Elizabeth May and the Green Party of Canada have spoken out against the recently announced FATCA IGA between Canada and the US. On Monday, Ms. May raised the issue of Charter rights in Question Period. From Open Parliament, here is her exchange with Finance Minister Jim Flaherty:
Elizabeth May Saanich—Gulf Islands, BC
Mr. Speaker, I rise to ask a question today of the Minister of Finance relating to the Foreign Account Tax Compliance Act, FATCA.
On the U.S. side of the border, there are concerns raised that because the treaties have not been ratified through the U.S. Senate, these may not be legally binding treaties in any case; and on the Canadian side of the border, no less a legal expert than Peter Hogg, former dean of Osgoode Hall Law School, has written the advice that this very likely will violate section 15 of the Charter by treating some Canadians differently from others.
More than 30 years ago, I learned constitutional law in a textbook he wrote.
What will the minister say to its constitutionality?
Jim Flaherty Minister of Finance
Mr. Speaker, I was taught by Peter Hogg as well. I got an A in the tax course.
The question is an important one. It is important for about a million Canadians who also happen to be citizens of the United States.
The Americans initially proposed that there would be a 30% withholding tax and there would be direct reporting by Canadian banks to the IRS. We got rid of that. They have agreed that we will use our existing framework under the Canada-U.S. tax treaty, which has been successful.
No new taxes will be imposed. The CRA will not assist the IRS in collecting U.S. taxes.
This was followed-up by a statement on the Green Party web site today:
FATCA a threat to Canadian rights and sovereignty
OTTAWA – The Green Party of Canada is calling for greater public and parliamentary scrutiny of a recently announced tax agreement between Canada and the United States, stating that it threatens the rights of Canadians and may even violate the Constitution.
On February 5th, Finance Minister Jim Flaherty announced that the United States and Canada had signed an intergovernmental agreement to implement the Foreign Account Tax Compliance Act (FATCA). This U.S. law requires all foreign financial institutions to report the personal financial information of ‘U.S. persons’ living abroad to the U.S. Internal Revenue Service (IRS).
“Although it contains certain exemptions, the agreement negotiated by Minister Flaherty fails to address the most significant threats that FATCA poses to Canadian privacy and human rights,” said Elizabeth May, Member of Parliament for Saanich-Gulf Islands and Leader of the Green Party of Canada. “This agreement also ignores the fact that Canada already has a robust information-sharing regime with the United States, and that Canada stands to gain virtually nothing from it.”
Under FATCA, Canadian banks will be required to search all Canadian financial accounts for the account records of U.S. persons and to report the findings to the Canada Revenue Agency, who will then provide the information to the IRS. In addition to being a significant privacy concern, this would likely be a violation of Section 15 of the Canadian Charter of Rights and Freedoms, which forbids discrimination based on “national or ethnic origin.”
Minister Flaherty and U.S. officials have set a March 10 deadline for public comments on the agreement, after which point the government will bring forward legislation to bring FATCA into effect. Said May: “This deadline should be extended to provide greater opportunities for the public to offer comments on the proposal – There is no reason why public input needs to be rushed on this issue.”
In Question Period Monday, May challenged the constitutionality of the provisions, as they violate s 15 of the Charter, the section that guarantees that all Canadians are equal under our laws. She cited the advice of distinguished Constitutional law professor, Peter Hogg, former Dean of Osgoode Hall Law School who has advised the Conservative administration that the FATCA is not likely to survive a Charter Challenge.
There are an estimated 1 million Canadians with U.S. citizenship or legal status who will be directly affected by this legislation; hundreds of thousands of their family members, employers, and business partners are likely to be affected as well.
Meanwhile, Olesia Plokhii at iPolitics (pay-walled) also covered the story today:
Greens call for more time to study cross-border tax law
For those who question physical gold, its as Canadian as apple pie is to Americans. Totally legal and if you sell it (who would do such a thing?) you pay tax on gains, but doesn’t everyone know gold is going to zero? LOL
In my opinion all unnecessary bank accounts should be closed, Switched to credit unions as there is almost no chance they will comply with singling out members for persecution like the banks will do. Buying gold is as easy as going to the supermarket but DO NOT BUY PAPER GOLD.. No ETF’s, no gold shares (unless you aren’t risk adverse) no funds no bull shit.
I posted a list of dealers in Canada
Don’t buy from Scotia Bank or any bank for that matter as the commission they charge is ridiculous and they try to tax you. THERE IS NO TAX ON .999 bullion. They are also nosy as expected.
More GREAT NEWS
Thank-you Elizabeth May. I voted Green in the last two Federal elections,which was essentially destroying my ballot. Next election I’ll have to vote more strategically.
