Will the Harper Government sell us out?

There have been very few comments from Jim Flaherty or the Canadian Government, in general, for many months regarding FATCA or the situation of so called USPs in Canada.

Mr Flaherty’s comments last Fall were quite strong. As you all likely know, he made it clear that FBAR penalties would not be collected in Canada and that Canada was not a tax haven. He seemed to be strongly backing USPs in Canada. His comments were very reassuring.

There have been some hints that an IGA ( Intergovernmental Agreement) over FATCA is being negotiated, but nothing concrete has been said, to my knowledge.

Often, the Canadian government gives in to the elephant  next door. Just look at what has been done to satisfy the U. S.over border security issues. However, there have been other issues such as softwood lumber where Canada has stood its ground.

My question is- will the Harper government  give in to the Americans or will it vigorously protect the rights of its citizens?

 

25 thoughts on “Will the Harper Government sell us out?

  1. Yes and no. I will talk more about this later. To give an example remember the infamous “Global Bank Tax” that Harper fought so hard against well many in the Canadian banking industry were happy to a point that Harper fought it but secretly were of the opinion that Canada needed to go along if necessary(i.e. Canada was going to be the only country opposed to it) in order for Canada to be seen as a team player on the international stage. This was not though what many Conservative MP’s were saying their constituents they were saying they would be against a Global Bank Tax come hell or high water and really didn’t care what Washington or Brussels thought. I also have a feeling these types of views were not exactly well received in the US or Europe.

  2. @ Tim

    Wow!. I never even considered the possibility of nationalising a U.S. company in retaliation for FATCA.

    Regarding who may be thrown under the bus, I find it hard to believe that the interests of Canadian banks will play second fiddle to anyone else. Let’s not forget that both Harper and Flaherty are constantly praising our banking system for weathering the Great Recession. Any sign that they would be willing to weaken the banks is totally inconsistent with their statements.

    On another note, regarding the relationship between Harper and Obama, I don’t see any indication that they like each other. Romney would be more compatible to Harper for whatever that’s worth.

    @ Blaze

    On the issue of Iranian-Canadians, it does’t look like they made much progress with TD. They have a facebook page

    http://www.facebook.com/CondemnTDoniranians

  3. One thing the US might perhaps want to think about is that we can hold Canadian subsidiaries of American companies “hostage” too. Along the lines I keep thinking about Esso/Imperial Oil.

    http://en.wikipedia.org/wiki/Imperial_Oil

    Perhaps a “special” tax on Imperial’s profit distributions to ExxonMobil or perhaps just seize the whole company from the Americans/ExxonMobil. I am a pretty free market capitalistic guy personally so I don’t take the idea of stealing Imperial Oil from its primary American shareholder lightly but if necessary I am quite willing to do so(and perhaps this would be the type of action that would get the US to think Canada means business).

  4. @Hazy2: Based on what has been reported, it seems the accounts or Iranian Canadians were closed at TD because they may have violated Canadian economic sanctions against Iran.

    Nonetheless, Canadian Civil Liberties Association has said this may be a violation of the Charter of Rights and Freedoms based on national origin. http://www.thestar.com/news/canada/article/1229904–iranian-canadian-bank-account-closures-may-violate-charter-rights

    I am in contact with the Director of Public Safety for CCLA. Interestingly, she herself is of American origin. CCLA is currently reviewing the FATCA issue and may become involved at some point, although I do not have a definite confirmation of that.

    Following an outcry and negative publicity, TD reported they would review closure of some of the Iranian-Canadian accounts and would “reach out” to some customers whose accounts were closed. http://www.theprovince.com/news/Bank+review+closure+some+Iranian+Canadian+accounts/6942055/story.html

    As you mentioned, no other Canadian banks followed TD’s example as far as we know. Like you, I am not aware of what the final outcome was, but I do know the Defense Minister’s wife (herself Iranian-Canadian and a human rights advocate) spoke out against this. http://news.nationalpost.com/2012/07/13/peter-mackays-iranian-born-wife-shocked-td-closing-accounts-belonging-to-irananian-canadians/

    Do you think CBA and banks will learn from this and “reach out” to us before they threaten to close our accounts for failure to identify national origin or for failure to give consent for release of information to a foreign government?

    Oh wait, I think we already know the answer to that. CBA’s representative has told us there is nothing prohibiting a bank from closing a customer’s account and CBA website clearly states our bank could do that.

    Do banks not care what this has done to their relationships with long time customers? Apparently not. If they did, CBA would “reach out” in a far more consultative and reassuring approach with us.

    Because of that, banks shouldn’t be surprised if our only recourse is legal action if they violate our fundamental rights as Canadians.

  5. Not long ago the issue of TD bank closing the accounts of Iranian-Canadians was in the news. I’m not sure if the issue has been resolved, but I took several things away from that situation: a relatively small group of Canadian immigrants, who originated in a country that is not popular with most Canadians, was able to make their story into a national news item and gain some sympathy; no other bank has dared follow TD’s bad example.

    If and when something actually happens with FATCA or an IGA and it is clear that a large group of Canadians are being discriminated against, the story will receive quite a bit of attention. I don’t think the issue will be a left versus right one, but an issue of national sovereignty.

