My submission to Department of Finance (IGA-AIG@fin.gc.ca), by Peter W. Dunn, PhD
Introduction:
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.
Conclusion:
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.
Excellent point about French language that I don’t recall reading before. In so far a language rights are a factor, might the Province of Quebec be a strong partner in this lawsuit? Also, I like the point about the need to protect Canadians against predatory, fear-mongering cross-border accounting agents.
On a related note, I think some journalists, for example Robert W. Wood of Forbes Magazine, play a powerful adjunct role in supporting the predatory accounting industry, disseminating information in a way that seems largely directed at creating fear and hopeless dependency on accountants. Wood says that FATCA etc doesn’t fall into the category of a human rights abuse, when it most certainly does. The subtext to his columns are that political action is likely to prove ineffectual, and that the safest thing to do is to bend over and take it like an American. Anyway when I read his columns I go into deep funk.
Because I didn’t know about f—ing FBAR law. And now that I know about it I’m told suddenly some kind of criminal. Part of my identity is being an America. Another part of it is being a law-abiding citizen. And now they’re telling me I’m a criminal. That I should go in a disclosure program for criminals because I didn’t do some paperwork that I didn’t know I was supposed to be doing. And I looked at the way to “come clean.” Coming clean means confessing to breaking the law? Hello 5th Amendment anyone? Having done nothing wrong, why should I pay penny in fines? Where is the disclosure program for non-criminals?
And let’s say I bend over and take it like they’re telling me to. What next? I don’t know whether I want to spend the rest of life worrying about whether I have filled out all all the forms, or whether I can afford accountants who may or may not know what they’re doing, and meet this or that filing deadline or face financial ruin.
Today I hesitate to start a business, hesitate to open bank accounts, hesitate to make investments with my money, hesitate to buy stocks, even hesitate to get married, all because I know all these decisions have massive implications in terms of paperwork and fines I don’t understand and I’m not convinced anyone that I can afford to pay to help me would understand. And I’m speaking as someone who has a hell of a lot more education than the average American and has studied up on these issues quite a bit.
Ever since I learned about the endless filing stipulations for overseas citizens, I feel like I can never be free.
Your words ring true for so many of us Tofino Tom. The reality of the situation is that for the vast majority of us, US “personhood” is financially unsustainable, and made unbearable emotionally in the extent that we are treated like criminals by the disclosures required of us. No one in the US would tolerate this kind of insult, why should we?
@Tofino Tom
I meant to mention that the OVDI ‘shock and awe’ campaign left us in a similar paralyzed state as what you’re in. Would the Streamlined Procedure not work for you? It didn’t exist when we had our OMG moment back in 2011.
@Tofino Tom
“Because I didn’t know about f—ing FBAR law. And now that I know about it I’m told suddenly some kind of criminal. Part of my identity is being an America. Another part of it is being a law-abiding citizen. And now they’re telling me I’m a criminal.”
YA, I KNOW. Exactly my thoughts. I am so enraged I want to march on Washington, burn the ramparts, scream Joplin/Baez/Airplane versus (yes I am a child of the 60’s). I am so frustrated at the moment I need to DO something big and loud. Is there something I/we can do while we are sitting waiting for Mr Avray’s decision? Are things going on that I can join in on that I don’t know about? They are just assuming we have assimilated what they assume are “nice” Canadian manners and will just take this crap laying down. Well I’m “up against the wall” and if I go down it will be screaming. I am way too old for this garbage.
@Charl, Organize a protest. It is a great catharsis. Tell me where and when, and I’ll join you.
I like your attitude, Charl. You are like the lady I heard about on Brock who asked the US border agent if he was going to stop her from entering the US on just her Canadian passport!
We are the incarnation of the brave protesters of Charl’s and my time. Put out of business purposely.
