But Bahamas not labelled

By LINDSAY THOMPSON,Guardian Business Editor lthompson@nasguard.com

The Organisation for Economic Cooperation and Development (OECD), which blacklisted The Bahamas in 2000 as a "harmful tax haven," has issued a new blacklist targeting Chinese jurisdictions.

The Bahamas has escaped this list, however its Caribbean sister state Barbados has been labelled.

News out of Berlin, Germany, at an OECD global forum on taxation held June 4, confirms that the OECD issued a new blacklist that targets Hong Kong, Macao, Malaysia (Labuan), and Singapore. Also targeted are Andorra, Brunei, Costa Rica, Dubai, Guatemala, Liberia, Liechtenstein, the Marshall Islands, Monaco, the Philippines, and Uruguay.

Andrew Quinlan, president of the Centre for Freedom and Prosperity, said, "This concession is good news for tax competition, but the OECD has not given up in its effort to prop up high-tax welfare states. The new blacklist is quite disturbing."

In June 2000 The Bahamas was placed on a list of non-cooperative countries and territories, the so-called blacklist, by the Financial Action Task Force (FATF) of the OECD and described as non-cooperative in the fight against money laundering. Since then, The Bahamas has enacted a compendium of laws aimed at bringing the country's financial services in compliance with international best practices.

Noted economist Dr. Gilbert Morris, director of the Landfall Centre, says, "We did not do it at their [FATF] behest we did it in respect to ... the Patriot Act, Tax Information Exchange Agreement was also implemented."

Dr. Morris suggests, "Let us observe how Hong Kong, Singapore, Barbados, Dubai, and Liechtenstein are going to respond to the OECD. I think you would see it being completely different."

According to Dr. Morris, the OECD is struggling to find another cause to continue its financing, so is the FATF; both are funded at the pleasure of their members. "If they continue to do things, which put their members, including the United States, in a position where they have to comply with what politicians think is not good for the United States, then they will lose their funding and go by Dubai."

He told The Guardian that he, along with many of colleagues, has been explaining the move towards a more creative business opportunity as far as financial services are concerned. One being facilitating the global wealth transfer of almost $3.7 trillion from the "baby boomers" to their children.

"There is $1 trillion out there in undeclared money around the world, and facilitating that money through a private banking platform into the jurisdiction where they belong, ensuring that inland revenue and tax regulators negotiate to ensure they are tax compliant," he said. "Any country or jurisdiction that develops the expertise to advise clients in that direction would develop a great deal of prestige."

Dr. Morris has always argued that The Bahamas' financial services should also be linked to tourism, in that when there are multibillion developments, bankers and people in the financial services ought to be able to demonstrate their skills by developing the products that support those investments.

In complying with OECD initiatives, he asked, "Are we questioning the OECD? Do we care about whether the OECD is consistent with our own development plans? Have we got a set of development plans for the future that reflects global economy and the rise or fall or developments in financial services? That has always been my view."

He stressed that there are two things which are important. The various opportunities in financial services - the wealth transfer, and the merging of tourism and financial services. "That is why in deciding how we move forward, I think we have to look at the opportunities in financial services, decide where we want to go in the financial services community, see which area we want to be the leader in ... and show ourselves to be the kind of jurisdiction that is interested in ideas," Dr. Morris said.

He also reiterated his advice that small countries should join together financial services and develop their own policies for their own protection; and, he concluded, that if every country on that blacklist complied, there would be a new blacklist on something else. "We have to nip this in the bud."