There has been a lot of noise over the issue of tax laundering and tax havens. While much of the focus of publicity will be on stopping money-laundering associated with criminal activities, the subtext of it all will be to restrain tax competition. Despite the initial aim to limit "harmful tax competition," a repackaging spin puts the purpose as a means to increase regulatory rigor and enhance fiscal transparency.
European finance ministers raised the issue of tax-haven status during last month's G7 meeting. In coming weeks, members of the Organization for Economic Cooperation and Development are to meet in Paris to consolidate plans for a crackdown on so-called tax havens. One sideshow will be attacks on Bush for withdrawing its support from yet another (flawed) international protocol.
As it is, in June of last year, the OECD applied the "stick" when it published a blacklist of 35 tax havens and threatened potential national economic sanctions if they failed to agree to share fiscal information by this July. Now a "carrot" is on offer to tax havens to encourage them to improve financial transparency, cooperate with overseas tax authorities and eliminate laws that provide advantages to international investors.