U.S. UNDER PRESSURE FOR OPPOSING CURB ON TAX HAVENS, MONEY LAUNDERING

Sunday Business, 10 June 2001

By Martin Essex

America will face pressure from other industrialised countries this week to drop its opposition to a scheme designed to curb tax havens and stamp out money laundering.

A three-day meeting of the so-called forum on harmful tax practices of the Organisation for Economic Co-operation & Development (OECD) begins tomorrow in Paris under the shadow of an article by US treasury secretary Paul O'Neill.

He wrote in the Washington Times that he was "troubled by the underlying premise that low tax rates are somehow suspect" and opposed attempts to interfere in a country's ability to determine its own tax system.

O'Neill's criticism, and similar comments by other members of the US administration, were rejected by Donald Johnston, the OECD secretary-general, who talked of "misunder- standings" and said there were no plans to attack low tax rates.

Last week, a group of former commissioners of Internal Revenue, the US tax agency, urged O'Neill to "engage in constructive dialogue with our trading partners" and claimed there was nothing in the OECD's publications on the project suggesting an intention to harmonise or raise tax rates.

By contrast, a group of mostly small Caribbean and South Pacific nations is urging the OECD to clarify its proposals. Lynette Eastmond, director of the International Tax & Investment Organisation secretariat said: "The OECD has given us a deadline of 31 July to commit to its initiative or face sanctions, yet despite constant reminders has still not kept its promise to clarify basic positions."

An OECD spokesman said he was hopeful a new consensus would be reached at the meeting but put the chances of reaching a compromise at only 50/50.

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