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10 October 2002 Speaking at a Tax Council luncheon in Washington on Tuesday, Treasury Deputy Secretary, Kenneth Dam warned US exporters that under a new export tax regime, they may not receive the same benefits as those to which they are currently entitled. |
Reiterating President Bush's pledge that the United States will comply with a World Trade Organisation ruling against the Foreign Sales Corporation (FSC) Act, and its successor, the Extraterritorial Income Act (ETI), Mr Dam announced that the administration is looking for a solution which benefits the US economy as a whole, not just individual exporting companies.
'The chances of going back to an FSC look-alike law are nil,' he told those attending the luncheon. 'It will not be possible to replicate for each and every American company the tax relief they obtained under FSC or ETI. Nor can we assure each and every American company that it will receive any tax relief at all from the tax legislation now being considered in Congress.'
Although the US government has promised to comply with the WTO ruling, following the organisation's decision to allow the European Union to impose $4 billion worth of sanctions on US products as compensation, lawmakers have repeatedly stressed that the issue will not be dealt with immediately, due to Congress's already busy schedule.
However, the Treasury Deputy Secretary revealed that progress is being made, announcing that: 'We have been working closely with Chairman [Bill] Thomas and the House Ways and Means Committee. We have begun to work just as closely with Chairman [Max] Baucus and the Senate Finance Committee.'
Concluding his overview of the FSC/ETI situation as it currently stands, Mr Dam observed that:
'One of the ironies of the FSC/ETI saga is that it can be viewed, across the history of the past half-century of tax legislation, as a self-inflicted wound. To see why this is so, consider that the United States has a worldwide system of taxation while many other countries have a territorial system.'
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