May 2001 Selected News Clips

FINGERPRINT FEAR

DNA fingerprints used by police contain information about the health of the suspect, with huge ethical implications.

Every time the police take a saliva or blood sample for DNA fingerprinting they are unknowingly collecting potentially sensitive genetic information concerning the health of the suspects they are testing.

A British team has discovered that the standard DNA fingerprints used by police around the world contain a subtle signature which can be linked to a person's susceptibility to type 1 diabetes.

The unexpected finding strikes at the heart of one of the sacred principles of DNA forensic testing - that tests should identify people and link them to crimes but reveal nothing of significance about their genetic make-up, family history or health. That way fingerprints can be collected from suspects and stored on police computers without invading anyone's medical privacy.

The link between the DNA signature and diabetes was confirmed by a team led by John Stead of the University of Leicester last year, but buried in an academic paper on genetics that made no comment about the implications for forensic science.

Team member Alec Jeffreys, the scientist who invented DNA fingerprinting, says he has decided to go public with the finding now because of the British government's plans for a huge expansion of DNA fingerprinting. He believes further troubling links between DNA fingerprints and disease will emerge as scientists probe the completed draft of the human genome.

ATTORNEYS GENERAL: LAW LAGGING BEHIND TECHNOLOGY

For Arizona's top law enforcement officer, protecting consumer privacy online is as hard as combating machine gunfire with a lance-wielding knight on horseback.

States have fraud-protection laws they could use to pursue egregious offenders, but little for run-of-the-mill Web sites. Attorney General Janet Napolitano thinks having an Internet-specific privacy law would offer consumers basic protections and make prosecutions easier.

Other attorneys general echoed Napolitano's frustrations this past week at a National Association of Attorneys General meeting devoted to online legal trends. Their chief complaint: The law simply cannot catch up with technology.

"It's this unsettling feeling that the ground is shifting (from) under our feet too fast for us to understand what's happening," said William Sorrell, Vermont's attorney general.

What to do remains open to debate.

LIVE FROM N.Y.: SECURITY CAM HAMS

A man prostrates himself on a busy sidewalk in midtown Manhattan, praying to a security camera while foot traffic swirls around him.

"I Want God to See Me," says a large cardboard sign propped up behind him.

The man is Bill Brown, and he's protesting the presence of a surveillance camera outside St. Patrick's Cathedral.

The number of security cameras in the Big Apple has doubled in the past three years to more than 5,000, according to folks like Brown who have been trying to keep tabs on their proliferation.

But while some privacy activists advocate donning Richard Nixon masks to befuddle camera operators, and others suggest blinding the electronic eye with a paintball gun, Brown protests the cameras by drawing attention to them.

He directs the Surveillance Camera Players, a group of anarchists and libertarians that stages avant-garde skits in the camera-lined streets of New York City.

"The cameras violate the Fourth Amendment protecting citizens from illegal search and seizure," said Brown, who has a Ph.D. in American literature and works as a proofreader.

PROFESSOR CITES EVIDENCE THAT GUNS STOP CRIMES

When Thomas Shim moved to Augusta, Georgia, and opened up a small convenience store more than four years ago, he planned to build his business peacefully.

But that plan was abruptly shattered by violence when he was robbed at gunpoint in his store. His wife Yougim was shot and wounded in the robbery.

Fed up and scared, Shim bought a .38-caliber pistol for protection.

That decision that may have saved his life, because in July of 1999, Shim's store was robbed at gunpoint once again. Fearing for his life, Mr. Shim shot and killed the armed robber, a career criminal named Anthony Boyd.

"If I didn't have a gun I would have been killed," Shim told Fox News. "I grabbed my gun, clicked it ... and shot him. At that moment, I had to survive."

Shim's story is one of many cited in research by Yale University Professor John R. Lott Jr., author of More Guns, Less Crime.

Lott says his research shows that guns used defensively stop about 2 million crimes a year, five times the amount of crimes in which guns are used.

"No one has found bad effects resulting from right-to-carry laws," Lott said, citing instances in which the mere presence of a gun played a key role in preventing crimes.

"When guns are used defensively, most of those times, the gun is not fired," said University of Georgia Professor David Mustard, who collaborated with Lott.

Lott says most media reports ignore the life-saving aspects of guns. In his research, he compiles instances across the country where the simple brandishing of a gun prevented crime.

OFFSHORE -WHAT DOES THAT MEAN?

