Havens in a Storm

Havens in a Storm: The Struggle for Global Tax Regulation

J.C. SHARMAN
Copyright Date: 2006
Edition: 1
Published by: Cornell University Press
Pages: 224
https://www.jstor.org/stable/10.7591/j.ctt7z6jm
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  • Book Info
    Havens in a Storm
    Book Description:

    Small states have learned in recent decades that capital accumulates where taxes are low; as a result, tax havens have increasingly competed for the attention of international investors with tax and regulatory concessions. Economically powerful countries including France, Britain, Japan, and the United States, however, wished to stanch the offshore flow of domestic taxable capital. Since 1998 the Organisation for Economic Co-operation and Development (OECD) has attempted to impose common tax regulations on more than three dozen small states.

    In a fascinating book based on fieldwork and interviews in twenty-two countries in the Caribbean, North America, Europe, and islands in the Pacific and Indian Oceans, J. C. Sharman shows how the struggle was decided in favor of the tax havens, which eventually avoided common regulation. No other book on tax havens is based on such extensive fieldwork, and no other author has had access to so many of the key decision makers who played roles in the conflict between onshore and offshore Sharman suggests that microstates succeeded in their struggle with great powers because of their astute deployment of reputation and effective rhetorical self-positioning. In effect, they persuaded a transnational audience that the OECD was being untrue to its own values by engaging in a hypocritical, bullying exercise inimical to free competition.

    eISBN: 978-0-8014-6181-1
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. ACKNOWLEDGMENTS
    (pp. ix-xii)
    J. C. Sharman
  4. Introduction
    (pp. 1-19)

    Tax is an area where states are most in need of international cooperation but least able to achieve it. This situation reflects the tension between contemporary economic changes and traditional sovereign prerogatives in a particularly stark form. From the early 1990s, policy makers in the world’s richest and most powerful countries worried that changes in the international economy might severely undermine their ability to tax. Discussions about what could and should be done to address this new threat took place within several clubs of rich states: the Group of Seven nations (G7), the European Union (EU), and especially the Organisation...

  5. CHAPTER ONE Death, Taxes, and Tax Havens
    (pp. 20-48)

    The struggle between rulers and ruled over the collection of taxes, whether for the maintenance of the city-state, the feudal domain, the empire, or the modern state, has been one of the longest and most keenly fought contests in world history. The efforts of subordinate populations to escape taxation have taken on a vast array of forms; they stand as an enduring testament to human ingenuity. From great revolutions that overthrew ancient dynasties and recurrent peasant rebellions to countless daily evasions, dissimulations, and adaptations, conflict over tax has been a prime motive of political change throughout the centuries. Charles Tilly...

  6. CHAPTER TWO Regulative Norms and Inappropriate Means
    (pp. 49-69)

    In their efforts to impose or fend off global tax regulation, both the OECD and targeted small states resorted to rhetorical strategies to advance their interests. With the huge power disparities between the two sides, small states listed as tax havens had few other options than a rhetorical strategy. For OECD member states, however, a range of other options was available and potentially more efficacious. Thus before surveying the main themes of the rhetorical contest in chapter 3, and analyzing the results in chapters 4, 5, and 6, it is important to establish why the dominant powers ruled out military...

  7. CHAPTER THREE Hearts and Minds in the Global Arena
    (pp. 70-100)

    Regulative norms exercised a crucial influence on the OECD campaign against what it defined as “harmful tax competition” by ruling out a number of options that would have been eminently practical and efficient. Instead, in delegating the campaign to the OECD, its member states opted for a rhetorical strategy, relying on moral and reasoned suasion and speech acts. This course of action involved public appeals based on generally accepted principles for targeted tax haven jurisdictions to comply with the OECD’s specified slate of reforms. It also was based on speech acts that served to impugn the reputation of those countries...

  8. CHAPTER FOUR Reputation, Blacklisting, and the Tax Havens
    (pp. 101-126)

    It has yet to be demonstrated why participants in the tax competition dispute, or in world politics generally, should care about what others think of them. In particular, why should participants be influenced by normative rules, given that these rules are not taken-for-granted axioms? This chapter and the next aim to elucidate the stakes of the struggle for the tax havens and for the OECD and to explain the different means employed by both parties. For the tax havens, the stakes were their reputations for stability and financial probity, vital for attracting investors. As discussed in chapter 5, for the...

  9. CHAPTER FIVE The OECD Rhetorically Entrapped
    (pp. 127-148)

    In international politics, as in everyday life, the reception of a statement depends as much on who is making it as on what is said. “Who says?” is a common question for people assessing the credibility of a claim, piece of information, or argument. This question of the identity of the speaker in evaluating the impact of a speech act has been raised in connection with norms. Risse holds that “It makes a difference in the UN Security Council whether the United States or Cameroon pushes a certain argument,”¹ but provides little explanation as to why. Critics of the constructivist...

  10. CHAPTER SIX Implications for Policy and Theory
    (pp. 149-162)

    The November 2005 meeting of the Global Forum on Taxation was notable for its politeness and amity. There was so little controversy that the two day meeting finished half a day early. Journalists expecting a repeat of the insults, tears, and high drama that had characterized previous meetings between the OECD and tax havens left disappointed. At the concluding press conference, the chair of the Committee on Fiscal Affairs and the Samoan Central Bank Governor (formerly a strident critic of the OECD) were relentlessly upbeat about the feats of dialogue and partnership that had been achieved. Andrew Quinlan even bought...

  11. NOTES
    (pp. 163-190)
  12. BIBLIOGRAPHY
    (pp. 191-206)
  13. INDEX
    (pp. 207-212)