Bermuda will not sell out its sovereignty to get in line with an international drive to cripple suspect offshore jurisdictions, Finance Minister Eugene Cox warned the world's most powerful nations last night.

But Mr. Cox's David and Goliath-style speech pledged a commitment to work with the Organisation for Economic Cooperation and Development (OECD) in its worldwide clampdown on tax evasion.

He said: "Bermuda supports the OECD initiative encouraging the removal of preferential tax regimes in all countries.'' And -- in line with Thursday's Royal Gazette story -- he hinted that changes to the Island's 60/40 rule, to limit the overseas percentage holding of Bermuda companies, could be on the cards.

He said: "Bermuda is currently reviewing its financial sector to determine the extent that a further liberalisation will benefit the Bermudian economy and its citizens.'' But Mr. Cox stressed: "However, Bermuda needs to protect certain aspects of its domestic market. With a population of only 62,000, Bermudian businesses cannot achieve the efficient economies of scale that firms are able to achieve in larger markets.

"Bermudian businesses also find that their small size limits their access to capital.'' Mr. Cox's address to the Paris conference drew a sharp line between financially clean Bermuda and less reputable offshore centres.

He said: "I believe that Bermuda can serve as an example of how small countries in the world can responsibly participate in the global economy and can contribute to the growth and development of the international financial system.'' But he insisted: "Our participation will be made without impeding our own development as a sovereign country.'' And Mr. Cox called for the major nations to consider the cost to tiny countries for providing tax information.

Mr. Cox said: "Information is not free and tax authorities of large countries cannot expect smaller or poorer countries to provide a large amount of tax information without any consideration of the costs involved.'' He added that the Island raised more than $580 million in taxes from a tiny population of just 60,000 -- a better percentage of Gross Domestic Product than many countries.

Cox: Bermuda will work with OECD But he said: "However, the amount that Bermuda, or any other state, needs to raise in taxes should not be judged by others, condemned or considered harmful.

"In fact, it would seem logical that states should be congratulated for prudent spending which makes possible a lower level of taxation.'' Mr. Cox was speaking on the closing day of the two-day think-tank, jointly organised by the OECD and French Minister of Finance Laurent Fabius.

And he beat the drum for Bermuda, stressing there was a difference between the Island's set-up and other jurisdictions which set up two-tier systems to pull in overseas cash.

He said: "Little effort is made to distinguish between jurisdictions and they are often all portrayed as sinister tax havens with devious schemes to steal the wealth of developed countries.

"Such poorly-researched literature is rubbish and is an obstacle to making progress towards our goal.'' And he told delegates from 60 countries: "It is important that you, and other members of the international financial community, understand the valuable contribution that is made by highly reputable international financial centres like Bermuda.

"It is time to dispel the myth that low tax jurisdictions are inherently bad.'' Mr. Cox said Bermuda had cooperated with the OECD Harmful Tax Practices Forum and altered Island legislation to keep up with international requirements -- and would continue on that path.

He added that the Island's booming international business sector had been built on "innovative free market economics, sensible regulation and political stability'', as well as a "know your customer'' policy and a solid banking and English-style legal system.

He told the conference: "You will notice that my description of Bermuda's many attributes has not included a discussion of tax.

"That is because tax is certainly not the only reason international companies choose to locate in Bermuda.'' Mr. Cox said the Island's consumption-based tax system had evolved over the years -- and had not been set up to attract international business.

He added: "It evolved because of its rationality, efficiency and simplicity for the taxpayer to understand and works well in a Country with a population the size of Bermuda.

"I must stress that Bermuda's choice of a consumption-based tax system is a sovereign one which is enthusiastically supported by its citizens.'' And he pointed out that both domestic business and the international sector paid "substantially the same'' taxes and regulations.

Mr. Cox told the conference that many jurisdictions would have to change to keep on the right side of the financial fence -- but insisted that coordination was needed to protect those quickest to get in line.

And he said: "The process must be flexible enough to encompass the diversity among nations, including those with smaller populations or fewer resources than the OECD member countries.'' Mr. Cox -- who earned a round of applause from delegates -- said the speech was "well received''.

He added: "Some of the points, I thought, should be taken and it was very flattering to have (Harmful Tax Practices committee member) Philip West make reference to my comments later''.

Mr. Cox said: "What we have done is we have achieved our goal. It's not something which is going to just stop and go away.

"One of the things which has happened is the approach which was used in the past has changed.

"OECD members and non-members getting together has been a very useful and productive occasion.

"Policies and strategies will not now be prepared in isolation and Bermuda has helped in a way to shape and mould their thinking. We see the need for the global approach and it has been very rewarding.'' He said: "Other speakers referred to my comments on where countries must go from here. I was flattered to think we had put together a speech which generated so much support.''