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The U.N. High Level Panel on Financing for Development Recommends Making Orwell’s Big Brother Real

By David R. Burton
The Prosperity Institute

On June 25, UN Secretary-General Kofi Annan provided the report of the High Level Panel on Financing for Development to the General Assembly. He appointed the panel in December of 2000. Annan considers the report a “sold piece of work” and commends the panel for the “energy, imagination and effort that they brought to their task.” The recommendations of this report will be considered at Conference on Financing for Development which will take place in Monterrey, Mexico between March 18 and March 22, 2002.

The report recommends the creation of an International Tax Organization (ITO) (pages 27-28, 64-66). The ITO would “sponsor a mechanism for multilateral sharing of tax information, like that already in place with OECD, so as to curb the scope for evasion of taxes on investment income earned abroad.” (page 28).

The OECD harmful tax competition would require targeted small low tax countries to routinely provide all financial information on citizens and investors in those countries to the 30 industrialized OECD countries. The OECD initiative imposes absolutely no requirements whatsoever on the country receiving the information to take any steps to protect financial privacy and no requirement that any OECD country show any probable cause that wrongdoing has been committed before being provided the information. Countries that do not comply with this total abrogation of financial privacy would be subject to extraordinarily brutal sanctions. The OECD would not require its own members to comply with these rules. Large countries, like the United States, that provide tax advantages to foreign investors and honor financial privacy of its citizens and investors (at least to some degree) would be exempt from the OECD rules but would not be exempt from the United Nations ITO rules. The proposed U.N. ITO would result in every U.N. member government having routine unqualified access to the financial information of the citizens of all U.N. member states. It would undoubtedly result in governments receiving this information using it not only for tax purposes but for intelligence purposes and to oppress minorities and political opposition.

The report states:

“The taxes that one country can impose are often constrained by the tax rates of others: this is true of sales taxes on easily transportable goods, of income taxes on mobile factors (in practice, capital and highly qualified personnel) and corporate taxes on activities where the company has a choice of location. Countries are increasingly competing not by tariff policy or devaluing their currencies but by offering low tax rates and other tax incentives, in a process sometimes called ‘tax degradation’.” (page 65)

“It [the ITO] might engage in negotiations with tax havens to persuade them to desist from harmful tax competition. It could take a lead role in restraining the tax competition designed to attract multinationals – competition that, as noted earlier, often results in the lion’s share of the benefits of foreign direct investment accruing to the foreign investor.” (page 65)

Tax competition is a highly desirable limit on the degree to which governments can tax and a check on the inefficiency and corruption of government. Countries that wish to attract investment from abroad by providing low taxes have every right to do so and neither the U.N. nor the OECD should dictate tax levels to sovereign states.

“Another task that might fall to an ITO would be the development, negotiation and operation of international arrangement for the taxation of emigrants. At present most emigrants pay taxes only to their host country, an arrangement that exposes source countries to the risk of economic loss when many of their most able citizens emigrate.” (page 66)

The idea that a government should be able to impose taxes on those that have emigrated from its jurisdiction is repugnant and a violation of fundamental human rights. It rests of the premise that the state retains a right to the fruits of its national’s labor and investment income even after they have emigrated. It should be viewed as a violation of Article 13 of the Universal Declaration of Human Rights adopted by the U.N. General Assembly in 1948 which states in relevant part that “[e]veryone has the right to leave any country.”

The report recommends that a currency transactions tax or carbon (CO2) tax be imposed to finance the various schemes in recommends. (pages 26-27) Providing the United Nations with the ability to directly tax the nationals of its several states would effectively create the first global government. It would commence a process of centralization similar to that currently being undertaken by the European Union and will necessarily exact a steep price in terms of reduced freedom and limits on U.S. national sovereignty.

The report recommends that foreign aid from developed countries be 0.7 percent of GDP (or $70 billion for the U.S., a nearly 8 fold increase). (page 21) The report endorsed steps to create a global council to promote global governance because “modern globalization calls for global governance.” (pages 24, 26).


Background Information on the U.N. High Level Panel on Financing for Development

The U.N. report is available at http://www.un.org/esa/ffd/a55-1000.pdf

On December 15, 2000 UN Secretary-General Kofi Annan appointed Ernesto Zedillo the former President of Mexico, to be the Chairman of the High Level Panel on Financing for Development to make recommendations to the United Nations International Conference on Financing for Development which will take place in Monterrey, Mexico between March 18 and March 22, 2002.

Also appointed to the High-Level Panel onHarmful Tax Competition: An Emerging Global Issue is available for purchase ($16.00) and immediate download at:


This is the original OECD report that initiated the process. It provides details of the initiative and the sanctions that would be imposed on small, low tax countries.of the Russian Credit Bank;
Majid Osman, former Finance Minister of Mozambique, who now heads The OECD report Towards Global Tax Cooperation, Report to the 2000 Ministerial Council Meeting is available at:


The MOU that the OECD is seeking to impose on small countries can be found at:


An informative web site on the issue, hosted by the Center for Freedom and Prosperity, is located  This site contains press coverage on the issue, Congressional letters, links to articles and the like.

Articles of particular interest include: