U.S. G20 Nations Must Recognize Stimulus Effect of International Financial Centers in the Global Economy

Jun 09, 2010, 10:13 ET from Invest Barbados

NEW YORK, June 9 /PRNewswire/ - A survey released today by Invest Barbados showed that the majority of people in the G20 nations of the US, UK and Canada are opposed to investments in low tax jurisdictions (international financial centers) with Americans showing the strongest opposition.

This opposition changes to overwhelming support once the public are made aware of the benefits of American foreign investment on the home economy.

Although 66 per cent of Americans are opposed to US foreign investment in general, 81 per cent support it when they learn it can help create jobs at home, and 70 per cent support it when they are told it increases domestic tax revenue.

For additional survey results click here: http://files.newswire.ca/885/IB_survey_June9.doc

The survey revealed broad misconceptions among major G20 nations about the beneficial role of international financial centers in the global economy. The survey is released in advance of this month's G20 Summit in Toronto where President Obama is expected to address financial reform and global economic cooperation.

"In recent years there has been much rhetoric in several G20 countries against tax havens in a way that stigmatizes legitimate international financial centers," said Minister Darcy Boyce, Minister of State, Finance, Investment, Telecommunications and Energy for Barbados, which is located in the Southeastern Caribbean.

"The reality is that well-regulated, transparent tax-treaty based centers, like Barbados, assist in the growth of both American multinationals and their home economy in the long term. At a time when most G20 nations need sustainable stimulus structures, governments should recognize the domestic benefits of legitimate international financial centers."

In 2008, Harvard Business School supported research by Desai, Foley and Hines* to measure how expansions in US foreign business activity coincided with changes in domestic activity.

"The evidence indicates that there is a strong positive correlation between the domestic and foreign activity levels of multinational firms", said Harvard Business School professor and co-author Dr. Fritz Foley, quoting the report.

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    Summary of other key findings:
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    -   63 per cent of Americans agree it is important that executives of
        publicly traded companies explore the use of low tax jurisdictions to
        increase share value.

    -   73 per cent of Americans agree almost every country can be considered
        a tax haven for non-nationals because it wants to attract foreign
        investment by offering incentives.

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* References

Desai, Foley, Hines Report, Domestic Effects of Foreign Activities of US Multinationals, May 2008 available at http://www.people.hbs.edu/ffoley/fdidomestic.pdf

About Invest Barbados

Invest Barbados (IB) is an economic development agency of the government of Barbados. IB is responsible for attracting, winning and sustaining international investment for Barbados. The corporation is also responsible for the promotion of the export of indigenous services and helping to develop and manage the Barbados Business brand.

About the poll

Ipsos Reid Polling conducted the survey for Invest Barbados between April 29th and May 23rd 2010 in Canada, the US and the UK. Interviews were conducted among a national sample of the general population (18+) of 3071 adults. With a sample of this size, the results are considered accurate to within +/-1.8% with a 95% confidence level. Interviews were also conducted with a sample of 592 (+/-4.0%) High Net Worth individuals as defined as having financial assets equivalent to $500K or greater and a sample of 626 (+/-3.9%) business managers, owners, professionals and executives (MOPEs) with the professional group limited to those holding financial or legal position.

SOURCE Invest Barbados