CaribWorldNews, WASHINGTON, D.C., Thurs. May 28, 2009: Two Caribbean ambassadors on Wednesday came out swinging at U.S. President Barack Obama`s plan to clamp down on offshore American companies.
Bahamas Ambassador to the U.S., Cornelius Smith, speaking at an Inter-American Dialogue event Wednesday was especially critical about aspects of Sen. Carl Levin`s bill that would publish a list of tax-haven jurisdictions, introduce sanctions from the Patriot Act for tax evasion, and treat offshore corporations as U.S. entities if their managers reside in the U.S.
`This legislation proposes to name, shame and otherwise take punitive action towards countries that are believed to be participating in tax evasion, without regard to the level of compliance,` said Smith.
The ambassadors also insisted that offshore activities of U.S. businesses aren`t illegal, and in some cases were designed by Congress to help companies lower their tax burden. And they also criticized proposals from Obama that would tax more of companies` foreign profits.
Barbados`s ambassador John Beale insisted that `the offshore sector feeds the tourism sector, and the tourism sector feeds the offshore sector.` As such he said, both sectors could take a simultaneous hit.
Both the Barbados and the Bahamas economies, like several other Caribbean islands, are heavily dependent on the off-shore financial and tourism sectors. Tourism has already taken a beating this year, amidst the U.S. recession, and many countries have also seen a dip in remittances to their islands.
Bermuda, another island that could be hit hard by such a plan, recently met with several congressional lawmakers to voice their concerns.
CARICOM heads had reportedly discussed their concerns over the tax haven crack down with President Obama during his recent visit to Trinidad but that has not stopped Obama from pushing full speed ahead with the plan he supported while in the U.S. senate and continued during his campaign.
U.S. senators including Florida Sen. Bill Nelson introduced comprehensive legislation in March dubbed the Stop Tax Haven Abuse Act. `Tax havens are engaged in economic warfare against the United States and honest, hardworking Americans,` they said in a news release. The legislation targets an estimated $100 billion in lost annual taxes.
At least 40 countries have been identified as tax havens by the international Organization for Economic Cooperation and Development, which claims the clandestine global network stretches beyond the Caribbean to hideaways as diverse as Panama, the Isle of Man and Liechtenstein, and in the financial centers of Southeast Asia.
But President Obama repeatedly has pointed to the Cayman Islands and its Ugland House as an unacceptable refuge for the U.S. taxpayers, saying during the presidential campaign it was the `biggest tax scam on record.` The president noted many major U.S. companies have foreign subsidiaries at the office building.