As taxes keep on rising, the offshore sector has grown until an estimated half of the world's money is stashed there. But how how do you define "offshore"?

ISLE OF MAN OVERBOARD?

DOUGLAS. Manx authorities are imposing new financial disclosure laws stricter than in the US or UK. And VALMET’s CEO keeps on singing to the police about his clients.

COOK ISLANDS’ PIONEER LAWS

This well known tax and asset haven has led the way in offshore financial statutory enactments. Background at More on this story here.

CANADA’S TOUGH OFFSHORE TAX RULES

ONTARIO. David LESPERANCE, explains how Canada's tax laws impact offshore finances.

And here is what Canadians are thinking about taxes these days.

E.U. LEADERS WANT EUROPEAN TAX

BRUSSELS. Not content with individual national taxes, EU bureaucrats now hunger for a Europe wide tax. But not everyone agrees with pan-European taxes.

F.A.T.F. FLATULENCE

The Financial Action Task Force says the best way to prevent dirty money laundering is to eliminate financial privacy globally.

F.B.I. SPIES ON BANK ACCOUNTS

New documents disclose FBI's Web surveillance of bank accounts using Carnivore seeking possible money laundering.

US civil liberties and privacy rights groups urge US Atty. Gen. ASHCROFT to curb FBI Carnivore violations of electronic privacy.

CELL PHONE TAPS INCREASE

Wireless devices accounted for 60% of 1,190 wiretaps authorized by US state and federal courts last year.

A new device called an “IMSI catcher”, switches off cell phone encryption without users knowing it, allowing secret police eavesdropping and location tracing.

PRIVACY TIPS

Top 12 ways to protect your Online privacy.

A better Anonymizer? This one leaves no browser records of your Web travels and frustrates Online official censoring used in China and Australia. As used by the US CIA!

THREAT TO THE AMERICAS

Pierre LEMIEUX, economist and professor at the U. of Québec at Hull, Canada, lays bare the real agenda of the recent Quebec Summit of the Americas; a cartel whose main export could be statism and lost liberties.

Summit of the Americas free trade deal agreed.

MANX CASH REWARDS & FAIRIES

Time magazine (Europe)'s "Letter from the Isle of Man: A tax haven that mixes Celtic tradition with sophisticated money." More on this story here.

Special feature: The Isle of Man - Life After the OECD

NEW ZEALAND “BUSINESS” COLUMNIST

AUCKLAND. A statist writer from down under wants even more income taxes imposed on NZ tax exiles.

OFFSHORE INFORMATION

Low Tax Net provides information for 55 offshore and haven nations, here.

WORLD BANK WEALTH STATS

Tax havens are richest per capita. UK way down at 29th place!

US REP. RON PAUL SAYS REPEAL INCOME TAX

A bill in Congress by libertarian Rep. Ron Paul (R-Tex) repeals the 16th Amendment and bans "taxes on personal incomes, estates and/or gifts."

CREEPING DEPENDENCY IN AMERICA

Affluent Americans crave cradle-to-grave security "guaranteed" by government.

SAFE TRAVEL OFFSHORE

Pack common sense along with your passport.

WORLD’S MOST DANGEROUS PLACES

Country list of worlds dangerous places.

WORLD TIME AND MONEY

World currency converter, here.

Local time by nations & by major cities, here.

MEASURE WOULD REPEAL 16TH AMENDMENT

Congressman seeks end to income tax, clarifies duties of government.

A proposed constitutional amendment by Rep. Ron Paul, R-Texas, speaks for itself: "Three years after the ratification of this amendment, the sixteenth article of amendments to the Constitution of the United States shall stand repealed and thereafter Congress shall not levy taxes on personal incomes, estates, and/or gifts."

The 16th Amendment, ratified in 1913, allowed the federal government to levy a tax on all incomes. House Joint Resolution 45, dubbed the "Liberty Amendment," would strip the federal government of that authority.

"America existed for nearly 140 years without an income tax," Paul concluded. "The federal government generally adhered to its strictly enumerated constitutional functions during that time, operating with modest excise revenues. When Congress introduced the 16th Amendment, it opened the door to the era of big government. This amendment would close that door."

Many Americans believe they are overtaxed, and investigations into the Internal Revenue Service in recent years have shown the agency to be abusive in the exercise of its authority to collect taxes. The tax code increasingly faces grass-roots legal challenges, and interest in flat-tax and national sales tax proposals is at an all-time high, giving Paul's proposal enormous popularity among disgruntled taxpayers and those simply weary of big government.

