The OECD plans to apply sanctions to 35 blacklisted tax havens if they do not reform their tax systems by 31 July 2001.
The initiative was supported by the Clinton administration, but under George Bush, the OECD crackdown is considered to be out of sync with the government’s thinking.
The official position from the White House was that the US had little to gain from supporting the OECD and supporting the proposal would place a burden on its financial industry.
US Treasury secretary Paul O’Neill was reported in the Guardian as saying Washington had ‘serious concerns about the direction of the OECD initiative’.
On Thursday O’Neill said in a newspaper column that he was troubled by the ‘underlying premise that low tax rates are somehow suspect and by the notion that any country, or group of countries, should interfere with any other country’s decision about how to structure its own tax system’.
Despite this setback, the OECD said it would continue with its plans to get as many tax havens to co-operate and reform their tax systems.
The organisation said it had noted the concerns following the comments of O’Neill. In a statement, the OECD said member countries were in active discussion about the most ‘constructive’ way to respond to these concerns.
It is rumoured that the 31 July deadline may be set back to give the OECD more time to persuade uncooperative financial centres to commit to the initiative.
This was backed up by Don McKinnon, the Commonwealth general secretary, who was reported as saying the 31 July deadline was now redundant.
He said he was ‘basically supportive of the OECD’, but on this issue the organisation had ‘gone too far too fast and was not taking people with it’.
The next meeting of the OECD’s Forum on Harmful Tax Practices is scheduled take place on 11-13 June 2001 at its headquarters in Paris.
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