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
@Em – ok .. I figured out what the problem was – it was with my browser settings.
Right after I typed my reply here I checked Ms. May’s site and your comment popped up. All’s well. 🙂
Blaze at Maple Sandbox requested materials that would have included Department of Justice information. What she received was heavily redacted – including the very titles of the documents. Somewhere I remember seeing this comment from Blaze; “………So, what does the Minister of Justice say?” AND she notes this comment in the government response to the FOIA; “If relevant information to this question exists, it would be subject to solicitor client privilege; therefore the Department of Justice cannot provide a response (four times on page 124) ” – from http://maplesandbox.ca/2014/finallly-a-response-but-few-answers-to-ted-hsu-questions/comment-page-1/#comment-11872 and also http://maplesandbox.ca/2014/finance-canada-244-pages-access-to-information/comment-page-1/ ). See also the non-answers received by MP Hsu from the Harper government ( http://maplesandbox.ca/2014/finallly-a-response-but-few-answers-to-ted-hsu-questions/comment-page-1/ ) and the non-answers received by MP Brison (see links from http://taxpol.blogspot.ca/2014/01/canadian-government-responds-to-fatca.html ).
If the Harper government received an opinion from the Department of Justice that a FATCA IGA was likely unconstitutional under Canadian law, are they compelled to acknowledge that to the Canadian public? I don’t know. Maybe they are not compelled to act on any opinion they were given or sought out – perverse and wrong as that might be.
Maybe they can just stonewall and refuse to provide any information, and hope that all those persons the US claims in Canada will not be able to force them to cough up the opinion they received. That is a question that Lawyer Arvay would know the answer to.
A New Zealand perspective may be helpful here. I requested the same data as Blaze under the FOIA and most was heavily redacted. However I did receive minutes from a cabinet meeting that were not redacted and gave some insight into why they think the IGA may not be inconsistent with our Bill of Rights (the equivalent of the Canadian Charter). I made a submission to NZ Select Committee based on this which is below:
In summary: You are US Citizens and should have known of your obligations. All we are doing is ensuring that you comply and therefore that is not discrimination. In any case, the needs of our financial institutions come before any citizens rights and we’ll take that as our excuse to override the Bill of Rights.
Flaherty’s “I got an A on the tax course” translated. “I know how to get around the laws of Canada really well.”
Someone might be interested in attending this — to do with PRIVACY rights. http://ccla.org/2014/03/07/march-2014-e-bulletin/#Pathways
March 20-21: CCLA hosts Pathways to Privacy Research Symposium
Public Panel Discussion & Privacy Fair
March 20, 2014 | 6:00 – 8:30 pm
The Bissell Building, University of Toronto
140 St. George Street, Toronto ON
Pathways to Privacy Symposium: Helping Canadians Find Pathways to Privacy
March 21, 2014 | 8:30 am – 5:00 pm
The Faculty Club, University of Toronto
41 Willcocks Street, Toronto ON
CCLA has been awarded funding by the Office of the Privacy Commissioner of Canada (OPC) to organize and host the second Pathways to Privacy Research Symposium in Toronto. We are organizing the symposium in partnership with the University of Toronto, Ryerson University, Sherbrooke University, and the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC).
Le symposium de recherche Parcours de protection de la vie privée sera organisé par l’Association canadienne des libertés civiles (ACLC), en partenariat avec des co-requérants de l’université de Toronto, l’université Ryerson, l’université de Sherbrooke, et le Clinique d’intérêt public et de politique d’internet du Canada Samuelson-Glushko (CIPPIC), et aura lieu à Toronto en mars 2014. L’initiative des symposiums de recherche Parcours de protection de la vie privée a été mise en place par le Commissariat à la protection de la vie privée du Canada afin de mieux faire connaître les résultats des projets de recherche et de transfert des connaissances en matière de protection de la vie privée au Canada.
A bunch of us are going and meeting for dinner prior to Thursday evening event.
That’s great, Joe Smith. Hope there will be good opportunity for questions from the audience — educating some more, ones that have a real interest in privacy rights being taken away.
