The Washington-based Center for Freedom and Prosperity and the Coalition for Tax Competition issued a news release today denouncing developments in the EU’s Savings Tax Directive.
According to Andrew F. Quinlan, CFP President, *”The bureaucrats in Brussels have substantially scaled back their proposal, but the new Savings Tax Directive is still bad tax policy. The proposal is an unworkable house of cards, and the Center for Freedom and Prosperity will work with the Coalition for Tax Competition to derail this misguided tax harmonisation scheme.”*
Originally intended to have all 15 member nations (as well as six non-EU nations including Switzerland and the United States) collect private financial data about nonresident investors and automatically share that information with the tax authorities of other nations, the new proposal gives certain nations the option of imposing a withholding tax on nonresident savings and sharing the revenue with tax authorities from other nations.
**Low-Tax Jurisdictions Called to Action**
Daniel Mitchell of the Heritage Foundation says the new proposal is based on the same flawed principles of taxing economic activity in other nations and double-taxing income that is saved and invested. *”All low-tax, capital-inflow jurisdictions should reject this attack against economic liberalisation and tax reform,”* he continues.
Veronique de Rugy of the Cato Institute also condemned the new Directive, but claims that there is some reason to celebrate. She explains, *”The EU’s new scheme clearly fails to satisfy the ‘level-playing-field’ clauses in the commitment letters sent to the OECD. This means that low-tax jurisdictions around the world can reclaim their fiscal sovereignty.”*
**United States Position**
Today’s release also points out that current U.S. information sharing policies are not compatible with the Savings Tax Directive, and makes references to previous announcements by the Bush Administration that the United States would not participate in the proposed tax cartel.