CF&P Warns Against OECD Back-Door Scheme to Create a De Facto World Tax Organization

For Immediate Release
Wednesday, June 1, 2011
202-285-0244
www.freedomandprosperity.org

CF&P Warns Against OECD Back-Door Scheme to Create a De Facto World Tax Organization

(Hamilton, Bermuda, Wednesday, June 1, 2011) The Center for Freedom and Prosperity, in Bermuda for the Global Tax Forum, issued a warning today that the Paris-based Organization for Economic Cooperation and Development is pushing a scheme that effectively would result in the creation of something akin to a World Tax Organization designed to prop up European welfare states and persecute low-tax jurisdictions.

“There are two smoking guns,” said Dan Mitchell of the Cato Institute, who was part of the Center for Freedom and Prosperity delegation. “First, the OECD worked with Europe’s welfare states to concoct a bulked-up Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This may sound dry and technical, but this new pact would be open to all nations and would give high-tax governments vast new powers to impose bad tax law on income generated in low-tax jurisdictions.” Mitchell then added, “Second, the OECD then put itself in charge of the ‘co-ordinating body’ that will have enormous powers to interpret the agreement and resolve disputes – thus giving themselves the ability to serve as judge, jury, and executioner.”

The Multilateral Convention has existed for years, but was radically altered in 2010 and the OECD now wants to coerce low-tax jurisdictions into acquiescing to the new arrangement – which will oblige them to become deputy tax collectors for every other nation that joins the Convention. Brian Garst of the Center for Freedom and Prosperity also was in Bermuda for the Global Forum and he noted that, “The Convention is another example of how the OECD continues to move the goalposts on low-tax jurisdictions. Having not yet finished jumping through all of the existing hoops, including the establishment of one-sided Tax Information Exchange Agreements, low-tax jurisdictions are now expected to participate in this onerous system.”

The unveiling of the Multilateral Convention at the Bermuda forum, combined with the OECD’s blatant assertion of control over the “co-ordinating body,” is reminiscent of the “Mexico City Surprise” at the 2009 Global Forum. At that meeting, the Paris-based bureaucracy engaged in another power grab by unilaterally asserting that it had the ability to impose rules to restrict tax avoidance and other forms of legal tax planning. Commenting from Washington, the President of the Center for Freedom and Prosperity, Andrew Quinlan, remarked that, “Fortunately, the OECD’s 2009 gambit failed and we hope low-tax jurisdictions will resist this siren song as well.”

For additional information:
Dan Mitchell can be reached in Bermuda at 202-218-4615, dmitchell@cato.org
Andy Quinlan can be reached in Washington 202-285-0244, andy@freeedomandprosperity.org

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