It’s not every day that the ambassador of Liechtenstein — her name is Claudia Fritsche — writes a letter to the Maine Legislature to weigh in on a bill.

But it happened March 4, when Fritsche urged state lawmakers to vote down L.D. 1120, a bill that would prohibit multinational corporations from using so-called offshore tax havens to avoid paying taxes in Maine. Democrats in the House voted to approve the bill on Tuesday

Lawmakers also received a letter from Jean-Louis Wolzfeld, Luxembourg‘s ambassador to the U.S., opposing the bill.

Both countries are among more than two dozens jurisdictions identified as tax havens in L.D. 1120. In their letters to the lawmakers, Fritsche and Wolzfeld explained why such a designation unfairly blacklisted the two countries and what the impact would be if the bill is enacted.

Fritsche touted Liechtenstein’s cooperation with the U.S. in fighting "terrorist financing" (This was apparently a symptom of the country’s secret banking laws until it began taking steps to improve them; in 2008 the International Monetary Fund conducted an assessment). She added that Liechtenstein didn’t have any investments in Maine, but L.D. 1120 could deter the prospect of future business.

Wolzfeld, meanwhile, suggested the proposal could impede trade growth with the Transatlantic Trade & Investment Partnership (TTIP), a trade agreement between the European Union and the U.S. (Wolzfeld didn’t explain how L.D. 1120 would impact the trade agreement.). 

Both ambassadors acknowledged that their countries had been previously labeled as tax havens, but said they were working to shed that reputation by ratifying more transparent banking regulations.

It appears that Liechtenstein has been more successful than Luxembourg in those efforts.

In March, Luxembourg was largely blamed for scuttling a deal that would create a data exchange within the European Union that allowed all 28 governments to identify and prosecute tax evaders (Proponents of a tougher crackdown say the EU proposal is weak.).

In any event, there was a lot of opposition to L.D. 1120, some of which can be read below in the document provided by the House Republican Office. The proposal faces additional votes in the Senate before being sent to Gov. Paul LePage.

 

LD 1120 Tax Haven