The US Congress is threatening to cut off funding for the Organisation for Economic Co-operation and Development unless the OECD ends efforts to promote fair international tax competition.
The measure, which could deprive the Paris-based think-tank of its largest funding source, is part of a huge spending bill that Congress is trying to pass by this weekend. With Congress facing the urgent need to approve the $388bn (€299bn, £209bn) funding before the end of the year, lobbyists for a range of interests are hoping to attach controversial provisions to the bill.
US companies pushing for an increase in H-1B visas, which allow foreigners to work in specialised occupations, particularly high technology, are pressing to exempt US university graduates with advanced degrees from the visa limit. The visas are capped at 65,000 a year and the entire quota for next year has already been exhausted. The proposed measure would add about 20,000 new visas next year.
House Republicans are also pushing to repeal a measure contained in the 2002 farm bill that would have required mandatory country-of-origin labelling on US food products beginning in 2006. Food processors and meatpackers, who argue it would be far too costly, have opposed the provision.
The OECD wrangle has been fuelled by anti-tax groups that say the organisation is wrongly attempting to penalise countries that lower their taxes to attract investment. Senator Judd Gregg, incoming chairman of the Senate budget committee, has added language to the spending bill that would halt OECD funding unless the organisation stops pressing tax-haven countries in the Caribbean and elsewhere to share information on companies that may be attempting to evade taxes.
Donald Johnston, the OECD secretary-general, was in Washington this week lobbying Congress to drop the provision. Nicholas Bray, a spokesman for Mr Johnston, said many in Congress misunderstood the OECD initiative, which is not aimed at “tax harmonisation” but at “levelling the playing field in terms of foreign competition on tax policy”.
Congressional leaders hope to conclude talks between the House and the Senate on the bill by today. The measure will fund all federal programmes except the departments of defence and homeland security.
In a letter to committee leaders late on Wednesday, the White House threatened a presidential veto if further spending was added to the bill. It also threatened a veto over several other provisions, including an easing of trade with Cuba and restrictions on the administration's new rules on overtime pay.
■ Arlen Specter on Thursday won the support of the Senate judiciary committee's Republicans to be their chairman next year, surviving complaints from abortion opponents who lobbied to skip over him in favour of a conservative, AP writes from Washington. “I have assured the president that I would give his nominees quick committee hearings and early committee votes,” Mr Specter said.
