May 20, 2009
Two senior Democrats urged the administration Wednesday to postpone sending a stalled trade deal with Panama to Congress until concerns about the Central American nation’s banking secrecy laws are formally addressed.
In a letter to President Obama, Sen. Carl Levin , D-Mich., and Rep. Lloyd Doggett , D-Texas, said that the Panamanian government should have to sign a tax information exchange agreement with the United States and pass legislation changing Panamanian law to “allow for sufficient transparency and access to financial and corporate information.”
Such an agreement would allow for an exchange of tax information between the United States and Panama and help the IRS enforce U.S. tax laws when it comes to American companies operating in Panama.
“Given Panama’s interest in successfully concluding the U.S.-Panama FTA, it is essential that we not waste the opportunity to insist on real cooperation from Panama in the fight against international tax evasion,” Doggett and Levin wrote.
The trade deal was negotiated and signed by the George W. Bush administration, but congressional Democrats have yet to bring implementing legislation to the House or Senate floors for a vote, due to a variety of concerns. In recent months, concerns about Panama’s banking secrecy laws have grown among many Democrats.
U.S. Trade Representative Ron Kirk said May 18 that the two governments have made progress on tax issues, as well as outstanding disagreements over Panama’s labor laws, and that he was working “furiously” to finalize negotiations and send the agreement to Congress.
Doggett and Levin have introduced legislation to crack down on offshore tax evasion. Among other provisions, the bills would treat foreign corporations managed and controlled in the United States as domestic companies for tax purposes. Obama has also targeted international tax dodges in recent proposals to Congress.
The Treasury Department and Panama’s government have been negotiating a tax information exchange, but have yet to reach a conclusion.