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New deadline on levy pacts sought
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Posted on Feb 22 2001
Pacific Islands Forum Secretary General Noel Levi, CBE, has called on the Organization of Economic Cooperation and Development to reconsider a deadline for agreement on new international tax arrangements, as these will harm some Pacific Island countries.
Seven Pacific island nations — Cook Islands, Nauru, Niue, Republic of Marshall Islands, Samoa, Tonga and Vanuatu — were among those listed by the OECD in June 2000 as “tax havens.”
They now face listing as “uncooperative tax havens” and bilateral defensive measures from the 29 OECD members if they do not meet the July 31, 2001 deadline for agreement to the OECD’s Harmful Tax Competition Initiative.
The Initiative is aimed at slowing what OECD nations believe is the unfair erosion of their tax bases through mobile financial activities, such as those offered by offshore financial centers. Such activities can attract capital away from OECD member countries, supposedly depriving them of potential tax revenue. The Initiative also aims to reduce the role that taxation levels play in business capital allocation decisions.
Mr. Levi said the seven Pacific states had a sovereign right to operate offshore financial centers, as well as any other innovative economic activity to help develop their economies, as they typically had a very limited range of economic resources to call upon.
The seven Pacific states listed as tax havens by the OECD are relatively small, developing states. Samoa and Vanuatu have populations of just under 200,000 people each; followed by Tonga (population 100,000), the Republic of Marshall Islands (65,000), Cook Islands (15,000) and Nauru (10,000). The total population of Niue is less than 1,900 people.