Sorry folks, this banker story is too big and not really too far off on the subject on our war with the banks
VIDEO.. Gerald Celente and Alex Jones comment on 20 banker “suicides”
re; “the tax treaty itself may be unconstitutional if Parliament doesn’t have the right to grant tax levying privileges to a foreign state”
Maybe that is why Flaherty keeps Harpering that the FATCA IGA doesn’t impose any actual US taxes (yeah right, but it is the PRECURSOR to assessing and levying taxes on Canadians and Canadian earned and sited assets). AND how can the US demand the automatic reporting on ALL those in Canada – and force Canadian citizens living in Canada to prove they are not US citizens? How can Canada force Canadian-only citizens to provide or prove anything to the US? And, if a Canadian-only refuses, their information is to be sent to the IRS anyway. How can the Canadian government waive the privacy rights of Canadian-only citizens vis a vis the US? And they very carefully have NOT touched the question of Canadian-only joint account holders – which was also not answered in the EU when Sophie in’t Veld asked that very question. I suspect that is a FATCA aspect that will prove to be indefensible.
Plus, re the deliberated evasion re the FATCA potential penalties are new, and FATCA form 8939 obligation for individuals is new – and failure to file or errors in filing the FATCA form 8938 (for those who meet the 8938 filing threshold) acts to extend otherwise expired Statutes of limitations on the ENTIRE associated return, and other draconian provisions.
Regarding FATCA and Quebec and sovereignty,
I have asked this related question before but it went no further (maybe because no-one reading knew the answer?): http://isaacbrocksociety.ca/fatca/comment-page-29/#comment-419509
and raised this here: http://isaacbrocksociety.ca/fatca/comment-page-29/#comment-419533
I don’t know the answer either. We need input from someone who is more familiar with these issues re Quebec’s sovereignty in tax issues.
Also not acknowledge is the matter of federal regulation of banks vs. provincial regulation of credit unions. The federal government can sign the FATCA IGA, but can they impose it on credit unions if there is a provincial regulation issue?
You can leave Ms. May a thank you in the comment section and watch the video from Question Period here:
your comment March 5, 2014 at 8:59 pm EST …”Guess again, Brockers will fight to the very last breath…” yes and Brockers worldwide will fund you to the last breath as you are our light in a very dark place..
and your further statement….. “1 M USP are watching … 4 M USP are watching”….. I expand to say the 7 M estimated USP abroad are watching and praying to whatever is “upstairs” for your success
God be with you and bless you for all your efforts, all of you, and keep telling us how we can help.
@Em – call me dumb. I cannot see how to leave a Thank you comment on the Eizabeth May site … short of just sending her an email. Would you please guide me?
Thank you Elizabeth May raising the issue in Parliament, however, Flaherty’s answer doesn’t solve any problems.
The CRA may not collect on behalf of the IRS, however, the US is still allowed to enforce CBT by having the data. US/ Canadian citizens resident in Canada should not have their Government supply the IRS the ammo to prosecute CBT. Without the data, the IRS has a weak case at best and can only prosecute for non-filers without the data to say they’re owed taxes.
The Charter Challenge must succeed.
Flaherty’s answer to having banks give personal data to the IRS was “we got rid of that” . The honest answer should have been ” we saved the banks by throwing out ALL exsisting protections for Canadians by having the CRA do our dirty work” Mr. Speaker, we have now made the CRA a reporting center for the IRS. Canadians need to know what we have done to them and how we can succeed in removing all protections for Canadians this easily.
There is a comment section below the video at the link Em provided. I just left a comment and with my slow laptop it is often a challenge.
Peter Hogg should take back Flaherty’s “A”
MP May’s question was a method of alert for all Canadians, and an important message for and to her fellow Parliamentarians. Her ability to ask questions is severely rationed – *her allotment seriously restricted by the Parliament based on her party’s representation in the House – and thus very very precious. The fact that the Honourable MP May chose to use one of her rare opportunities to raise the constitutionality of FATCA demonstrates how very seriously she takes this issue.
*”…. The recognition pattern – that is, the order by which members are permitted to ask questions – and distribution of questions among political parties and independent members is based on each party’s level of representation in the House. It is now accepted practice for political parties to provide to the Speaker, prior to question period, a list of their members who will be asking questions on that day. While the Speaker is not bound to follow this list, and has the authority to recognize any MP, he or she does follow the list in practice.
Guidelines and precedents govern the questions that may or may not be asked during question period. House of Commons Procedure and Practice, a book published by the House of Commons that provides a complete description of the rules, practices and precedents in the House, summarizes the effect of these rules as follows: calling on members to “ask a question – be brief – seek information – and ask a question that is within the administrative responsibility of the government or of the individual Minister addressed.” 4 Questions are not preceded by a notice. Members and ministers have, based on practice, 35 seconds each to ask and answer a question.”……
As I read Jim Flaherty response it dawned on me that he really believes the IGA was the way to go and that is assists duals (and the banks) – but in reality the IGAs, the Canadian (and other governments that have signed an IGA) and the US Treasury itself are actually ‘enablers of tax non compliance’. Flaherty takes pride in what is not going to be required to be reported under the IGA but does not seem to realize that each affected individual has a positive obligation under US law to disclose (in most cases) all accounts. Similarly, the US Treasury by not requiring certain types or amount in accounts to be disclosed under FATCA is just setting a trap for the individual affected because the US LAW still requires disclosure, FBAR still must be filed, and US taxes still must be paid. Am I missing something or is everything (liability, obligations etc) just flowing down hill onto the US Persons …. in what is really a HUGE Catch 22?
