While this is fairly old it is the first time I have come across it so it wanted to link and post some relevant remarks.
Now, talking about the creation of a good environment to do business, there are a couple of issues that Canada and the United States need to address. Secretary Geithner and I have discussed these issues.
First of all, the requirement for dual U.S.-Canadian citizens living in Canada to file Foreign Bank Account Reports. Most of them didn’t even know that they had to file U.S. tax returns, even though they weren’t earning income in the United States, and there are substantial potential penalties. So this is something that we’re talking about to try to be effective and efficient in what is sought to be accomplished. What is sought to be accomplished, of course, is to avoid tax evasion and the use of tax havens.
There’s also the impact of the Foreign Account Tax Compliance Act on Canadian financial institutions and consumers. This is a key issue. It would impose extremely heavy reporting obligations on Canadian and other non-U.S. financial institutions.
I’ve discussed this with our banking leaders in Canada and with Secretary Geithner and other American officials. We do have a bilateral agreement with the United States, a Tax Information Exchange Agreement, which I think we can use to our advantage because most of the information that would be sought would be information that we’re already capable of providing. Canada is not a tax haven and if we’re going to use government resources and private sector resources in this area, I think we ought to target them more toward issues that are of serious concern, such as money laundering and terrorist financing.
So I urge you to join us in calling for changes to these proposals in order to avoid a lot of red tape for Canadian financial institutions and expenses. Hundreds of millions of dollars spent on developing compliance processes to target Canadian citizens will not be a useful exercise, and these are for the most part people who have no tax liabilities, as they have not earned income in the United States.
Thanks, Tim, for your digging and finding a speech that none of the others of us came across. Seems you find things a good media should find and report on. I appreciate that Finance Minister Flaherty did give this speech, perhaps measured for the audience he addressed. I continue to scratch my head on why this has not been hugely in the media.
This speech seems to be have been given about the same time Flaherty sent his letter to several US newspapers (including I believe Wall Street Journal and Washington Post, if I recall correctly). That letter got some press in Canada and on the internet but for whatever reason none of the US media ran it. I am not aware of any previous case of a Canadian finance minister writing letters to US media critical of a US financial policy, and I find it hard to imagine he did so without the awareness and at least quiet agreement of the Prime Minister’s Office. Cabinet ministers don’t generally do stuff like that without PMO clearance and stay in their jobs, though one does wonder about some of the things less stable ministers than Flaherty have got up to in this government (starting notably with Bev Oda and going on from there …) Good to know he delivered the message in person to a US audience. Thanks for finding this, Tim.
*Back in my early days here at Brock I came across a “left wing” NGO down in the US that was attacking Flaherty over FATCA. The poster their said the following:
There’s been a great deal of backlash against this law, particularly from foreign banks (surprise) and even the outspoken foreign financial minister of Canada. Some of these concerns are based in logic and fact. Others are not. The Obama administration has remained pretty steady on the issue, but still senior bank officials have still pleaded with Treasury Secretary Timothy Geithner to modify the law.
To which I responded:
There is a new grassroots organization gearing in Canada called the Isaac Brock Society to fight FATCA. Yours truely has made light on their website of the fact that the Task Force for Financial Integrity for Economic Development has received funding from Canadian International Development Agency despite FATCA being against Canadian government policy. In the near future as many Canadian Citizens which are claimed by the US as US persons complain to their MP’s in Canada over FATCA I suspect there will be a move to cut the Task Force’s funding from CIDA as CIDA has done to other organization e.g. KAIROS that do not support Canadian Government policy. I suspect the quip over Canada “outspoken” finance minister will not be appreciated by Prime Minister Stephen Harper or his PMO(Prime Minster’s Office).
I hope the Task Force and its staff will be happy with this reduced funding from CIDA and Canada.
Now if follow CDN politics at all you know EXACTLY what I am talking when I mention the PMO, CIDA, and Kairos. What is interesting is my comment appeared to spook someone higher up at this place who responded to me basically telling me the received no funding from CIDA although they do appear to have some type of relationship with CIDA. For non Canadians CIDA is the Canadian International Development Agency that for many years has been run by one of the country most incompetent cabinet ministers(the aforementioned by Schubert Bev Oda) whom all she knows how to do is take orders from the PMO(and Immigration Minister Jason Kenney) along with booking limosuine rides and ordering $10 orange juices.
*Funny video on PMO
PMO Pest Control
@Tim LOL!!! made my morning. Gotta love Rick Mercer … Am forwarding the You-Tube link to friends and family in the US and overseas as well as Canada. With a couple of explanations (re what PMO stands for, also a sentence putting this in context of federal government staff cuts in the past couple of months and where the cuts have been targetted)
Most ‘regular’ Canadians I talk to like Obama, as does the Canadian left leaning press. Many of both intensely dislike the Harper government. Can you imagine the reaction they may have when they find out Obama’s policies threaten Canadian sovereignty and the well being of fellow Canadians who are also USP’s? These current Obama supporters may actually have to instead throw their support behind the Harper government against this overreach by a government they perceive as sharing values similar to their own. Perhaps this is why the press is reluctant to cover it. Canadians are about to find out what a wolf in sheep’s clothing Obama is. Just my .02 (and soon to be .04 USD, according to Petros).
I will say the NDP has been pretty strong on this issue too although like the Conservatives they have been rather silent of late. I do happen to know that Peter Julian and Hoang Mai actually travelled to Washington in late May and met with the IRS/Treasury FATCA team. However, I don’t have any knowledge of what the outcome of this meeting was. I just thought it was very interesting that Julian and Mai even got a meeting with the US Treasury Department. My only “guess” and its just a guess is that US Treasury wants any agreement with Canada to be supported in the future by a future NDP government but I really don’t know to what degree they at all follow the ebb and flow of Canadian politics. I have also heard the earlier meeting between Don Davies, Peter Julian, Hoang Mai, and Megan Leslie and Ambassador Jacobson in the fall did not go “well” to say the least. Supposedly Megan Leslie was quite dissappointed.
Could it actually be a rare time in history that all parties will agree on something and rally behind the government of the day to fight it? I imagine the prospect of doing so would be revolting to those who dislike the Harper government, to put aside political differences fight a common foe, as in war? Polarization within our own government may actually be hindering progress, or, maybe they’re all on the same page and that’s why we aren’t hearing anything from the NDP about how the Tories aren’t doing enough to stop FATCA? (Crossing fingers).
Good question. My guess and its only a guess is that Canada is looking for a solution for Canada and only Canada thus Flaherty and others are not going to say anything that might discourage other especially tax haven countries from signing up to FATCA. I don’t know whether this is the “right” strategy or not. In some sense they are being helpful to the US by not making a big public scene that will get picked up in Switzerland or the Cayman Islands on the otherhand they continue to take a firm position in private.
Do you think that the NDP’s silence could indicate that they may be complicit in this or any other solution? I mean there’s got to be some reason why the NDP aren’t publicly riding the Tories on this, as it would be a great opportunity put them in a bad light if they believed that they weren’t doing enough to protect Canadians and Canadian sovereignty.
@Tim, @bubblebustin, @schubert,
In my mind, the only way I can reconcile all the silence is that something is going on in the background with Canadian politicians in dealing with this, hopefully for their US citizen population in addition to how it affects Canada’s financial / bank health. This reasoning makes sense to me.
It ties in with NorthernShrike comment on another thread:
‘Horns of a dilemma‘ especially when the Canadian government does not have the reciprocity bargaining chip, already having it.