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44

Accordingly,

if

strict

bank

secrecy

in

many

of

the

offshore

financial

centers

are

abolished it is anticipated that the industrialized countries will substantially increase the

amount of capital that remains within their borders, as they would have eliminated a key

element of obstruction to finding financial records of its citizens.

The critics of this such as Rep. Dick Armey and the Heritage Foundation’s Dr. Daniel

Mitchell have rightly stated that this will seriously impugn the ability of some countries

in the developing world ability to attract capital investment on a global basis. Indeed,

Rep. Armey suggests that the entire situation may backfire on the United States and other

OECD members as countries that have been traditional allies will now view this new

initiative as an all out threat on their territorial sovereignty.

Moreover, the increase of taxable income may, it is suggested, have adverse effects on

the very same governments that were supporters of the OECD’s proposal. There is a

cogent argument that the increase of taxable income may lead to radical and unnecessary

wastage of public expenditure by governments. In addition, a tighter and more fiscally

well-planned budget is widely known to be much more responsive to good governance as

governments have to be prudent in their expenditure of funds available.

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