MARSHALL ISLANDS CRITICIZES OECD’S TAX-HAVEN ACTION

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MAJURO, Marshall Islands (January 19, 2001 – The Marshall Islands Journal)---Marshall Islands officials are upset that the RMI has been placed on a "tax-haven" blacklist by the Organization for Economic Cooperation and Development, a grouping of the major European, Asian and North American nations.

The OECD, at a meeting in Barbados, announced last week a list of 33 developing nations – which includes Nauru, the Cook Islands, Tonga, Niue, Samoa and Vanuatu in addition to the RMI – that are alleged to have harmful tax practices.

"It really concerns us to be on the list," said Justice Minister Witten Philippo this week. He expressed concern over the OECD’s "unilateral" action, commenting that the "big countries have their own tax problems but want to blame small island countries."

A number of Texas Congressmen, including Rep. Dick Armey, have also attacked OECD’s campaign against "harmful tax competition." Countries with "high tax burdens need more (not less) international tax competition in order to provide incentives for lowering their tax burden." Rep. Sam Johnson wrote to OECD Secretary General Donald Johnston earlier this month, adding his concern about "the OECD focusing on ‘harmful tax competition’ as opposed to ‘harmfully high levels of tax burdens."

A follow-up meeting on the tax-haven issue is scheduled for mid-February in Japan, and Finance official Casten Nemra confirmed that the RMI will attend and present a response to the OECD blacklist.

Philippo said last year, the RMI was put on the international Financial Action Task Force’s money-laundering blacklist despite the fact that the RMI has no off-shore banks.

He said it was the "arbitrariness" of the OECD action which especially irked the RMI because it was done "with no concern for the impact on our economy."

Trust Company of the Marshall Islands manager Baron Bigler said OECD is labeling these 33 countries for concerns it has about the way the 33 nations "carry on their sovereign and legitimate business rights," Bigler said.

Unlike the money-laundering issue, tax practices will be a much more difficult issue to gain agreement on among the many countries involved because OECD demands that developing countries shape up their tax laws "infringes on the sovereign rights of governments to set their taxes" in their own best interests, he said.

The Marshall Islands Journal, Box 14, Majuro, Marshall Islands 96960 E-mail: journal@ntamar.com  Subscriptions (weekly): 1 year US $87.00; international $213.00 (air mail).

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