Thank you for your comments @osgood. The reminder about unreasonable search and seizure is also a good one, as is the point about ‘US taxpayer’ not being a term relevant to the laws of NZ (or Canada, or anywhere else other than in the US – where the laws defining that were made, and can be changed). I would also add anything that is relevant to a guarantee of due process – since we have not committed any crime, and the automatic presumption of a crime which is one only as per foreign US laws seems dubious.
I was thinking about how the CRA (Canada Revenue Agency) or the NZ equivalent will treat the data that the FIs and non-FIs will be automatically sending them PRIOR to being forwarded on to the IRS and Treasury. So, if our domestic tax agency is collecting all this extra data only on certain citizens with a US national origin or ancestry, then what if it would like to use that data someday on someone it is domestically interested in? That would mean that the domestic tax agency would be able to effectively warehouse data (ALL transactions, deposits, withdrawals, transfers, etc.) that ordinarily it probably could not automatically obtain without some kind of warrant or other authorization if it was investigating domestic taxpayers who did not have the US taxable status on file with the FI. Perhaps that is covered under the idea of ‘unreasonable search and seizure’, or of due process. But if not, our domestic tax agency is not just collecting this additional information to remit directly for the use of the US, but I am sure that it would be tempting and perhaps it would not be forbidden for the domestic agency to use that data domestically for its own purposes – a second type of discrimination.
I did not think of this before, because I am not worried about my own tax agency – and taxable interest is already linked with our SINs and reported automatically for tax purposes to our CRA (Canada Revenue Agency). However, that was taxable interest only – not every single transaction, deposit, withdrawal, transfer etc. Just because we don’t have anything to be concerned about and are completely compliant domestically doesn’t mean it is okay for our local tax agency to troll through and store all that information automatically for SOME of us, but not for ALL. Thus FATCA enables two sets of banking discrimination – 1. by the US (since FATCA demands automatic information that is not routinely demanded of ALL US homeland resident accountholders AND ALL US accounts), and FATCA enables retrieval and dissemination widely – without recourse, limits or transparency to other federal agencies (and beyond?), but also enables this discrimination of wholesale retrieval, storage (and dissemination?) without the controls that would ordinarily apply to our domestic accounts in domestic matters. If that makes any sense?
That makes perfect sense and I have been pointing out here and there that FATCA separates Canadian residents into those WITH financial privacy and those WITHOUT financial privacy, based on whether or not they are also U.S. citizens or deemed to be U.S. persons by the USA. That’s discrimination. That’s unacceptable. I also have pointed out in my Fin. Can. submission that there was nothing “secure” about all of this financial information getting into the hands of the CRA which offers no more data security than the IRS or any of the other 3-letter agencies the IRS will share it with. All down the line this sensitive data is rife for abuse by governmental miscreants and opportunistic hackers. That’s dangerous. That’s unacceptable too.
Privacy of the individual needs to be paramount. I was watching a BBC World show this morning and was amazed that a former editor of The Economist spoke quite calmly and bluntly saying that the Brit Police – especially the Metropolitan (London) force contain corrupt individuals and are a State unto themselves. Given that, I repeat – the Privacy of the Individual MUST be paramount in all things. Too much information in the hands of corrupt, rogue or Power Intoxicated people is dangerous. Even those that one believes are there to help … may convert that trust into hurt.
Pingback: Richardson Kish comments on Canada #FATCA IGA – Submitted to Departement of Finance | Citizenship Counselling For U.S. Citizens in Canada and Abroad
@ozgood, this is indeed disgusting. I still don’t understand why foreign countries didn’t unite in forcing the US into RBT, instead of discriminating against a portion of their own citizens.
Just Me’s list of possible options were indeed valid. Yet none of them did anything, except carving out a set of instruments that they didn’t want reported.
The US’ divide and conquer approach of talking secretly to a single government at a time was very effective in getting what they wanted. Still, I am speechless about how all of them reacted to that and did not protest more to some international authority. They might as well raise the US flag everywhere next to theirs.
It gets worse. I heard today from a banker in Jamaica that part of the FATCA thing is that REGARDLESS of US Personhood or other Citizenship or personhood, the US expects that all institutions will report Persons who have signatory authority over all accounts aggregating US1 Million or more in that institution … apparently the US wants to check to see whether the money had been originally earned in the US and not reported for tax purposes there ! Good grief ! Could this be true ?