Milton Friedman, the Nobel prize-winning economist, has criticized the OECD's drive against the harmful tax practices of tax havens. In a letter to George Bush, Friedman and 199 other economists have urged the US president to "pull the plug" on the OECD's initiative, claiming the organization is trying to create a "tax cartel" by forcing tax havens to "change their tax and privacy laws so that high-tax nations can more easily double-tax income that is saved and invested" .
However, the OECD has repeatedly stated that its project is intended to encourage financial transparency and the exchange of information between tax havens and other countries rather than promote tax harmonization.
According to a statement by OECD secretary-general Donald Johnson, bank secrecy in tax havens may enable taxpayers to hide illegal activities and escape the taxes established by their parliaments.
The Paris-based organization is due to publish a list by July 31 of tax havens that have refused to cooperate with its initiative, and has threatened these havens with trade sanctions. It is unclear, however, whether OECD member states will proceed with sanctions without US support.
