Home' Trinidad and Tobago Guardian : February 23rd 2017 Contents BG20 | COMMENTARY
BUSINESS GUARDIAN guardian.co.tt FEBRUARY 23 • 2017
Business Guardian columnist,
Ronald Sanders, made a pres-
entation on the Future of Financial
Services in the Caribbean: Inter-
national Tax Competition, Glo-
balisation and Fiscal Sovereignty
on Friday February 17, in Panama.
The conference was organised by
Goethals Consulting Corp. Here's
an excerpt of his speech.
As I speak, that future is bleak.
Globalisation has been a
one-way street of imposi-
tions by powerful countries;
fiscal sovereignty has been
violated by the strong; and
tax competition remains under threat from
Indeed, if the current pattern of incursions,
restrictions and false labelling of Caribbean
jurisdictions as "tax havens," and the Caribbe-
an as a region of 'high risk', is not halted soon
and swiftly, not only will financial services
have no future, but the Caribbean region as a
whole could be relegated to the backwater of
The evidence of the last 30 years speaks for
It is clear that the major member states of
the Organisation for Economic Cooperation
and Development (OECD) have been embarked
upon a campaign to eliminate competition in
financial services from Caribbean countries
and other developing states, since the 1990s.
That campaign has never waned.
It has gained validation in the international
community by seducing or coercing some de-
veloping countries into participation in groups,
created at the behest of G7 countries, ostensi-
bly to establish globally acceptable rules on tax
information exchange, transparency, common
reporting standards, anti-money laundering,
counter terrorism financing and tax evasion.
One such group is the OECD Global Forum on
Transparency and Exchange of Information for
Tax purposes which claims 139 members and
in which the countries of the European Union
are over represented since they participate as
individual nations and as a collective body.
At the end of the day, the seemingly broad
membership of the OECD Forum is win-
dow-dressing for the menacing objectives of
the more powerful countries.
The high number of members, masks the
fact that no small nation can resist the can-
dy-coated but bitters pills with which they
In the end, sanctions hang like the sword of
Damocles over the heads of those who par-
The entire process remains one of pushing
the agenda of automatic access to tax infor-
mation and ending tax competition in keeping
with the prevailing ideology of European Union
Despite all the rhetoric of level playing fields
and respect for sovereign rights, the world re-
mains one in which might parades in the ar-
mour of right, and power camouflages itself
in the clothes of justice.
In this matter, there has been---and con-
tinues to be---the most blatant disregard for
the rules of international law; rules that have
been spelled out by the UN and upheld by the
International Court of Justice.
Those rules specify quite clearly that States
cannot intervene in areas solely within the ju-
risdiction of other States, and international
organisations are restricted from intervention
within the domestic jurisdiction of states.
Yet, the powerful nations of the world---clus-
tered in the OECD---do precisely the opposite.
And, weak and vulnerable nations are pow-
erless to respond.
In fear of sanctions, such as blacklisting by
OECD countries and the European Union Com-
mission, and penalties from the United States,
they acquiesce; surrendering their sovereignty.
At the conception of the United Nations,
world leaders committed themselves to a world
"governed by justice and moral law"
which they asserted the "pre-eminence of
right over might and the general good against
If, in the history of the UN, that commit-
ment was ever respected, it has certainly been
disregarded if not reversed in relation to fiscal
sovereignty and globalisation.
DOGS OF WAR RELEASED
And, in all this, the powerful nations have
seduced the international media into becoming
participants in their campaign.
As far back as 1834, a US Senator described
this with prescient clarity.
He said "power marks its victim; denounces
it; and then excites public hatred and odium to
conceal its own abuses and encroachments"
So, as one commentator put it: "The dogs
of war have been released on Caribbean off-
In the wake of the so-called "Panama Pa-
pers", Panama has had its share of the snarling
and bites of the war-dogs.
The truth that dares not speak its name is
that "automatic exchange of tax information";
false branding of countries as "tax havens
"while the real tax havens continue to thrive
and prosper; and sanctions against what is
described as "uncooperative jurisdictions"
is a form of neo-colonialism.
It is a campaign to dictate the tax systems
and structures of other nations for the benefit
of OECD member-states, curbing the rights
of sovereign but weak states and autonomous
This campaign has been continuous and un-
relenting, reaching an apex 17 years ago, when
the OECD launched its so-called 'harmful tax
competition' in 1999.
NO UNIFIED RESPONSE
FROM VICTIM COUNTRIES
The campaign has persisted and has been
successful not only because of the coercive
might of the powerful States, but also because
there has been no unified response from the
countries and jurisdictions which are their
Indeed, there is still no unified response.
The victim-nations lack the cohesion, the
coherence and the capacity to formulate a com-
mon position and to stand-up for themselves.
Instead, there is a scramble by individual
powerless nations to salvage what they can of
their financial services sector, and to avoid, at
all costs, the sanctions and penalties of the
So, they play the game as best they can, with
their feet hobbled and their hands tied behind
The upheaval against the discriminatory
political order that we have seen within the
affairs of nations has not yet taken root in the
affairs between nations.
There is as yet no leader ready to trump the
abuse of the last three decades.
In fact, the absence of cohesion and coher-
ence by developing countries might be obvious
in a recent decision by the government of Ec-
uador, as Chair of the G77& China at the UN,
to work for an independent UN body that will
eliminate tax havens and illicit financial flows.
There had been no prior discussion with oth-
er developing countries on this effort, and no
clear indication of which jurisdictions Ecuador
regards as tax havens.
The initiative might get the support of
developing nations if the real tax havens are
As it is, more than a little suspicion now
attaches to its motivation and its initiators,
and that is unfortunate.
But, in any event the OECD countries, in-
cluding the US, would hardly support a UN
body over which they would have no control.
They are far more comfortable with the
OECD Global Forum on Taxation that they
dominate and with their own unilateral ac-
tions such as the US Foreign Account Tax
Compliance Act (FATCA) and the blacklists
of countries they issue from time to time.
CARIBBEAN NOT A
It is well-known that Caribbean jurisdictions
have been labelled as tax havens.
There is this belief that we are rum and Co-
ca-Cola societies that deliberately hide the
ill-gotten gains of foreigners; help people to
shield their taxable revenues from tax authori-
ties; and have off-shore centres in furtherance
of the Hollywood image of swashbuckling Pi-
rates of the Caribbean.
Nothing could be farther from reality.
A "tax haven" is an area or jurisdiction where
payable tax is hidden, and where countries, in
which such payable tax originates, are prohib-
ited from receiving information on the such
That is not the Caribbean; it is other coun-
tries---some in the OECD---but not in the Car-
Low tax or no tax jurisdictions are not "tax
Countries pitch their tax levels in accordance
with the imperatives of their economic and
For instance, with a corporate tax rate of 22
per cent, Ecuador is 7 per cent lower than the
average of the Americas and considerably less
But Ecuador would not consider itself a tax
In the case of my own country, Antigua and
Barbuda, we are a low tax jurisdiction; indeed,
we abolished income tax completely last year
on the strong belief in two things: first, that
the costs of pursuing such taxes outweigh the
benefits, and second that money left in peo-
ple's pay packet will promote economic growth
through spending and saving.
With growth of 4.3 per cent last year, Antigua
and Barbuda was the fastest growing economy
in the Caribbean and the fourth fastest growing
economy in Latin America and the Caribbean.
But, Antigua and Barbuda, like most Car-
ibbean countries, is not a tax haven.
COMPLY WITH RULES
All Caribbean countries have had to make
themselves compliant with the demands of
the countries of the OECD as a group and in-
Contnued on Page 21
Widening the pathways
to open societies
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