While there have been several legal challenges to the veracity of the 16th Amendment's ratification, all such challenges have been rejected by the courts. Plaintiffs argue then-Secretary of State Philander Knox committed fraud when he declared the amendment had been properly approved by the appropriate number of states. (Editor's note: For a more in-depth discussion of this argument, see the April issue of WorldNetDaily's monthly print magazine, WorldNet.)

The Texas congressman criticized his colleagues' frequent manipulation of the massive tax code through various exemptions, credits, deductions and the like.

"America clearly is ready for sweeping tax reform, yet Congress remains focused on rewarding certain constituencies by forever making complex small changes to the existing tax laws. The Liberty Amendment is an attempt to eliminate the system altogether, forcing Congress to find a simple and fair way to collect limited federal revenues. Most of all, the Liberty Amendment is an initiative aimed at reducing the size and scope of the federal government," he wrote.

If approved, the measure will accomplish that goal through more than elimination of the federal income tax, which is the last of four sections in the bill. Comprised of only four sentences in all, the resolution's first section prohibits the federal government from engaging in any business "except as specified in the Constitution." The measure also states that all "activities" of the U.S. government that violate the Constitution will "be liquidated and the properties and facilities affected shall be sold" within three years of the resolution's adoption.

Critics of HJR 45, however, believe the government is acting within the boundaries of the Constitution by providing public education, welfare services, foreign aid and numerous other programs. But Paul says the sweeping nature of such programs has made government too involved in the lives of individuals.

"The income tax has given government a claim on our lives," Paul stated. "It has enabled government to expand far beyond its proper limits, invade our privacy and penalize our every endeavor. The Founding Fathers never intended an income tax, and they certainly would be dismayed to know that Americans today give more than a third of their income to the federal government."

In order for HJR 45 to take effect, according to the text of the measure, the resolution must be adopted by three-fourths of the states in the Union within seven years of the date Congress adopts it. The most recent constitutional amendment, which was proposed by the First Congress on Sept. 25, 1789, and was first adopted by Maryland in December of that year, was ratified on May 18, 1992. It provided that congressional pay raises could not take effect until after the next election.

MIDDLE CLASSES PAY FOR GET-THE-RICH FOLLY

In the late 1960s Wilbur Mills, the mighty chairman of the House ways and means committee, held show hearings to expose all the ways the rich got away with paying fewer taxes.

The problem, it was said, was that progressivity was not working properly. America, to be sure, had a structure of graduated rates, but somehow the wealthy were not paying those rates. Instead, mysteriously, a number of loopholes had worked their way into the tax code. Often, these loopholes were being used in ways their authors had never intended. The system had become too complex, over-engineered. And the loopholes were so numerous that some of the wealthy wound up paying a lower rate of tax than some of the middle class.

Joseph Barr, the Treasury Secretary, was also intent on exposing the evil rich. As Julian Zelizer recalls in his book Taxing America, a biography of Mr Mills, Mr Barr published a list of shame showing that 155 wealthy American families paid no income tax at all, even though they earned Dollars 200,000 or more.

So the Nixon administration and Congress came up with a solution. They would get the rich by making a complex system even more complex. They did this first of all by taking numerous steps to strengthen the progressive rate structure. They also created an alternative tax regime, a sort of fiscal penalty box, to punish rich guys who claimed "too many exemptions" or "too many preferences" by sending them there. In that regime, many of the usual loopholes would not be allowed. Thus the Alternative Minimum Tax was born.

The programme's authors were sure that their gizmo was watertight, that this time they had finally managed to trap the errant rich guys. And trapping the rich guys was their paramount goal. Although today Washington's budgeteers report that killing the AMT would cost hundreds of billions of dollars, it was not originally a revenue-getting exercise. In other words, the plan was pure behaviouralism.

Fast forward to today. Just as in the old days, we have a get-the- rich progressive rate structure. Just as in the old days, people are screaming that the rich are not paying enough taxes. And just as in the old days, government's special devices are not working as advertised.

Indeed, the star failure turns out to be the AMT. The scholarly journal Tax Notes reports that the National Association of Enrolled Agents, a group of tax professionals which negotiates with the Internal Revenue Service on behalf of taxpayers, has honoured the AMT with the label "Tax Headache of the Year".

