Writing for Hong Kong’s Harbour Times, CF&P President Andrew Quinlan and I recently coauthored a piece explaining why appeasing the radical demands of the OECD is a losing strategy. Simply put, the global tax collectors will not be satisfied with anything less than the end of all tax competition:
Like the OECD’s prior standards, demands to implement automatic exchange are likely to come with the threat of blacklisting, sanctions, and other coercive tactics. Hong Kong established itself as an economic powerhouse in part by attracting investment through smart fiscal policy. The Fraser Institute’s 2013 Economic Freedom of the World Report gave Hong Kong its top rating, as did the Heritage Foundation in its Index of Economic Freedom. In fact, Hong Kong has sat atop the Heritage ranking for 19 straight years, an impressive feat that explains why it persistently performs as one of the world’s fastest growing and most competitive economies.
The major welfare states of the OECD, on the other hand, have seen their economies stagnate. High taxes combined with aggressive, overbearing enforcement efforts have resulted in poor economic performance. But rather than improve their own policies, politicians from these nations have abused the power of the OECD to pressure competitive nations into adopting uncompetitive policies.
…The OECD has relied upon the coerced cooperation of targeted jurisdictions to achieve their goals, but this appeasement has so far produced nothing but new demands and continued threats of punishment. There is indeed a risk for standing up to the OECD and asserting the sovereign right to defend financial privacy and maintain pro-growth policies, but the alternative approach of constantly bending over backwards to accommodate the global bullies in hopes that they will go away has proven ineffective.
Read the entire piece here.
