My submission to Department of Finance (IGA-AIG@fin.gc.ca), by Peter W. Dunn, PhD
In 2013, the Government of Canada deported head of Eritrean Consulate, Semere Ghebremariam O. Micael, for using the consulate as a base for the collection of a 2% Diaspora tax. CBC’s Meagan Fitzpatrick reported the following (May 29, 2013):
Deepak Obhrai, parliamentary secretary to Baird, further explained the decision to expel Micael when he spoke to reporters Wednesday morning.
“We have been very much concerned with the actions of the Eritrean consul general here in Canada. We had asked him at the early stages not to do this, it is contrary to our laws, but our information is that they continued doing it,” said Obhrai. “And so we finally had to take action. We cannot allow our territory to be used for fundraising for other countries.”
Thus, the Canadian government of Prime Minister Stephen Harper took necessary actions to protect Canadians of Eritrean national origin from the tax collecting efforts of Eritrea. With the proposed legislation, however, the government refuses to protect Canadians of United States origin, and therefore, will be in violation of article 15 of the Charter of Rights and Freedoms. Not only so, but the proposed legislation would violate several rights of Canadians.
A. The Heart of the Matter: Principle concerns
I am the administrator and founder of the Isaac Brock Society, henceforth “Brock”, (http://isaacbrocksociety.ca), a web-based gathering place for people concerned about FATCA and its implementation throughout the world. Most of the people who now participate in our discussion are very disappointed with the government of Canada. The main reason for this is two-fold:
(1) The government of Canada is implementing through this legislation National Origin discrimination which is strictly forbidden by the Canadian Charter of Rights and Freedoms article 15. The government of Canada fails to provide equal protection to certain Canadian citizens.
Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
The proposed legislation will enact systematic discrimination of people who are of United States national origin. Most of our participants at Brock have a connexion to the United States. Some are married to a US citizen. Some were border babies–thus, the flimsiest of ties. But most are Canadian citizens. Thus, the legislation proposes to single out Canadians of US national origin for special treatment and in many cases, to send their banking information to a foreign government for tax collection and criminal enforcement purposes.
(2) The government of Canada will be sending the bank account information of certain Canadians to a foreign government, which will expose these Canadians to damage through extra-territorial taxation under United States tax code and to felony charges under US criminal code.
(a) The Conservative government is seeking through Strengthening Canadian Citizenship Act to strip certain Canadians of their Citizenship. In practice, Finance Minister Flaherty is already stripping certain Canadians of their right of citizenship by agreeing to send their Canadian banking information to the IRS. This is tantamount to extraordinary rendition: the CRA will in certain cases strip Canadians of their Canadian privacy rights and their right to financial protection from a hostile foreign government which is desperate for funding. I thought that the government of Canada learned its lesson about extraordinary rendition from the case of Canadian Maher Arar, whom suffered torture because the RCMP aided the United States in deportation to Syria; this cost taxpayers 10.5 million when the government settled with Arar. The Canadian citizen who suffers financial damages because of the Minister Flaherty’s decision to render that citizen’s private Canadian banking information to the IRS has grounds for lawsuit against the government. Why would the government of Canada expose itself to such damages?
(b) The CRA will give this banking information in what amounts to a felony investigation under US law (Bank Secrecy Act) resulting in possible criminal charges, imprisonment and fines exceeding 300% of a Canadian citizen’s financial wealth. Finance Minister Flaherty has euphemistically referred to this cooperation with United States law enforcement as an “exchange of information”, when it should be more properly termed the enforcement of a general warrant (hence, fishing expedition) requiring financial information that is potentially incriminating under United States tax and bank secrecy laws. But these bank accounts are completely innocent and legal under Canadian banking law: yet the effect of this legislation would be to make it illegal for certain Canadians to have legal bank accounts without the CRA disclosing their financial information to a foreign government. This fails to acknowledge article 8 of the Canadian Charter of Rights and Freedoms:
Everyone has the right to be secure against unreasonable search or seizure.
How will the government of Canada prevent Canadians that cross the border, whose banking information the CRA has sent to Washington DC, from detention and arrest, based on this information? Already United States seems to moving towards greater co-operation between the IRS and the US Customs and Border Protection, and those whose bank accounts are not in conformity with United States law may be open to detention. Again, these individuals would have the right to damages from the Canadian government which gave their private banking information to the IRS. Since the Canadian government cannot guarantee how United States will use the information, it is irresponsible to share it.
B. Other Damages and Abuses: What Canada is already allowing the United States to do
Apart from these principle concerns about the fundamental right of Canadians to protection, the participants at Brock have been subject to many other kinds of abuse which the Government of Canada is allowing to take place within our borders–indeed, with the direct complicity of the Canadian government in some cases:
(1) Cross border accountants and lawyers who are the main implementers of US law in Canada operate with impunity. They do this at exorbitant fees, in an industry unregulated by Canadian law. The services of these experts provide no net benefit to the residents of Canada, as they are collecting taxes for the United States treasury. I am aware of a case in which a tax lawyer charged over $25,000 to help a middle-class Canadian to pay $3000 (i.e., 5% of his Canadian financial assets) Offshore Voluntary Disclosure Program penalty to the United States. In order to pay these fees, he had to take a mortgage on his Alberta home. I know also of a woman who will relinquish her US citizenship but paid a cross border lawyer $4,000 to prepare her taxes and disclosure forms for her 2012 all-Canadian income of $50,000, and yet she owed zero taxes to the United States. Canada regulates many industries to protect consumers. But by acknowledging the United States’ tax law which imposes United States taxation on its alleged citizens no matter where they actually reside, the government of Canada has created a climate of fear in which tax specialists can charge exorbitant fees. This industry has no legitimate business being within the borders of Canada, as it is implementing tax laws to which Canadians did not consent.
(2) Francophones in Canada have the right to correspondence from the Canadian government in French. The IRS only communicates in English and does so using Canada Post. Thus, the government of Canada aids and abets the imposition of English tax enforcement on francophones in Canada. The entire United States tax code of roughly 75,000 pages is in English only—rarefied English only understood by American tax experts. How are francophone Canadians suppose to understand this tax code that even native English speakers do not understand? Why does the Government of Canada allow the IRS to have federal jurisdiction in Canada to tax Canadian citizens, when this violates the hard won right of francophones to have the laws that apply to them be in a language that they understand?
Again the Charter of Rights and Freedoms protects francophones in Canada to the imposition of laws not written in French. Yet the effect of the agreement, is that the Canadian government explicitly acknowledges United States laws as having jurisdiction in Canada; these laws are in English and will apply to many Canadian citizens, including francophones, who live in Canada. As the Federal Government of Canada cedes its own sovereignty to the United States, I imagine that its failure to protect francophones from the United States will inflame the Sovereignty movement in Quebec.
(3) Aboriginals living on Canadian treaty lands are exempt from taxation of their income. But they enjoy no such exemption from the United States. Is it not the duty of the government of Canada to protect aboriginals in Canada from foreign governments? Some aboriginals will be affected by this legislation, and they will go from tax exempt to facing full taxation under United States tax law.
The first mandate of every government is to protect the citizens of the country. Failing to do that, the government delegitimizes itself and should be now open to sanction either from the voters or from the courts. I hope and pray that the government of Stephen Harper would come to its senses and vote down this legislation. It is not in the interest of Canada.