The charges against the AMT are numerous. Rather than precision-bombing the rich, as was originally intended, the AMT is hitting many of the middle class. It is hurting families, who may not claim "too many children" for fear of being sent to the penalty box.

It is also murdering the high-technology crowd. That is because this group often takes advantage of their companies' incentive stock options, or ISOs. And when workers exercise those options, the difference between the fair market value on the day of exercise and the strike price is often taxable under the AMT regime. In other words, because of the AMT and the market correction, these folks pay taxes on income they never had in the bank.

Still, once again Congress is treating the matter in the old fashion and holding hearings. They are ignoring what should by now be clear: the real problem is progressivity, which inevitably generates loopholes. Lawmakers have instead come up with a wonderful set of mini-solutions for the AMT's failures, all very technical and reminiscent of the late 1960s' efforts. Indexing the AMT, they say, would help the middle class escape the ugly levy. Rejigging the AMT preference list would also do much to make the AMT fairer.

Zoe Lofgren, a California Democrat, has proposed special narrow legislation to target the dread ISO problem. "My constituents are a lot more interested in this bill than they are in marginal tax relief for people in the top 1 per cent bracket," she says.

If this is so, those constituents deserve their AMT punishment, and more. For if the AMT fable reveals anything, it is that "getting the rich" nearly always backfires. We have met the rich, and they are us.

SWISS BANK SECRECY HANGS IN BALANCE

The outcome of Swiss-EU talks may decide the issue.

THERE IS ONE BORN EVERY MINUTE

Offshore Business News & Research’s six-month poll shows just how gullible and unrealistic some eager investors are when it comes to offshore scams. Many expect 100% investment returns!

However, well managed closed ended offshore funds are worth a look. They're listed on stock exchanges, and shares trade at discounts to the funds' net asset value.

ONLINE FORFEITURE FEST

The U.S. Marshals Service hires an online auctioneer to sell real estate and other assets seized in US federal criminal cases.

AFTER YOU HAVE GONE

Consider the post mortem havoc wrecked by crooked estate lawyers. Plus tips on how to avoid the bad guys.

A MONEY LAUNDERING PRIMER

Two leading experts explain international criminal anti-money laundering laws and how dirty cash is detected.

MONEY LAUNDERING NEWS:

UNITED STATES. Main Street businesses, from leather goods stores to travel agencies, to consumer electronics boutiques are being pressured to adopt anti-money laundering "know your customer" practices.

IRS SLAPPED WITH $500 BILLION SUIT

2 groups charge civil rights violations in raid.

Two national groups providing estate-planning help announced today the filing of a $500 billion class-action lawsuit against the Internal Revenue Service and approximately 50 individual IRS agents, charging them with civil rights violations against thousands of its members, most of whom are senior citizens.

The suit stems from a raid on the offices of Heritage America and the Aegis Company conducted by the IRS March 31, 2000, says the groups' executive director, Michael Vallone. About 30 armed IRS agents reportedly entered the Palos Hills, Ill., offices of the two groups.

The IRS agent in charge, Robert Kuschel, served a search warrant for a company named "Aegis Financial Group." The suit alleges this company has no relationship whatsoever to either Heritage America or The Aegis Company.

Vallone claims that Aegis Financial Group was a corporation of which he was a partial owner from 1996 to 1998, and that it was an Indiana licensed mortgage brokerage firm which operated exclusively in Indiana and had no business dealings whatsoever with Heritage America or the Aegis Company.

The suit alleges that upon entering the offices of the companies, the agents proceeded at gunpoint to separate the staff into separate rooms and interrogated them for as long as two hours without ever reading them their rights or informing them they were not required to provide information.

The IRS then proceeded to carry off all the companies' records, including the paper and computer records of their members, says the suit. This material contained the names, addresses and phone numbers of all the past and present members of Heritage America and the Aegis Company. It also contained financial information and the private estate-planning information of these people, including copies of their wills, trusts and other estate-planning documents such as powers of attorney.

"Their (the IRS') absolute rape of the privacy rights of more than 5,000 Americans is another example of the terrorist tactics of a government agency whose abuse of power demands severe retribution," said Vallone.

The suit also states that almost one year after the first raid, on March 29, 2001, the IRS performed a second raid in similar fashion on the offices of Homer Richardson, a representative of Heritage America and the Aegis Company. Once again, the search warrant served on Richardson stated it was to procure documents associated with "Aegis Financial Group." Richardson states he has never had any association whatsoever with Aegis Financial Group.

