Business Urges Senate Not to Block OECD Funding

Senator Orrin Hatch (R.-Utah) addressing an OECD tax conference in Washington earlier this year – the organization’s work on international tax policy has been repeatedly mischaracterized.
Senator Orrin Hatch (R.-Utah) addressing an OECD tax conference in Washington earlier this year – the organization’s work on international tax policy has been repeatedly mischaracterized.

New York, N.Y., October 11, 2006 – America’s top global companies have again urged Congress not to withhold funding for the Organization for Economic Cooperation and Development due to a misunderstanding over the nature of the 30-nation body’s work to coordinate international tax policies.

In a letter to all the members of the Senate, the United States Council for International Business (USCIB) expressed concern about language in Section 577 of H.R. 5522, the Fiscal Year 2007 appropriations for Foreign Operations, Export Financing, and Related Programs. The language would prohibit funding of activities undertaken by the OECD that are “designed to hinder the flow of capital and jobs from high-tax jurisdictions to low-tax jurisdictions or to infringe on the sovereign right of jurisdictions to determine their own domestic policies.”

USCIB said it “strongly disagrees with the thrust and implications of this language and believes that its inclusion in the bill is unwarranted and inadvisable.” The letter was signed by Peter M. Robinson, president of USCIB, and Michael P. Reilly, chair of USCIB’s Taxation Committee.

From time to time, similar language mischaracterizing the work of the OECD has found its way into pending legislation. USCIB has reminded members of Congress on several previous occasions of the valuable work being done by the OECD, both in coordinating tax policies and in other areas critical to U.S. competitiveness.

“Section 577 reflects charges by certain critics of the OECD that have been made repeatedly in recent years and that rely on misunderstanding and mischaracterization of the nature and utility of the OECD and its work,” the USCIB letter stated. Specifically, these critics have sought to portray an OECD effort, aimed at curtailing the abuse of overseas bank secrecy laws by criminal and terrorist groups, as an attempt to encourage ”tax harmonization” and the elimination of tax incentives for investment. “This charge is without factual basis,” USCIB said.

The 30-nation OECD seeks to promote growth through coordination of economic and regulatory policies between its members, all of which are democratic market economies. USCIB serves as the American affiliate of the Business and Industry Advisory Committee (BIAC) to the OECD, a group that provides the official business voice on OECD matters.

For the past few years, USCIB has joined with the OECD and BIAC to hold an annual conference in Washington, D.C., most recently this past June, explaining the OECD’s role in international taxation policy and the importance of engagement by the business community in the OECD process.

USCIB promotes an open system of global commerce in which business can flourish and contribute to economic growth, human welfare and protection of the environment. Its membership includes some 300 U.S. companies, professional service firms and associations whose combined annual revenues exceed $3 trillion. As American affiliate of the leading international business and employers organizations, including BIAC, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade.

Carol Doran Klein

USCIB letter to the Senate on H.R. 5522

More on the OECD’s work on taxation (OECD website)

More on USCIB’s Taxation Committee

Staff Contact:   Rick Minor

VP and International Tax Counsel
Tel: 202.682.7376

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