Member of Parliament for Fort Charlotte

Wednesday 25th March 2009

The Prime Minister, in a Communication to Parliament today on the “Expansion of Network for International 333Development (“OECD”) for greater standards of transparency and exchange of information by countries offering financial services, failed to provide a national strategy to defend the financial services industry in The Bahamas from unwarranted attacks from the OECD and the United States.

The Prime Minister stated that“The Bahamas is ready to negotiate and conclude appropriate arrangements to accommodate these OECD standards.”  The Communication neither reports any specific measures undertaken by the Government in response to the immediate threats from the OECD and the United States nor does the Government provide any strategy for dealing with these threats.

The Prime Minister self congratulated himself for the removal of The Bahamas from the Blacklist of the FATF, but failed to acknowledge that it was the Christie administration which succeeded in having The Bahamas removed from the Monitoring List of the FATF in July 205, in passing the Anti-Terrorism Act, in establishing the Tax Information Exchange Agreement with the United States and generally improving international cooperation.

It is regrettable that the Government has responded so slowly and inadequately to the current external threats facing the financial services sector of The Bahamas.

The Communication incredibly makes no mention of the “Stop Tax Haven Abuse Act”, currently before the United States Senate sponsored by Senators Leven, Coleman and Obama (as he then was), which names The Bahamas as a “tax haven engaged in harmful tax practices” which should be punished.  As recently as the 3rdMarch 2009, Secretary of the Treasury Timothy Geithner announced to the House Ways and Means Committee that President BarackObama’s administration supports the said Bill.

Most countries labeled in the Bill as “tax havens engaged in harmful tax practices” have undertaken a vigorous lobby effort in the United Statesto have the names of their countries removed from the Bill and to inform the White House, Congress, Senate and the media in the United States of the inaccurate assumptions and conclusions contained in the Bill as they related to their respective countries.  In response to the Tax Haven Initiative of the OECD, Austria, Andorra, Belgium, Monaco, Switzerland, Luxembourg, Liechtenstein, Singapore, Cayman Islands, British Virgin Islands and Bermuda, amongst others, have all taken aggressive measures to address the OECD standards for transparency and exchange of tax information.

Mysteriously, The Bahamas has been and remains silent on this issue, other than to say today that it is “ready to negotiate and conclude appropriate arrangements to accommodate these OECD standards.”

The OECD will meet in the United Kingdom on the 2nd April 2009 to address, amongst other things, the issue of offshore centres engaged in what they term as “harmful tax practices”.  One standard of satisfactory tax exchange advanced by the OECD is the existence of at least 11 tax information exchange treaties.  The Bahamas has only one tax information exchange treaty with The United States.  To meet the current OECD standard, The Bahamas will have to enter ten (10) additionaltax information exchange treaties with other OECD countries.

From the Communication of the Prime Minister, it would appear that The Bahamas is like an ostrich with its head in the sand, hoping that the danger from the Group of 20 and the Stop Tax Haven Abuse Bill will, like a hurricane, spare The Bahamas from a direct hit.

I call upon The Government to take a more proactive posture and present to the Parliament and the Bahamian people with a rational plan to defend, protect and preserved the financial services industry in The Bahamas from the unwarranted attacks from the OECD and the United States.  To do any less would amount to a betrayal of the national interest of The Bahamas.

Therefore, I recommend that such a national strategyin response to these external threats to financial services be developed, in consultation with the financial services industry and civil society, andshould include the following:

1.   Concluding at least ten (10) tax information exchange agreements withselect OECD countries (based on mutual interests such as double taxation and investment treaties),other than the United States, since the Government claims that its acceptance of  the “…international standards promoted by the OECD is a matter of public record.”

2.   Lobby all OECD countries, especially the White House, the Senate, the Congress (including the Black Congressional Caucus) and media in the United States to stop the passage of the Stop Tax Haven Abuse Bill and other punitive measures from the OECD against offshore financial centres such as The Bahamas.

3.   Invest in a Policy Research Unit at the College of The Bahamas to monitor the global economy and trends, assess their impact on the financial industry of The Bahamas, assess the effectiveness of public policy to reposition financial services in The Bahamas to the changing global regulatory environment and propose policy recommendations to improve the competitiveness of The Bahamas as a centre of wealth management.

4.   Review and restructure the tax system of The Bahamas with a view to making The Bahamas more competitive in the changing global economy.