Vallone charges the attack on Heritage America and the Aegis Company is part of a four-year campaign the IRS has been waging against trusts. Both Heritage America and the Aegis Company have provided their members with services to set up trusts for estate planning, business planning and tax planning. The Aegis Company has provided educational material and services for its members regarding a type of trust that IRS regulations call a "Business Trust."

"These types of trusts are completely legitimate," says Vallone. "They are used by many of the major mutual funds in the United States, such as Fidelity Magellan, Kemper and Nuveen. However, they can also be used by small business owners. The IRS has recognized this in their own regulations. Unfortunately, many companies have improperly promoted the use of business trusts, and so the IRS has stepped in to crack down on the abuse of these trusts."

The class-action lawsuit contains 11 separate counts of violations of Title 42 of the United States Code for deprivation of civil rights, and an additional count under Title 18 which charges that the IRS and its agents violated federal racketeering laws.

The 56-page complaint was filed May 8 in the Southern District of Illinois.

MEDICAL EDITOR RIPS INTO FDA

The editor of a top medical journal on Friday accused the U.S. Food and Drug Administration, the world's most powerful drug watchdog, of endangering people's lives.

Richard Horton of The Lancet said the FDA, which safeguards the health of 274 million people and regulates over $1 trillion worth of products, was compromised by funding from the drugs industry and pressure from Congress.

In an editorial, he slammed the FDA for its handling of GlaxoSmithKline Plc's controversial bowel drug Lotronex.

The FDA approved Lotronex in February 2000, but the company voluntarily withdrew it from the market nine months later after the deaths of five patients who had been taking it.

Senior FDA officials are now trying to reintroduce it, Horton said.

"This story reveals not only dangerous failings in a single drug's approval and review process but also the extent to which the FDA, its Center for Drug Evaluation and Research (CDER) in particular, has become a servant of the industry," he wrote in an editorial in the journal.

According to Horton, serious side effects were evident during the pre-approval process and shortly afterwards but the FDA kept the product on the market. "The decision was to prove fatal," said Horton.

JORDAN CREATES A NEW TAX HAVEN

AQABA, the Red Sea port, is now an official tax free zone.

CANADA TAX WEB PAGES

All you need to know about Revenue Canada's taxes and reporting.

And for expats living or working in Canada, here's the scoop here.

VIVA LA FRANCE HYPOCRITIQUE!

PARIS. The Socialist government of France has repeatedly hurled wild charges of money laundering at the governments of neighboring Monaco, Switzerland and Luxembourg. Now mired deep in their own dirty money scandals, French sanctimony burns undiminished. So Paris is in fits over the US dumping the OECD's phony war on tax havens.

WISHFUL TREASURY THINKING

WASHINGTON. US Treas. Sec. Paul O'NEILL calls for radical reform of the US tax structure, including abolition of corporate income taxes and capital gains taxes. Who woke him up?

U.S. ESTATE TAX REPEAL

No thanks to Bill GATES father, repeal of the US estate tax is moving ahead in Congress.

SOFTWARE KILLS CENSORSHIP

Police are upset by browser software that makes it impossible to control the material people have access to on the Web.

HALF OF BAHAMAS BANKS MAY QUIT

The Central Bank governor says more than half of the 124 registered "managed" banks in The Bahamas may leave because of tough new laws.

SWISS WITHHOLDING TAX?

To meet EU demands, the Swiss may impose a uniform W/H tax on all Swiss accounts of EU nationals; but secrecy remains sacrosanct.

OECD BATTLE PICKS & PANS

WASHINGTON. The Center for Freedom & Prosperity (CFP), acknowledged leader in the battle against the OECD's phony war on tax havens, issues awards, good and bad, to the heroes and villains of the long running OECD farce. And US Treas. Sec. O'Neill is called a hero for conservatives.

OECD AUDITED

A US Senator demands to know how Paris tax exempt bureaucrats spend their money and the OECD submits to its first ever audit.

BASLE CONTRADICTION

Stability of world financial institutions may be undermined by new rules claimed to reduce the risk of bank failures.

INTERNET FRAUD

The US charges 90 people and businesses with using the Internet to con people out of US$117 million.

WHY FREE TRADE?

Free trade makes goods and services available to everyone, raising living standards for all.

FACTS ON OFFSHORE HEDGE FUNDS

10 year history of offshore funds' amazing growth.