Thanks to everyone for your responses, and yes, I plan on attending the Calgary info session. I will not go down without a fight. Quite frankly, I’m surprised there hasn’t been more in the news about FATCA and the whole U.S. taxation witch hunt. Whenever I tell people about it, they’re shocked and always ask, “Why haven’t I heard about this before?”. I believe we all need to work hard to educate others about this, as this affects ALL Canadians. As a former journalist, I’m working to try and get more news coverage around this issue. Most of what I’ve seen so far has only skimmed the surface and hasn’t touched on why everyone in this country should be outraged by this.
@Molly,
Long timers at Brock have been singing this song over and over, but the deafness has been silencing. Anything you can do to help is much appreciated.
@Molly, The whole, ‘it only affects Americans living in Canada’ perception/propoganda, is a big part of the problem.
@molly
James Fitz-Morris of the CBC blitzed it right after the IGA was announced, but now there’s only radio-silence (literally).
OK, what are we going to do? I am basically a follower, not a leader. I live in the boonies West of Orangeville, Ontario but my daughter is in Toronto. Her MP is a freshman, Chrystia Freeland, a liberal that was silent re FATCA during the debates but she is smart and might “get it” if enlightened.
Do we go after the MP’s and a pack of us show up for the meetings? Check out his site: http://www.apathyisboring.com/en/the_facts/articles/how_to_set_up_a_meeting_with_your_MP
US Consulate in Toronto? (If we are a large enough group that might at least get us on the telly). Might John Richardson with a loud speaker join us so we can be REALLY loud rather than apathetically boring walking in circles. I’m thinking this is a good idea, no? Maybe we peons can teach the legislators how to have a the cojones to stand up to the US. (The problem is the consulate in Toronto is not in a hugely trafficked area). But again, if we are large in numbers maybe we can still be noticed? Use John’s theme of the US is stealing Canadian assets and our government is paying them to do it? I don’t know, just brain storming here.
@Charl
Will you be at the Richmond Hill info session on March 29th?
My MP , Charlie Angus, is in hiding… not responding to my emails anymore. I talk to his assistant. Who says he has to call back when I ask a question. My MP has other concerns. He has nothing about FATCA on his website, nor does Mulcair. or the Liberal or Green Party. I never looked at the PC party website. I can not bring myself to look up those wanna be Americans.
Protesting the US Consulate is difficult…. The back street door where people go in it may be interesting because it may give those going for Visas second thoughts..
It would be better if we had a bigger crowd – join up with the grannies, OBS (occupy Bay street) and the Idle No More groups.
@Charl
Some of us followed that by-election closely as Ms Freeland was up against FATCAnatic Linda McQuaig.
Been wanting to do the consulates for some time – I wish I lived in Toronto (not really ;-))
@northernstar
The last rally in Toronto I know of was against the Syrian air strikes and was held across the street from the consulate. Is it customary to have them there?
http://globalnews.ca/news/825730/rally-at-u-s-consulate-protests-proposed-military-strikes-against-syria/
@Bubblebustin
The only protest I went to at the Toronto Consulate and was on the sidelines was in 1970….Viet Nam was the issue.
Why can’t we organize hitting all the US consulates in Canada on the same day? Find some folks that are savvy with crowd rallying(not me), know the best use of a loud speaker(not me), have media contacts so they will show up(again not me). Youtube ourselves maybe wearing masks as we are fugitives from the law, print up the Richardson/Kish document…my mind wanders here.
@Northernstar
Shall we contact those groups and see if they have any empathy for our circumstance and might join us? I am going to try and get to Richmond Hill….got 350lbs of “loyal to family” Shepherds that need fur-sitting with few takers. (As an aside, as a MUCH younger woman I dated Joan Baez’s brother in law. Her husband was the counter-culture anti Nam fellow famous for his protests. Maybe I need to look him up for some tips!)
@Charl
Maybe some helpful hints would be good but that is over 40 years ago. Times are a changing…:)
I used to have a Shepherd. born in Germany and brought over for breeding in Canada. I got her when she “retired”. Loved her lots.
