cuts that will make Americamore attractive to the world's investors, regardless of whetherthe bureacrats of the OECD think this is `harmful competition'.
"The financial protectionism that the OECD wants to imposeagainst low tax regimes is against our national interests andwould also endanger the economies of other nations.
"Adopting the OECD's policy not only represents a major changein tax policy, it hinders our efforts to reduce the US tax burdenand reform our unfair tax code.
"It also poses a serious risk to continuing prosperity andprosperit around the globe.
"I urge you to summarily and immediately reject this policyand look forward to learning the actions you plan to take to stopthe OECD from moving forward."