“I cannot see how to leave a Thank you comment on the Eizabeth May site … short of just sending her an email. Would you please guide me?”
Ms. May’s comment section is “powered” by DISQUS. Some browsers (like Camino) will not show DISQUS comments but others will (like Safari). I really don’t like DISQUS but I reluctantly registered recently so I could do more commenting. I hope that helps. I’m not techie so that’s all I’ve got.
I think you are 100% correct. The IGA changes nothing with regards to compliance obligations.
Therefore, US expats have three choices:
1.) Comply with reporting and tribute payment obligations (remain a slave)
2.) Go under ground, hide in the closet, fly under the radar, or whatever you want to call it (future trap)
3.) Renounce or Relinquish US citizenship (eradicate the cancer)
4.) Oh, I almost forgot, “sit tight” and wait around to be fucked in “due time.”
@Samuel Adams2.) Go under ground, hide in the closet, fly under the radar, or whatever you want to call it (future trap)
No future trap at all. Why would you say that?
I have to issue a correction to my earlier post, that the NDP hasn’t raised the Charter issue while Elizabeth May has. Blaze called to my attention that Murray Rankin (NDP National Revenue Critic) raised the issue on February 6 in Question Period, the day after Flaherty announced the IGA:
Mr. Murray Rankin (Victoria, NDP):
Frankly, Mr. Speaker, the minister failed to mention that this agreement was negotiated entirely in the backrooms with absolutely no transparency.
Conservatives refuse to even listen to the Canadians affected. They have also failed to heed the advice of many constitutional experts. As a result, what they released yesterday may not stand up to a charter challenge.
Can the minister guarantee that this agreement is even constitutional?
Hon. Kevin Sorenson (Minister of State (Finance), CPC):
Mr. Speaker, what I can tell the hon. member is that the agreement that was negotiated over a great period of time is much better than having no agreement at all.
To be clear, the agreement will not impose any new or higher taxes, and the CRA will not assist the IRS in the collection of United States’ tax penalties.
Note the reply wasn’t given by Flaherty but by his “Minister of State,” but it was the same waffle — boasting about not collecting taxes or penalties, but ignoring the question of constitutionality (Charter violation).
If the government has a legal opinion that the agreement is not in violation of the Charter, why don’t they just say so? If they aren’t saying so, it seems to me that means they either don’t know, don’t care, or do know it is a Charter violation and don’t want to admit that and invite a court challenge. Or maybe that whole caucus (from Harper right on down) is congenitally incapable of giving a straight answer to a very straight and direct question. Twice now, from two parties.
I guess for now I’m back to splitting my annual political donation between the NDP and the Greens …
@schubert your observation is very troubling.
IF the government had an opinion letter that said it was not constitutional would that not have stopped them in their tracks.
Can you write your MP to make an enquiry and request a copy of any opinion letters from counsel?
What I meant by (future trap) refers to what Steve Klaus had written above with regards to people who go underground and try to stay off the radar (closet Americans):
“Flaherty takes pride in what is not going to be required to be reported under the IGA but does not seem to realize that each affected individual has a positive obligation under US law to disclose (in most cases) all accounts. Similarly, the US Treasury by not requiring certain types or amount in accounts to be disclosed under FATCA is just setting a trap for the individual affected because the US LAW still requires disclosure, FBAR still must be filed, and US taxes still must be paid. Am I missing something or is everything (liability, obligations etc) just flowing down hill onto the US Persons …. in what is really a HUGE Catch 22?”
At some point in the future, the US may decide to go after Canadian banks like its doing to the Swiss banks by threatening to seize their assets in the US or revoking their banking license there. Many CA banks operate or have assets in the US which can easily be attacked.
Uncle Sam can be a mean SOB and all too willing to turn his scorn onto longstanding traditional allies when ever it suits him, particularly when he wants money or someone to blame for his problems.
@Samuel Adams, “Canadians with Clinging Closet USA nationality”, not “Closet Americans”!
@George, Not ‘if’, Peter Hogg did write a long letter explaining in his opinion why a FATCA IGA was unconstitutional, and suggested that the only way it would NOT be unconstitutional was if it was applied to non-residents of Canada.
So much has gone on since this whole battle started, that many of the newer people reading this site, have missed a lot of background! I don’t have the link to Hogg’s letter off-hand, but with some digging I could find it easily enough.
@Em – I am registered for Disqus … but could not find the comment section to start typing.
@ White Kat,
It’s under FATCA and Canada in the sidebar
Peter W. Hogg, C.C., Q.C., position on FATCA and the Canadian Charter of Rights and Freedoms, 12 December 2012.
@whtekat, I have read the Peter Hogg letter but he is not the governments lawyer. I would like to know if they have a legal opinion and what it says.
Wow, I’m stumped. The comment section, when it appears, is immediately below the video and the text of the question and answer. You seem to have no problem with the US Politico site but I can’t imagine why a Canadian site would not work properly. Sorry, wish I knew.