New Report: Panama FTA promotes tax haven abuse
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(tradereform.org) Public Citizen's Global Trade Watch released a report today entitled "Panama FTA Would Undermine U.S. Efforts to Stop Offshore Tax-Haven Abuse and Regulate Risky Financial Conduct." Major points are these: * Obama campaigned on closing offshore tax loopholes and fair trade, yet bailed out corporations like AIG and Citigroup are lobbying for the administration to pass a leftover, Bush-negotiated, NAFTA-style trade agreement.* If the administration bites - and some in the administration are certainly pushing this - it will be a tremendous waste of political capital for pushing health care, climate change, and financial re-regulation.
* Moreover, the Panama trade deal would actually empower corporations with subsidiaries in Panama - and Citi and AIG are just two of the 350,000 foreign-registered corporations there - with new rights to sue U.S. taxpayers for any financial hit they take from U.S. anti-tax haven initiatives.
Why are we considering a trade deal with a notorious tax haven like
Panama?
* According to the U.S. State Department, Panama has over 350,000 foreign-registered companies, all of which face low to no taxes and
regulation.
* Foreign companies registered in Panama do not pay taxes on profits earned outside of Panama.
* Panama is one of only 11 countries that has not signed the U.S. or any other tax evasion or tax information exchange agreements (TIEAs),
which is one way nations crack down on tax avoidance.
* Many of the top 30 recipients of TARP money have subsidiaries in Panama. Because Panama does not charge taxes on “offshore”
subsidiaries, the TARP and other bailout fund recipients may be able to avoid paying significant amounts of U.S. taxes. According to Securities and Exchange Commission (SEC) filings, Citigroup Inc., AIG, Morgan Stanley and American Express all have Panamanian subsidiaries.
* Best-Tax-Havens.com lists Panama as one of the top three tax haven nations, and here’s what PanamaLaw.org says about why to
register your corporation in Panama: “Even Switzerland cooperates on income tax cases if the return is filed falsely like all income was not
declared, things were omitted or so the complaining government says. Belize has tax treaties, as do most of the so-called ‘tax havens.’
There is no better jurisdiction than Panama today!!!!!!!”
* Tax evasion costs the U.S. Treasury handsomely. According to the Office of Management and Budget (OMB), eliminating tax evasion in tax
havens could save U.S. taxpayers $210 billion over the coming decade, while the Senate Homeland Security Committee estimates a savings five times as great.
* The Obama administration celebrated legislation introduced in early March 2009 to crack down on offshore tax havens. The Stop Tax
Haven Abuse Act, which Obama himself co-sponsored while a senator, now has six Senate and 64 House cosponsors. Treasury Secretary Timothy Geithner welcomed the measure, which targets Panama and other jurisdictions, stating: “We fully support the legislation on offshore
tax centers, and we look forward to working with you as part of the broader effort to address international tax evasion and close the tax
gap.”
* But U.S. Trade Representative Ron Kirk announced in his first major policy speech that he wants to move Bush's Panama Free Trade
Agreement (FTA) through Congress “expeditiously”
* No FTA should go into effect with Panama until that country eliminates its excessive banking secrecy practices, re-regulates its
financial sector, and forces banks and multinational subsidiaries to pay their fair share of taxes.
* This antiquated agreement effectively limits financial service regulation in direct contradiction of the current bipartisan consensus
created by the meltdown that better regulation of financial services is necessary for markets to work productively.
**************Original Source: Trade Reform ORG
Date Retrieved: May 2, 2009
