Cross posted with permission from Tax, Society & Culture

I have just posted on SSRN a submission to the Canadian Finance Department co-authored by myself and Professor Arthur Cockfield of Queen’s University. Here is the abstract [the full submission can be downloaded here]:

The United States enacted a tax reform in 2010 known as the Foreign Account Tax Compliance Act (FATCA), which will impose an extensive third-party monitoring and disclosure regime on financial institutions around the world in an effort to “smoke out” American tax cheats and expose their undeclared foreign assets to the U.S. Internal Revenue Service (IRS). The flow of information from Canadian financial institutions directly to the IRS that is required by FATCA would violate a number of laws in Canada. Accordingly, the United States has requested changes to these laws. The Canadian government now seeks to accommodate these requests in the form of an “intergovernmental agreement” (IGA) with the United States, which will be enacted into law as the Canada–United States Enhanced Tax Information Exchange Agreement Implementation Act (the Implementation Act) pursuant to a proposal released for comment by the Department of Finance. The Department of Finance invited public comments on these documents. We examined the proposed Implementation Act and the IGA and we find that they raise a number of serious issues ranging from likely constitutional violations to violations of international law. We submit these comments in the hope that they will help lawmakers and the public understand that FATCA, while intended to catch tax evaders, is poised instead to impose serious and unjustified harms on people who live around the world as non-resident U.S. citizens and green card holders, as well as their family members and business associates.

I know that some of my good friends and colleagues view FATCA as a net positive step toward a much-needed global automatic information sharing regime, and some have not understood my reasons for caution. I hope that this submission will help explain some of these reasons.
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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.

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For Immediate Release March 10, 2014

Today a small group of Canadians began the long legal process to prevent the Conservative government from helping the United States impose a bad law on Canada.

With the announcement of an Intergovernmental Agreement (IGA) for the U.S. Foreign Account Tax Compliance Act (FATCA) on February 5, 2014, Finance Minster Jim Flaherty makes discrimination against one million innocent Canadians and their families – those the U.S deems “U.S. persons” – mandatory.

Finance Canada has requested public input on the FATCA agreement, which will override federal laws to meet demands of a foreign power to seize private financial records of Canadians.

Canadian citizens Dr. Stephen Kish of Toronto and Lynne Swanson of London Ontario responded today to that request by retaining prominent constitutional lawyer Joseph Arvay of Vancouver to provide a legal opinion on whether this legislation violates Canada’s Constitution including the Charter of Rights and Freedoms and if so how a constitutional challenge might be mounted.

“It’s time for Canadians to get angry. FATCA is a threat to all Canadians and cannot be captive to party politics. MPs must NOT be required to vote along party lines – They must vote their conscience in a free vote” says Dr. Kish.

In less than one week a funding initiative, organized by Dr. Kish and Ms. Swanson, raised the money required to pay for this legal opinion.

“It is despicable the Harper government thinks so little of Canadians that they are forced to raise money from those with limited means to retain counsel to ensure their fundamental rights are protected from foreign demands,” says Ms. Swanson.

“As a Canadian citizen for 41 years, I never thought I would see the day when demands of a foreign government would take precedence over Canadian laws. The implications of this for Canada and for all Canadians are chilling.”

CONTACT: Lynne Swanson maplesandbox@yahoo.ca

C3F Press Release

Do you have any suggestions for Mr. Arvay?

You know that with the donations Lynne Swanson and Stephen Kish have retained Joe Arvay to provide a legal opinion on the constitutionality of the proposed FATCA IGA legislation.

@George recently made the good suggestion we are now following up on:

Could you start a thread where Brockers could make comments or observations which you could then hand to the Attorney?

The purpose of this thread is to receive those comments you feel might be helpful to Joe Arvay. In my own experience with lawyers, suggestions from people who have been harmed have made the difference.

If you make your suggestions by March 11, Lynne will coordinate and synthesize them and forward them to Mr. Arvay.

Also, if you are uncomfortable in providing comments publicly, you can email me at canadiancharterchallengefund@gmail.com If you do, please don’t use your real name.

Thanks

The following advertisement spontaneously appeared in the Delta Optimist. This paper appears weekly in the riding of Kerry Lynn Findlay, Minister of National Revenue (Kerry-Lynne.Findlay@parl.gc.ca). We accept free advertising like this from any concerned citizen who wants to try to make an impact. Thanks to the person who did this and sent me the graphics.

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ACA Urges Congress To Adopt Residence-Based Taxation
by Mike Godfrey, Tax-News.com, Washington

07 March 2014

American Citizens Abroad (ACA) has provided testimony to the Senate Homeland Security and Governmental Affairs Permanent Investigations Subcommittee following its recent hearing on offshore tax evasion, and has recommended that the United States should implement a residence-based tax (RBT) system to avoid penalizing American expatriates.

The ACA, as the principal organization representing Americans overseas, has limited its comments to tax issues which impact US citizens and green card holders resident overseas.

Under the current citizenship-based tax (CBT) system, Americans abroad remain subject to US taxation as though they were still US residents. Under RBT, only US residents, whether Americans or foreigners, would be subject to US income, estate and gift taxation, while Americans resident abroad would be taxed under essentially the same rules applicable to non-resident aliens.

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http://massrealestatelawblog.com/2014/01/26/asking-where-are-you-from-results-in-60000-discrimination-penalty/

Asking “Where Are You From?” Results In $60,000 Rental Discrimination Penalty

Innocent Small Talk Apparently Illegal, According to Boston Fair Housing Commission

The seemingly innocent question posed by a Boston rental agent to Gladys Linder when they were searching for an apartment was “Where are you from?”

“Venezuela,” she answered.

Gladys and her husband went on to find an apartment a month later without further incident. But she found the question about her national origin insulting and upsetting.

This is Massachusetts, and you know what came next.

Stokel filed a complaint with the Boston Fair Housing Commission, claiming that rental agent’s question was discriminatory and caused her to suffer fear, anxiety and sleeplessness over a three-year period.

Seriously?

Massachusetts General Laws Chapter 151B and the Boston Fair Housing Commission Regulations make it illegal for any licensed real estate broker “to cause to be made any written or oral inquiry or record concerning . . . national origin.”