First, don’t you love this photo of her at The Sandbox Project in Ottawa yesterday? Elizabeth, you have an open invitation to play with us at Maple Sandbox anytime!
Thanks to Hazy for finding Elizabeth’s comments in Hansard June 4, 2014
Elizabeth May: The piece my hon. friend from Victoria mentioned is the most controversial. It will certainly be the piece that will cause the greatest grief to this administration. It could cause real grief and hardship for about a million Canadians who may find themselves swept up, not as U.S. citizens, but described as U.S. persons.
I refer again to the Foreign Account Tax Compliance Act. This is unusual in a lot of ways. My friend from Victoria and I are both lawyers. I no longer practise in a way which anyone would notice. I am not a practising lawyer. I am not insured to practise law, but I know my legal principles.
It is certainly remarkable that U.S. legislation has been accepted in Canada as having extraterritorial application. Canada is prepared to say okay. I do not know if this would be allowed if, say, Iran decided to pass legislation to say that anyone with an Iranian connection in Canada had to be treated differently than other Canadians.
In the case of the United States and this piece of legislation, it is based on the implementation of something called the Intergovernmental Agreement, or IGA. Obviously, the United States is our greatest trading partner and closest friend. This is nothing against the United States, but as a matter in principle of law, one nation’s laws do not apply extraterritorially to citizens of other countries. In this case, we have agreed, as though it were a treaty, to implement the IGA.
What is fascinating about this is that the United States does not treat it as a treaty at all. It has not been sent to the U.S. Senate for ratification. In other words, the U.S. does not treat it as a treaty. The U.S. treats it as sort of a clarification of previous agreements. However, it contains substantive new obligations for foreign countries, and somehow Canada feels that we are obligated to enforce it.
Not all experts in tax law accept that. There was a particularly useful submission to Finance Canada prepared by Allison Christians, who is the H. Heward Stikeman Chair in Tax Law at McGill University, and Professor Arthur Cockfield of Queen’s University. Together they have looked at this and have urged Finance Canada to slow down. They say that the steps we have already taken completely vouchsafe Canadian business and protect Canadian banks. We do not need to push FATCA through, and we certainly should not be pushing it through in an omnibus budget bill.
Their recommendation I think is worth reading into the record this evening:
…we recommend that the government delay passage of the Implementation Act until: (a) the issues surrounding Charter protections, other taxpayer protections, and global cooperative efforts have been thoroughly studied and addressed; and (b) the U.S. government agrees to reciprocal treatment with respect to the tax information reporting system that has been unilaterally imposed on Canada.
We are looking at a piece of legislation that imposes on Canada requirements that the U.S. does not have to reciprocate without a treaty having been ratified in the United States.
What are the implications for Canadians? Well, as I just mentioned, Professors Christians and Cockfield talked about charter implications. My office some time ago filed an access to information request. That is how Professor Peter Hogg’s constitutional advice to Finance Canada became public.
Professor Hogg’s letter, dated December 12, 2012, was advice to Finance Canada that what he saw in FATCA definitely violated the Charter of Rights and Freedoms, specifically section 15 of the charter, which says:
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…
This is clearly discrimination, and Professor Hogg went on is his letter to point out the following:
There is no mechanism in the Model IGA whereby individuals who are suspected to be U.S. citizens would even know that their personal information was provided to the IRS.
Further on in his letter, he puts it very strongly and clearly:
In my opinion, the procedures mandated by this Model IGA [FATCA] are discriminatory in a way that would not withstand Charter scrutiny. These procedures effectively treat individuals differently, and adversely, based on immutable personal characteristics, specifically citizenship (whether or not acknowledged or desired by the individual) or place of birth. If Parliament were to enact legislation authorizing and permitting this type of differential and adverse treatment, the legislation would contravene the equality protections in section 15 of the Charter.
That is not a tentative conclusion. It is an authoritative conclusion from the most respected constitutional law expert in the land. He wrote the book on constitutional law that I studied when I was in law school. He taught constitutional law to our dear late friend, Jim Flaherty. Jim claimed that he gave him an A, but we cannot verify that.
However, we know that this piece of legislation, I say without qualification, clearly is unconstitutional, and it brings shame to this place to knowingly pass an unconstitutional act.
Marc Garneau (Liberal)
Mr. Speaker, I thank my colleague from Saanich—Gulf Islands for raising the issue of the Charter of Rights and Freedoms, because we in the Liberal Party are also concerned, based on what we have seen from constitutional experts, that there may be violations of the charter.
Let me get to my question, which deals with FATCA. As we know, under FATCA, Canadian banks must report to the IRS the accounts held by clients who happen to have U.S. citizenship. In Canada there are about a million of them. Otherwise they face the prospect of a 30% withholding tax on their U.S. income.
The government seems to have been very motivated to protect the banks from this. It has come up with some alternate arrangements and changes. As it turns out, the banks would report to the CRA, which would then report to the IRS.
However, there does not seem to be the same concern for the citizens themselves. In fact, it seems that the government has folded its tent here, and it seems quite happy to do the work of the IRS insofar as citizens are concerned.
I would like to hear more from my hon. colleague on why she thinks the banks would be protected but not Canadian citizens with dual nationality.
Elizabeth May: I think what has happened here is that there have been threats made by the U.S. administration to sanction Canadian banks. The expert legal advice we have is that the best approach would be to push back on that internationally and to say that there is no right on the part of the U.S. government to penalize banks operating within the United States on the basis of this treaty, which the U.S. has not even ratified itself.
Murray Rankin: Mr. Speaker, my hon. friend was there at the committee stage. Why does she think the government would not accept an amendment that would say, for greater certainty, that the provisions would comply with the Charter of Rights and Freedoms and the Privacy Act, and it would not accept the need for notice of Canadians before their information was released?
Elizabeth May: Mr. Speaker, there were some concessions the Canadians officials gained, such as making sure that RRSPs and other pension and tax savings funds would not be caught under this web. They felt so good about those that they felt they did not dare do anything to protect Canadians and that they got the best deal they could get. They should be listening to legal advice, particularly constitutional law.
cross-posted from Maple Sandbox