by Ruth Odia
A deeply controversial global tax information sharing regime has been unveiled by the Organization for Economic Cooperation and Development (OECD).
Inspired by a U.S. tax scheme that was adopted in 2010 known as the Foreign Account Tax Compliance Act, or FATCA, the scheme, whose key component would be information sharing among governments, would require the collection of sensitive personal information on individuals from banks and other financial institutions in their jurisdictions, which information would be automatically exchanged between all participating governments in the scheme.
Developed at the behest of the G-20, and lead by the OECD, the tax scheme is a multilateral form of the American FATCA agreement. Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration describes the scheme, which is funded in large part by U.S. taxpayers, as a sort of “global taxman.”
OECD leaders admitted in a brief that FATCA is a key catalyst for automatic exchange of information and that FATCA has the ardent support of central bankers and G-20 countries. OECD hopes to have the controversial international tax-information regime in place by September of 2014.
OECD Secretary General Angel Gurria, said “Globalization of the world’s financial system has made it increasingly simple for people to make, hold and manage investments outside their country of residence.” Referring to the new tax-information system as “a real game changer,” he added that this new standard on automatic exchange of information would ramp up international tax co-operation as well as put governments back on a more even footing as they seek to protect the integrity of their tax systems and fight tax evasion.
Angel Gurria also reported that the organization was working closely with interested countries and stakeholders to design global solutions to global problems for the benefit of governments and businesses around the world.
If and when it goes into effect, governments all over the world will have instant access to citizens most sensitive financial records including bank accounts, assets, income, insurance, interest paid, capital gains, property ownership, investments, sale of real estate, changes of address and much more. Authorities would not require any warrants to search through personal information in search of potential crimes. Financial privacy would be a relic of the past.
Compliance costs are expected to be massive. National governments must obey the global tax schemers — and taxpayers and consumers must pay for the schemes — or face consequences. If authorities do not bow down to the OECD demands, they can be blacklisted as “uncooperative,” or worse, with economic sanctions being the implicit threat.
The repercussions for Americans, locally and abroad, as well as for people around the globe — especially when it comes to financial privacy and economic freedom — would be crushing. Critics are already warning of economic and human devastation when it happens. Analysts are also sounding the alarm on the vast array of possible abuses and problems that could result from the scheme. Very worrying is the collaboration with member tyrannical regimes famous for human rights abuses.
Andrew Quinlan, President of the Center for Freedom and Prosperity observed that “The global tax bureaucracy is determined to implement policies that benefit the global political class at the expense of taxpayers and domestic economies, and are further prepared to punish jurisdictions that choose not to comply with their demands.”
Already, owing largely to FATCA, machinations are underway to force U.S. financial institutions to gather data on their foreign clients to share with foreign regimes. Analysts say the effects of such a scheme could prove devastating to American banks as foreign capital flees the United States, ravaging the U.S. economy in the process. Multiple experts have warned about the prospect, but Congress has largely refused to provide oversight.
Not surprisingly, the scheme has the backing of Socialist International, the premier alliance of socialist and communist political parties around the world. The powerful coalition, which met last year in South Africa, called for global taxes, a planetary currency, and a global tax information-sharing regime in one of its most recent resolutions.
Social International also said there was a pressing need to dismantle tax havens, close loopholes and create automatic tax record exchange systems and that this could only be achieved under the auspices of a new Global Financial Architecture, one that would significantly increase transparency and strengthen enforcement of the regulations.
Over 40 governments, including Argentina, Brazil, China, India, the Russian Federation and South Africa, have already committed to adopt the controversial scheme. In a joint statement, participating countries endorsed the scheme and called on other countries and jurisdictions to commit to join this initiative at the earliest opportunity with the aim of rapidly creating a truly global system of automatic information exchange.
Sounding suspiciously like a threat, the participating governments also claimed that only countries with rulers who submit to the draconian new regime will “prosper in the future.” In other words, join the global tax regime and violate the privacy rights of everyone in the jurisdiction, or suffer financial penalties. As critics say, the nightmare begins.