Why US persons should invest in offshore hedge funds.

The best of 2,000 offshore hedge funds worth $240 billion.

The haven nations offshore hedge funds call home.

E.U. POLICE vs. PRIVACY RIGHTS

European Union police plans to force archiving of all electronic communications clashes with personal privacy protections.

N.S.A. SNUBS ECHELON INVESTIGATORS

US security agencies cancel meetings with European parliamentary investigators seeking Echelon information.

O’NEILL LAYS OUT VISION FOR TAX

Paul O’Neill, US Treasury Secretary, has laid out a vision for a radical reform of the US tax structure, including a sweeping revision of the Social Security - or public pension - system and abolition of corporate income tax and capital gains tax on businesses.

In an interview with the FT at his Treasury office, Mr O'Neill espoused changes that would reach far beyond the legislation currently before Congress.

As the Senate moved ahead with the Bush administration's initial $1,350bn tax reduction plan, which Mr O'Neill expects to be signed into law next Friday, he expanded on his previous piecemeal attacks on America's tax system.

The present system was "an abomination" that required changes to its "very structure".

"Not only am I committed to working on this issue, the President [George W Bush] is also intrigued about the possibility of fixing this mess," said Mr O' Neill.

One of the most important moves, he suggested, would be abolition of taxation on companies. Corporate income tax, the main form of tax on US businesses, accounts for 10 per cent of federal revenues and has a top rate of 35 per cent.

Among other controversial ideas, Mr O'Neill questioned the the guarantees the government provides for full public subsidy of senior citizens' health care and retirement programmes. "Able-bodied adults who have the ability to earn income have an obligation not to pass part of their own responsibility on to a broader population," he said.

His remarks are bound to reverberate in Washington, where speaking about reductions in elderly care programmes has been taboo. Mr O'Neill's remarks reflect growing determination in the Bush administration to show its willingness to propose radical change to try to secure growth.

Abolishing corporate tax would inevitably lead to higher personal income taxes, but Mr O'Neill believes such a move would reduce the overall tax burden and promote economic growth.

Current corporate tax levels - and their administrative costs - were too high, he said. The system would work better if the government "collected taxes in a more direct way from the people, who were paying the taxes in any event".

Mr O'Neill said simplification of the tax code would also improve US global competitiveness. "It would certainly make us more formidable if we had a simplification of this sort."

Any increase in personal income tax would undoubtedly provoke strong voter opposition. Mr O'Neill, however, says he "absolutely" wants to eliminate corporate income tax. He also wants to do away with capital gains taxes on businesses, and indicated the administration was prepared to put this on a shorter-term agenda.

It is highly unlikely that other members of the Bush administration share every aspect of Mr O'Neill's reformist visions. But the fact that one of the most senior cabinet members would lay out such a detailed and radical programme is a sign that the administration has not been deterred by opposition to its initial tax-cut plan.

EC REJECTS TAX HARMONY AND TURNS TO LIFTING TRADE BARRIERS

THE European Commission is to abandon long-standing efforts to harmonise tax policy, concentrating instead on breaking down trade barriers and restoring the dynamism of the European economy.

A leaked copy of a new commission report, called "Tax policy in the European Union - Priorities for the years ahead", argues that different tax rates across the EU are not only acceptable, but positively beneficial.

"A reasonable degree of tax competition within the EU is healthy and should be allowed to operate," says the document, marking a radical shift towards free-market thinking in Brussels.

"Tax competition may strengthen fiscal discipline to the extent that it encourages member states to streamline their public expenditure, thus allowing a reduction in the overall tax burden." The report, due next week, says EU states should be "free to choose the structures of their tax systems as well as the tax rates and tax bases they consider most appropriate and according to their preferences", provided they respect single market rules.

The tone of the proposals suggest that Frits Bolkestein, the Thatcherite single market commissioner, has so far succeeded in driving through his free enterprise agenda within the "college" of 20 commissioners. This is despite fierce resistance from a socialist camp led by France's Pascal Lamy, the trade commissioner, who has pushed hard for harmonisation of corporation tax.

But Theresa Villiers, MEP, the Tory economics spokesman in Brussels, say the report is not as benign as it looks, warning it opens the door for Brussels to meddle for the first time in the area of personal income tax.

It states that very low rates of income tax can, in certain circumstances, be tantamount to a state subsidy for industry, violating the rules of cross-border competition. This could lead to a ruling by the European Court against the offending country.

