Monday, March 16, 2009

Dominica PM says US tax-haven legislation could spell disaster for Caribbean countries

By Thomson Fontaine

caricom heads of government
CARICOM Heads of Government at the Twentieth Inter-sessional Meeting of the Conference of Heads of Government of the Caribbean Community, 12 March 2009, Radisson Fort George Hotel, Belize City, Belize.

Legislation before the United States Congress to clamp down on foreign tax havens, if passed could “pose a serious blow to CARICOM member states.” This, according to Prime Minister Roosevelt Skerrit.

The bill referred to as the Stop Tax Haven Abuse Act names Dominica as one of the countries on an initial list of 34 offshore Secrecy Jurisdictions. Several other Caribbean countries including the Bahamas, Barbados and St Lucia are also included. The initial list of jurisdictions was taken from IRS court filings identifying them as probable locations for U.S. tax evasion.

In response to the action of congress, the Heads of Government of CARICOM have set up a sub-committee to hold consultations with the United States Congress over the proposed legislation.

According to Prime Minster Rosevelt Skerrit of Dominica, “we will engage the President of the United States, Congress and the American public in order to ask that they reconsider the bill in its entirety.”

Skerrit, who is also on the sub-committee along with the finance ministers of The Bahamas and Barbados, called the draft bill “unwarranted.” He went on to say that “it was difficult to understand that any financial transactions can take place with the Caribbean if the bill were to become law.”

The bill aauthorizes special measures against foreign jurisdictions, financial institutions, and others that impede U.S. tax enforcement. It is expected to pass in the United States Congress and has the support of President Barack Obama, who was one of the initial sponsors of the legislation in 2007.

Secretary of the Treasury Timothy Geithner recently told the House Ways and Means Committee “we fully support the legislation ... on offshore tax centers, and we look forward to working with you as part of the broader effort to address international tax evasion."

The administration's support greatly improves the chances of offshore tax legislation becoming law this year, said Michigan Senator Carl Levin, chief sponsor of the Senate bill.

"It also sends a strong signal to tax havens that this administration is not going to tolerate the kind of offshore tax abuses that have been draining $100 billion a year from the U.S. Treasury," Levin said in a statement.

In 2002, the United States Treasury issued an aadvisory against Dominica warning financial institutions in the US against conducting business with suspicious offshore banks operating out of Dominica. The warning was issued following the blacklisting of Dominica by the Financial Action Task Force of the Organization of Economic Development.

Although the advisory was withdrawn in May 2003, it had a chilling effect on Dominica’s offshore sector and most of the banks closed down. Dominica’s offshore sector is now just a shadow of its former self.
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Comments:
Skeritt and CARICOM can forget about going to Washington to lobby. This bill is a done deal. Let the Caribbean governments focus instead on building sustainable industries and opportunities for their people rather than relying upon quick dirty money!
 

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