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  O'Neill: OECD Tax Haven Too Broad

By Curt Anderson
AP Tax Writer
Thursday, May 10, 2001; 12:59 p.m. EDT

WASHINGTON –– An international initiative to identify and eventually sanction countries used as tax havens could improperly interfere with the laws of those countries, Treasury Secretary Paul O'Neill says.

O'Neill, in a newspaper opinion piece published Thursday, said the effort by the Paris-based Organization for Economic Cooperation and Development is "too broad and it is not in line with this administration's tax and economic priorities."

"I am 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," O'Neill said.

One of President Bush's cornerstone issues is cutting taxes in the United States by more than $1 trillion over 10 years. O'Neill said U.S. policy abroad should mirror the goal of lowering taxes.

The Clinton administration had supported the project by the 29-nation OECD to curb use of offshore subsidiaries, bank accounts and other arrangements to evade taxes. The goal is to identify countries with laws that encourage tax avoidance, providing the basis for possible international sanctions or other punitive action.

O'Neill, however, said the effort should focus instead on cooperation and information exchange so that individuals and businesses that are evading taxes can be caught and prosecuted.

"The United States must make every effort on our own to obtain the necessary information to enforce the U.S. tax laws," O'Neill said. "We cannot tolerate those who cheat on their U.S. taxes by hiding behind a cloak of secrecy."

The United States has negotiated treaties with 60 countries to obtain information in cases of suspected tax evasion. Last year, Bermuda, the Cayman Islands, Cyprus, Malta, Mauritius and San Marino pledged to make changes in their own laws to avoid being identified by the OECD as tax havens.

O'Neill's column appeared in Thursday's editions of The Washington Times, but it was mistakenly identified as the work of a Treasury public affairs subordinate. The Treasury Department later issued the full statement under O'Neill's name.


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© Copyright 2001 The Associated Press

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