The commission accepts that income tax has always been the preserve of member states but then goes on to say, "even this area it may be necessary to co-ordinate national tax systems in order to prevent discrimination in cross-border situations or to remove obstacles".

The Tories said the commission was switching tactics after its failure to abolish the national veto on taxation in the Nice Treaty last December. Since EU states can block legislative initiatives, the commission is now hoping to advance its agenda by other means, chiefly by using a so-called code of conduct group led by Britain's Dawn Primarolo, which is examining tax practices.

Mrs. Villiers said: "Labour sold us down the river on tax when they signed up to the code of conduct. They let Brussels get a foot in the door in direct taxes for the first time and now the EU is trying to expand the code to income tax, which Dawn Primarolo has repeatedly said would never happen."

The Tories also claim the new proposals could also threaten Britain's VAT exemption on food, books, and children's clothes. The report calls for a review of the different countries' opt-out when they come up for review after 2002.

But the Government insisted last night that the report is nothing more than a debating text. No initiative in the tax area can go ahead without the unanimous backing of the 15 EU states.

INTERNATIONAL AWARDS INSTITUTED IN OECD/OFFSHORE IMBROGLIO

Adding a rare touch of humour to the somewhat dour process of confrontation between the God-like OECD and the raggle-taggle pack of offshore jurisdictions which it has been tormenting, the Centre for Freedom and Prosperity has instituted two international prizes for people it sees as stars or boobies in the interminable back-and-forth that is defining the future of 'offshore'.

The CFP Halls of Fame and Shame have as their first occupants (for Fame) Antiguan Prime Minister Lester Bird and High Commissioner Sir Ronald Sanders, while Shame is ladled out to Richard Hammer, Chairman of the Tax and Fiscal Policy Committee of the OECD's Business and Industry Advisory Committee.

Here is the CFP's announcement and explanation of its new awards:

'Fighting on the front lines of this issue, we have learned to appreciate strong allies. We also have learned that there are many who are willing to capitulate for personal advantage. As a result, we thought this would be a good time to launch an "Unsung Hero Award" and a "Benedict Arnold Award" for those whose actions demand special recognition.

'These awards, which will be an occasional feature of our weekly update, are designed to help the broader community get a better appreciation of the behind-the-scenes battle.

'The "Unsung Hero Award" goes to the person, institution, or government that has demonstrated special valor and commitment in the fight to preserve tax competition, financial privacy, and fiscal sovereignty. The first winner of this award is the government of Antigua and Barbuda. More specifically, Prime Minister Lester Bird and High Commission Sir Ronald Sanders have played a critical role in this fight. The Prime Minister's courage helped ensure that the Caribbean jurisdictions resisted the OECD's fiscal colonialism. Sir Ronald Sanders, meanwhile, has been an effective voice in London and elsewhere for the principles of freedom and competition. We also owe a special debt to Sir Ronald. It was his trip to Washington almost one year ago that helped trigger the events that led to the founding of the Center (okay, we may be a little biased as a result, but Sir Ronald deserves praise for everything else he has accomplished as well). Congratulations.

'The "Benedict Arnold Award," named after America's infamous Revolutionary War traitor, goes to the person, institution, or government that has demonstrated a special cowardice or incompetence in the fight to preserve tax competition, financial privacy, and fiscal sovereignty. As such, it does not go to those who started on the wrong side, have stayed on the wrong side, and always will remain on the wrong side (i.e., the government of France). Instead, it goes to someone who should be on the right side, but winds up aiding the forces of statism through either incompetence or venality. The first winner of this award is Richard Hammer, Chairman of the Tax and Fiscal Policy Committee of the OECD's Business and Industry Advisory Committee (BIAC). Mr. Hammer in 1999 helped oversee the publication of a BIAC report that was appropriately critical of the OECD anti-competition initiative (still available on the BAIC website). Earlier this year, however, Mr. Hammer did an about-face and co-authored an article endorsing the OECD's attack on tax competition. For selling out the interests of the business community - and for switching sides just as the OECD effort is falling apart, Mr. Hammer truly has earned the "Benedict Arnold Award." Congratulations.

The CFP Halls of Fame and Shame web page: here and here.

RADICAL SOLUTIONS EYED IN NET IDENTITY THEFT BATTLE

For $39.95, a thief can buy someone's Social Security number on the Internet, use it within minutes to get a credit card, then start buying big-ticket items like cars and jewelry.

