Panama kicks OECD's Butt

What can I say. I'm very impressed with the letter written by our Minister of Economics and Finance, Norberto Delgado to the OECD.
For those who haven't been following the OECD's harmfull tax directives or know about OECD. I'll give a quick run down.
The OECD is basically a club of developed nations. Think EU, a few others European countries, USA, Canada, Australia, Mexico, Japan and Korea.
A few years ago they got the idea that they didnt like tax havens as their citizens where using them to avoid taxes. What they decided to do was to create a large black list of all tax havens and force them to change their laws. The euphemism the OECD burocrats in Paris invented for this was "Unfair Tax Competition", they wanted a "level playing field".
The original black list contained 35 or so countries. Most negotiated for a year or so with the OECD and got taken off in exchange for "information exchange" agreements.
Panama was on the original list, but not longer as they signed an agreement with the OECD. The financial industry in Panama is exceptionally important to the country and is far more diversified than people might think.
Norberto's letter was concerning the fact that the OECD have given waivers to their own member countries Luxembourg, Austria, Belgium and Switzerland about the information exchanges. In other words these countries do not have to share information when non member countries like Panama must.
The reason behind this waiver was that financial services provide an imporant part of these countries economy and they therefore can't afford to exchange this information.
Now is that hypocritical or what? What about Panama, Cayman Islands, Antigua, Bahamas? Financial services are extremely important for employment in these countries as well.

I've pasted Mr Delgado's letter below, which I originally saw at Tax-news.com

Republic of Panama
Ministry of Economy and Finance
Office of the Minister

Panama, 28th January 2003
Note No.101-097 DMEyF

Mr. Donald Johnston
Secretary General of the Organization for Economic
Cooperation and Development
2 Rue André Pascal
75775 Paris, Cedex 16
France

Dear Mr. Secretary General :
The Government of the Republic of Panama writes to you once again to address the matter of the European Union's directive regarding savings that was approved by the Council of Ministers of Economy and Finance of the fifteen member nations last week.

You will remember that last December our Vice Minister of Economy, Mr. Domingo Latorraca, had advised you of the Government of Panama's deep concern in light of the preferential conditions that such exchange of tax information directive would grant to Austria, Belgium and Luxembourg, as well as to Switzerland (which does not form part of the EU), all these being members of the OECD.

Upon confirming that the proposal made by the above EU president has been basically adopted such that the above-mentioned countries will not exchange tax information on savings accounts with other EU members - nor with OECD members - until 2010, the Government of Panama reiterates its rejection of such action, as it directly violates the principle of equality envisaged in the often discussed concept of a "level playing field" that is the essential basis for the undertaking signed by my government, in good faith, to participate in the studies of the OECD's effective tax information exchange project at its Global Forum.

This situation is even more untenable upon confirmation that one of the arguments put forth to justify the granting of a "special" treatment to these three EU members by their community partners is the defense of their economic interests as providers of international financial services.

My Government has learned that the government of Antigua and Barbuda and that of Saint Vincent and the Grenadines have asked the Secretariat General of the OECD to call, as a matter of urgency, a meeting of the Global Forum in order to assess the future of the studies on the matter of tax information in light of the serious damage that a measure such as that adopted by the EU implies for this multilateral effort, as well as the damage that would be done to all the participants who have in good faith signed undertakings regarding this matter and whose economic interests as providers of international financial services are equally important, particularly since they are for the most part developing countries.

The Government of Panama supports the proposal made by Antigua and Barbuda, since technical studies such as those of the Ad Hoc Group on Accounts are
being made on premises that have presumably been established on a political level, such as absolute compliance with the principle of equality or of a "level playing field". These studies cannot be continued inasmuch as there is not absolute certainty that the conditions shall be equal for all participating jurisdictions.

Consequently, the Government of Panama joins in the statement made by the Government of Antigua and Barbuda and evidences its view, in light of the change in the conditions set down for carrying out the studies of the Global Forum, that it does not deem it appropriate to respond to any document sent by the OECD until such time as a meeting of all OECD countries and all non-OECD jurisdictions that participate in the Global Forum shall be held in order to assess and decide, together, whether there are sufficient grounds and guarantees from all the OECD countries so as to allow the studies on the effective exchange of tax information project to continue.

We look forward to your reply on this matter and remain

Yours sincerely,
(sgd.) Norberto Delgado D.
Minister of Economy and Finance