I am gong to try to make the R.H. session, especially since it has the psychologist as well as John Richardson.
@molly,
Thanks for sharing your experiences with part of the compliance industrial complex in Canada:
re your comment; ..”.. I attended a Moody’s Gartner seminar last month in Calgary and was told it would be $2,000 to come in for a one-hour consultation. I was quoted a total of between $20,000 – $25,000 to become compliant and renounce, and my situation is VERY simple: single, no assets, modest income, born in the U.S. to two Cdn parents and moved here when I was five..”.
Prices have gone up substantially.
If pressed, (going on the description you gave of your situation) they might admit that you are not their target client, but would they discourage you or turn down your money? Would they pro-actively counsel you that your situation is unlikely to require the level of professional assistance that comes with a price tag of; “……$2,000 to come in for a one-hour consultation … [plus a] total of between $20,000 – $25,000 to become compliant and renounce.”?
FWIW, in my experience and opinion (and I am not a US tax expert, only someone who experienced this firsthand), be very very careful about entering into this kind of agreement with members of the compliance industrial complex. The quotes aren’t detailed, and they are not at all firm in any sense. They can’t be relied on. For example, in my experience, some of these ‘professionals’ can and will bill you at the senior lawyer’s rate for merely sending you an unsolicited email ‘update’ containing a link to their firm’s blog – posts containing information that isn’t even personalized for your unique ‘facts and circumstances’ – except that your name is added in the salutation. The post the link directs you to is publicly available to anyone who cares to follow their web-blog. Is it a fair and ethical practice for a legal professional? To bill an email linking to a blogpost as if it constitutes US tax assistance? Is that ethically worth > 650 – 750. or more per hour? Or even at a junior lawyer’s rate of perhaps > 350. per? Very high fees are NO guarantee of perfect paperwork – or even that it will be free of careless error and omissions. Or corrected without the client identifying the errors, and chasing them down for the requisite corrections. Apologies, and amelioration without further charge are also elusive. That was my experience. At some point the professionals I was dealing with became a significant part of the problem.
I don’t know where the usual protests at the Consulate are held, I will check that out. I do know that they are barricaded in there and the sidewalk on University Ave is pretty much off limits.
Reckon the times aren’t changing that much… how is it we are that dissimilar to the US governments’ overreach, might is right sense of entitlement, lack of foresight as to the unintended consequences as was their incursion into Viet Nam?
Thanks, Molly, for
1) going to attend the Calgary information session, and
2) working on getting more news coverage.
Believe me, it is not at all for lack of trying on the part of Brockers and Maple Sandboxers!
@Charl,
If you like, I could create a post on your behalf at Brock re your ideas for a protest.
That would be fabulous but my fear is that I am really overstepping my bounds here. I am rather a newbie here at IBS and nobody likes the bossy, new-comer. You folks have all done so much work, I am not even in your league. It is just that I am soooooo angry right to the bottom of my soul that I have to DO something or I am going to explode. Commenting in the rags just ain’t doing it for me. (Ya, I need the shrink at Richmond Hill but I’m afraid short of a lobotomy nothing will help). Again, I’m a follower so I would LOVE for someone else to take the lead on this. I just have a big mouth!
That being said, I will do whatever it takes. Maybe stepping out of my comfort zone is a good thing, who knows. But I lack the coherent verbal skills, contacts and confidence that seem necessary to launch a Canadian wide US embassy protest. (What is the expression…go big or go home?) Would need LOTS of help. I’m up for the work, just seem to lack the talent. (Now I have a vision of the Brockers doing a fund raising to post my bail!) I am not out of the closet as of yet with miles to go before I sleep.
@badger
Thanks for your insight on the cross-border professionals and no, I haven’t had anything more to do with Moody’s. It became clear to me very quickly that they are only interested in gouging people for as much money as possible.