About 1,400 times a day - or nearly once a minute - someone's identity is stolen.

"It's risk-free," James Huse Jr., the Social Security Administration's inspector general, told a House subcommittee Tuesday after a demonstration of the ease of Internet fraud. "Why wouldn't criminals do this?"

He said Congress should pass a privacy plan first debated last year to ban the sale of Social Security numbers and prohibit many companies from requiring customers to divulge their numbers. The Ways and Means Committee approved the bill last year, but it never came up for a House vote.

One House Republican says that's not enough and that all Americans should be assigned new Social Security numbers that the government would have to keep secret. Rep. Ron Paul of Texas wants the Social Security Administration to issue new numbers within the next five years. His plan would ban the use of Social Security numbers as identifying tools.

Any significant changes are opposed by banks, insurance companies, investment firms and pension fund overseers. Government officials also don't like the resurrected privacy plan because the government's massive system of record-keeping would have to be changed.

Charles Bacarisse, a district clerk in Harris County, Texas, said many Social Security numbers are already easily available, and regulations "will increase the burdens and costs on everyone while doing little or nothing to enhance anyone's privacy."

The Social Security numbering system was created 65 years ago for the tracking of each American's earnings. The government promised it would never be used as a national identification card, but the numbers now are widely used personal identifiers. They are available on many public documents, such as driver's licenses and court records.

Huse told the House Ways and Means Social Security subcommittee that Social Security information theft, "catalyzed by the Internet, has quickly become a national crisis."

Rep. Gerald Kleczka, D-Wis., told colleagues that he was so tired of being asked for the information that he made up a series of numbers when required by a toy store to provide his Social Security number.

Requests like that would be restricted under a bill that Kleczka cosponsored last year. The subcommittee chairman, Rep. Clay Shaw, R-Fla., said the legislation was being refiled this week. Besides curbing excessive circulation, the bill also would ban governments and private companies from selling Social Security numbers or displaying them on public documents.

Nicole Robinson of Oxon Hill, Md., Said she became a victim last year, despite following anti-fraud tips such as regularly obtaining her credit history to check for discrepancies. Robinson said a Texas woman got her information, apparently from health insurance records, and went on a $36,000, three-month buying spree.

"This crime continues to give me constant anxiety," said Robinson, who works for a government contractor and has had problems refinancing her home and getting loans.

About 1,400 people report fraud each week to the Federal Trade Commission. An estimated 500,000 are victimized annually.

Identity theft victims, like other crime victims, "feel personally violated," said Michael Fabozzi, a detective in New York. He said victims "are left to fend for themselves in attempting to clear their credit history and good name."

Fabozzi is the lead investigator in the case of Brooklyn restaurant busboy Abraham Abdallah, arrested in March and accused of trying to assume the identities of Steven Spielberg, Oprah Winfrey, Martha Stewart and many others.

"The tale of the busboy cyberthief is a frightening testimony to the vulnerability of the entire e-commerce system," Fabozzi said.

BIG 5 ACCOUNTANTS HELP IRS CHASE TAX EVASION

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CASH BUSINESS BOOMS IN ANDORRA

As the euro looms Spaniards are trying to unload hoarded pesetas. This mountain redoubt is happily raking in the cash.

BAHAMAS IBCs NUMBERS PLUNGE

NASSAU, The Bahamas. Drastic changes in offshore corporate laws here are decimating IBC registrations. In Jan. 2000 there were 3,368 new IBCs, only 781 in Jan. 2001. $20 million in tax revenue lost.

CARIBBEAN BLACKS SLAM O.E.C.D.

They charge high tax G-7 nations are persecuting black majority small nations.

And Caribbean states see a new OECD threat to their economies.

N.Y. TIMES SLAMS BUSH ON TAX HAVENS

George W. must be right if The Times is upset.

NIGERIAN SCAM STILL GOING

That old Nigerian bank scam has surfaced in the US again.

DO NOT BE TOO DOMESTICATED

Why you should invest and diversify offshore.

DOES ENCRYPTION MAKE GOVERNMENT OBSOLETE?

Will new technology strengthen privacy or the rule of Big Brother?

EUROPEANS WARN AGAINST ECHELON

It is real, so defend against the threat, they urge.

U.S. SPIES TAP UNDERSEA CABLE TRAFFIC

The US National Security Agency, home to Echelon, has been taping undersea electronic international cables.