    It will then be time for many of us to come out of the shadows and make our stories and our names public loud and clear.

    • That’s what I think, too, an across-the-board national sovereignty issue.

      If banks are required to implement FACTA … in order to discriminate against “US persons,” they’ll have to require all Canadians to prove their place of birth. “Why do I have to do fill out this form?” “Because of a US law.”

      I think that in itself will be a rather inflammatory issue for a cross-section of Canadians. Although Canada and the US have had a very close relationship, our country has always, more than any other, been very sensitive to the fact that we’re not the 51st state.

  6. @Tim: A 25% risk would be great indeed. However, at 1 million possible US expats in Canada out of a population of about 35 million it works out to less than 3%. Throwing in family and friends I still think this is a very unlikely issue to spark that kind of political backlash. Now think of how the press has handled all the IRS press releases and think about how likely they are to show any sympathy to something which might hurt the banks and I think the chances drop even further.

  7. *JohnNB

    I guess my response would be it can very unpredictable what the Canadian people will go over the wall for. Another older example would be Meech Lake. Watch this video clip below discussing the start of negotiations of over the consititution at Meech Lake.

    http://www.cbc.ca/archives/categories/politics/the-constitution/constitutional-discord-meech-lake/an-agreement—in-principle.html

    Watching the video there is a little indication of nor I would suspect someone watching it at the time would be able to predict that ultimate political chaos that resulted from Meech Lake. Meech Lake in part destroyed the Progressive Conservatives, damaged the NDP quite badly for most of the 1990s especially after Bob Rae flip flopped as Ontario Premier from opposing Meech Lake to supporting Charlottetown and I suspect some of the more recent issues the Federal Liberals face today can in part be traced back to that time period. At the provincial level the political career of David Peterson who had frequently been referred to as a future Prime Minister was basically destroyed. Bill Vander Zalm(I am still amazed how he was one of the people in the room at Meech), Don Getty, and Grant Devine were all driven from office. John Turner was undermined as leader of the Federal Liberals and brought about the great Chretien Martin wars within Liberals Party.

    It is probably obvious by now I am a bit of Canadian political junkie for knowing all of the intrigue surrounding Meech Lake, Charlottetown, and the BC HST. The point I would make to the CBA, Flaherty, and others is even if the chance of FATCA turning into a full scale Meech Lake/BC HST style revolt is “only” 25% the risk is simply to high given the damages that occur in that type of a scenario. Taking a 25% change of Meech Lake 2 is the political equivalent of taking a military course of action that results in a 25% chance of intercontinental nuclear war. I guess the lesson would be is if the Canadian want to go over the wall for something you don’t want to stand in their way.

  8. @Tiger: I believe the answer to your question about class action against the banks is “Yes” if they violate our rights under Canadian law.

    Remember the 1989 Canadian High Court decision between IRS and TD Bank which Tim posted:
    “The effect of what has occurred is that a Canadian citizen has placed assets in a branch in Canada of a Canadian chartered bank. The bank also does business in the United States and is being threatened by a United States authority.
    One must sympathize with the position of the bank but that position is the result of its election to carry on business in more than one country and that cannot influence the application of Canadian law.”

    Sound familiar? I would suggest those words apply to today’s situation well.

    There was also a 1963 Supreme Court of Canada decision when IRS tried to collect in Canada:
    “A foreign State cannot escape the application of the rule that in no circumstances will the courts directly or indirectly enforce the revenue laws of another country.”

    Although both of these are old, I have not seen anything to convince me IRS has any more jurisdiction in Canada today than it did then. I have forwarded copies of these decisions to my contact at Canadian Civil Liberties Association.

    Even Maura Drew-Lytle of CBA, (who has told us there is nothing to prevent our bank from closing our accounts if we refuse to provide information about place of birth or consent to release information to IRS) acknowledges FATCA “may contradict Canadian legislation.”

    TD’s Vice-President does not think closing accounts is a simple matter. From a letter to DOT and IRS:
    “If an FFI closed an account because such information was not provided, the purpose of ABBS rules would be frustrated and, in addition, the FFI would be subject to fines. Each violation of the ABBS requirements would subject the financial institution to a penalty of up to $200,000. Even if an FFI could close the account of an uncooperative account holder, an FFI could not refuse to reopen an account for such an individual if adequate identification under ABBS were again provided.”

    Now, remember, that does not just apply to “US persons” in Canada. Can you imagine if Canadian banks start asking all Canadian citizens and residents where they were born or if they hold any other citizenship? Is someone born in Pakistan, Iran, China, India, Russia, Eritrea, etc. going to quickly cooperate? So, a class action lawsuit could be much bigger than just from “US persons.”

    I personally don’t think it will come to that. I would not want to be in the banks’ position right now. I don’t pretend to know what the outcome will be.

    I do know my bank will not be given information about my place of birth. My bank will not receive consent to release information to a foreign government.

    I continue to wish CBA would work with us to find a solution. So far, CBA has not made an effort to do that in a substantive way. So, a lawsuit may ultimately be our only recourse.

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