Intervention by Prime Minister Lester Bird on OECD
at 14th Intersessional Meeting of CARICOM Heads of Government
in Trinidad on 16th February 2003

When this time last year, Antigua and Barbuda decided to commit to working with the OECD on its "Harmful Tax Competition Initiative", we did say on the basis that whatever standards or practices would be required of Antigua and Barbuda would be applied and enforced equally in other jurisdictions, particularly those of the OECD.

This was a sine qua non of our commitment to participate in the OECD Global forum at which standards and practices would be elaborated and agreed.

Central to the OECD's "Harmful Tax Competition Initiative" is the requirement for exchange of information across borders on civil matters, particularly those related to tax.

Contrary to the manner in which the OECD media [and to some extent our own] has characterised our Caribbean jurisdictions as "tax havens", the reality is that the principal tax havens of the world are: Switzerland, Belgium, Luxembourg, Austria, the United States, The Netherlands and the United Kingdom. In the context of scale, Lichtenstein and Monaco are also larger havens than the jurisdictions of the Caribbean.

In these countries, non-national are not required to pay tax on their interest income on savings in bank accounts or on dividends earned from stocks, shares or other investment portfolios. While the non-payment of taxes on such income is important to the institutions in the United Kingdom, the United States, in jurisdictions like Switzerland, Belgium, The Netherlands and Luxembourg confidentiality is of much greater importance.

In other words, what makes Switzerland, Belgium and Luxembourg attractive to their account holders is secrecy.

The OECD Harmful Tax Competition Initiative was always driven by the European Union countries, particularly France and Germany. But it was always threatened by Switzerland, Luxembourg and The Netherlands.

Austria, Belgium and Luxembourg had always made it clear within the European Union that they would not agree to an EU directive on taxing interest income, until Switzerland (which is not an EU member) is made to comply with the same rules.

It was in this context that the EU countries seized upon HTCI within the OECD as a means of including Switzerland which is an OECD member.

In turn, Switzerland resisted the idea in the OECD pointing to competition from jurisdictions such as ours. This is why the OECD then moved to include Caribbean and Pacific jurisdictions and other non-members of the OECD in their net.

In the worst form of bullying, combined with threats of sanctions, and accompanied by a media campaign designed to demonise our jurisdictions, the OECD tried to force us into compliance.

In the end, those of us, who committed to work with the OECD, did so on the basis of a level playing field. In other words, the requirement for exchange of information had to apply to all, and especially Switzerland.

When a few weeks ago, the EU Finance Ministers decided that Austria, Belgium and Luxembourg would not be required to exchange information, and further that the requirements would no longer be applied to Switzerland, Lichtenstein and Monaco, the principle of a level playing field was abandoned.

They have opted for the application of a withholding tax which would be shared between the EU countries concerned and Switzerland, but "confidentiality/secrecy" would be preserved.

Antigua and Barbuda has made it clear that as far as we are concerned it is patently and blatantly clear that a level playing field no longer exists, and we can see no good reason to continue to respond in any way to the OECD.

We have called for a meeting of the OECD Global Forum to discuss the implications of the EU decision and to determine whether or not the HTCI is not now dead.

We have received written support in this from St Vincent and Cayman Islands in the Caribbean, Panama and several Pacific countries.

The OECD has acknowledged the Antigua and Barbuda position and they have said that they are trying to organise a meeting of the Global Forum.

We expect, however, that the objective will be to apply a double-standard. In other words, to try to continue to require exchange of information and other standards and practices from our jurisdictions while letting their own States off-the-hook.

Antigua and Barbuda will resist this, in its own interest and in the interests of all Caribbean States. However, if we are to be successful, we will need other Caribbean jurisdictions to adopt a similar position.

We therefore propose the following:

1. CARICOM decide not to participate in any further work of the OECD Global Forum until there is a meeting to discuss the issue of a level playing field.

2. At such a Global Forum Meeting, the Caribbean stand firm in insisting that in the absence of a level playing field, the OECD HTCI should be abandoned.

3. This Conference include in its communiqué a reference to this matter expressing the Caribbean's view that a level playing field no longer exists with regard to the OECD HTCI, and endorsing the call for an early meeting of the OECD Global Forum to determine the future of this matter; and

4. This Conference agrees to write to the Commonwealth Secretary-General indicating our view that the Commonwealth position on this matter has now been violated, and asking him to communicate the Caribbean's concerns to the Secretary-General of the OECD, Mr Donald Johnston.