MEMO  19Feb03

Review and Outlook
from: Anton Keller, Secretary, Swiss Investors Protection Association,
cp. 2580  -  1211 Geneva 2  (t+f: 022-7400362, 079-6047707, swissbit@solami.com)

9/11 broke the momentum generated in 2000/2001 among US lawmakers in favor of what has become the conservatives‘ mantra, i.e. tax competition, fiscal sovereignty and financial privacy.  Regaining that momentum has been the key objective of all efforts – together notably with Richard Anderegg, Patrick Martin, Patrick Masters, Daniel Mitchell, Gilbert Morris, Richard Rahn and Philippe Wainwright - I have either directed, helped to organize or participated in, e.g. the Nassau spring and fall meetings with Treasury, FINCEN and other US Government officials, our research work for countering further class actions against Swiss banks, firms and individuals in US courts, our special September OECD workshop at the 20th Cambridge International Symposium on Economic Crime, and my interview in Le Temps of 11Nov02 "L'échange d'informations fiscales sert les services de renseignements": www.solami.com/letemps111102f.  Related memos include: "Conceivable lines of defense against lex americana class actions; Cambridge": www.solami.com/armscom; Workshop "OECD & FATF - Background, Status & Outlook": www.solami.com/memo16march, www.solami.com/Nassau; Response to Fritz Bolkestein's FT ed-page piece of 02Jul02 "Everyone should pay the tax they owe": www.solami.com/BOLKESTEIN; "Responses to the OECD Harmful Tax Practices Initiatives": www.solami.com/responses; "After stopping the EU juggernaut, keep up the pressure on the OECD - despite 9/11": www.solami.com/memo3dec02.

When, in January, the EU finally had to face up to the apparently uncompromising US position against automatic tax data exchange, its spokesman vowed to carry on the battle against Swiss bank secrecy at the OECD.  In fact, the EU bureaucrats quickly found hidden support for that looming battle - as well as for mutual backscratching - among its long-time friends in the US Treasury (see the US-Swiss "accord administrative" of 23Jan03, www.solami.com/CHUS.pdf, which, behind the back of the constitutional lawmakers, sheds the principle of double criminaility regarding tax data exchange in cases of "tax fraud or the like": it was signed by Robert Waldburger on our side, and on the US side by Barbara Angus, the Treasury's Bush-appointed International Tax Counsel, who is understood to be basically on our side, who has been very attentive to what Gilbert Morris had to say to her, but who needs unrelenting hand-holding, back-rubbing and genuine intellectual spine-strengthening in the face of determined and entrenched anti-market, anti-sovereignty and anti-privacy Treasury bureaucrats).   For those familiar with the saga of the OECD/Council of Europe "Convention on Mutual Administrative Assistance in Tax Matters" (www.solami.com/ORWELL), this comes as no surprise.  And it confirms - and invites all concerned to recognize - the OECD as our main battle field.  It indicates promising pathways.  And it calls for a search for effective elements to turn back the tide.

As outlined before - notably in: "PRIVACY IN THE YEAR ORWELL PLUS 16" (www.solami.com/billiard) - the OECD Fiscal Affairs Committee has been carrying out self-designed and self-serving official mandates (reproduced on p.24ss at: www.oecd.org/pdf/M00017000/M00017724.pdf) which are not in line with this pro-market, pro-sovereignty and pro-individual liberties organization's original intent and purpose, nor with its Convention (www.oecd.org/about/origins/convention/conventn).  The most recent - and by now universally fought (www.freedomandprosperity.org) - addition to these harmful ukases has been on "Harmful Tax Competition".  The probably most anti-market mandate has been the OECD's official call of 1977 for measures attacking the linchpin of the free enterprise system, i.e. for "combating tax avoidance".  And in as much as OECD-induced measures seeking to repatriate, double-tax or discourage-by-divulging foreign investments in favor of an investor's home country may be at odds with fundamental sovereignty and fiscal principles, constitutional lawmakers here and there may want to examine whether their national interests are served or harmed by these "guidelines", "recommendations", "regulations", emmanating form an out-of-effective-control international bureaucratic lawmaking machinery.  And whether it is not high time to enforce - if need be by suspending the national contribution to the OECD budget - the OECD Council's explicit prohibition of any and every work directed at social and economic engineering by re-allocating resources which, in OECD parlance, is defined as "work on the use of fiscal policy for demand management purposes." (Council Resolution C(71)41, §2)