NDP Revenue Critic Letter to Flaherty

We’re getting attention. NDP now seems to have a position on FATCA. I’m just not sure it’s the position we want.

Joe Arvay just sent me an NDP Revenue critic Murray Rankin Letter to Flaherty. Joe said he sent my Financial Post article to Rankin “and pestered him a bit, so it seems to have paid off.”

The letter focuses primarily on how information may be provided to IRS:

We are concerned that these negotiations may allow United States to bypass the established exchange of information between the Internal Revenue Service and the Canada Revenue Agency to instead get information directly from Canadian financial institutions. Concerns have been raised that such a system could potentially violate Canadian privacy laws. Furthermore, at this time, it is unclear of reciprocal information would be granted in return.

Alarming to me was this statement:

Cracking down on tax cheats should occur through international cooperation rather than unilateral action.

Does that sound to anyone else like the NDP has joined the tax cheats bandwagon in writing about us?!? Flaherty has been clear since the beginning of this nightmare that we are not!

The letter goes on:

What’s more, the secrecy of the negotiations over this agreement has left Canadians in the dark as to the integrity of their personal banking information. The Canadian government should be standing up for the civil liberties of Canadians. Furthermore, the Conservative government must ensure that any agreement reached is fair for Canada.

In the interest of transparency, fair taxation and respect for privacy rights, we are asking the government to reject any agreement that violates the rights Canadians or that fails to offer Canada equal benefits to those provided to the United States.

So, NDP does make some small mention of our rights, but the major focus seems to be on IRS not being able to get information directly from banks and on “equal benefits” to Canada.

When I pointed this out to Joe, he cautioned me:

It is a politicians letter not a lawyer’s so don’t read more into it than need be. The NDP can’t waive Canadians legal and constitutional rights

9 thoughts on “NDP Revenue Critic Letter to Flaherty

  1. Wondering, I just read the story of this couple – who had actually lost US status back in the early seventies, but who were told they had to file anyway, and at great cost did. They also entered the OVDI and paid a penalty – which later was returned to them when their IRS agent contacted them, told them about the Streamlined program, and they got a refund after the fact.

    But they weren’t even US citizens. And the US took their money anyway.
    See “Kingston.on says
    September 4, 2013 at 4:48 pm” at http://isaacbrocksociety.ca/2011/12/14/about-the-isaac-brock-society/comment-page-5/#comment-519000

    So here we have naturalized Canadians, who lost their status under the US law of the seventies, who went through all of that for no reason. That is another category of Canadians that MPs need to hear from. The US consulate agreed that their CLN should be backdated to 1974 when they swore the Canadian oath. Yet, the IRS was entirely willing to accept them into OVD, assess a penalty, and take their money – despite knowing about the changes in US citizenship law over time.
    This stinks.

    Shouldn’t our Canadian government and MPs be outraged at this?
    If that can happen without FATCA, what would happen under it? How can tens of thousands or 1 million Canadians be forced to get CLNs? How can > 1 million renounce?

    Shouldn’t they be outraged at Canadian resident children and those with disabilities being taxed by the US on their RESPs and RDSPs? And over 1 million prevented from saving with TFSAs?

  2. In response to Murray Rankin’s recent letter to Flaherty, I sent him a letter which began with thanks and encouragement, and then said:

    “The administration of FATCA – specifically discrimination in banking and finance based upon “indicia of U.S. birthplace” – is currently unlawful in Canada under the Charter and Human Rights laws. Only an act of Parliament can enable FATCA here. However, a Canadian IGA to enable FATCA would be the first law in Canadian history to discriminate against an entire class of Canadians based upon birthplace. Canada’s estimated 1,000,000 so-called “U.S.-persons” are a significant constituency – this issue could directly affect more than 3% of Canada’s population.

    As you are likely aware, noted constitutional expert Peter Hogg has spoken strongly against FATCA. In a letter to Department of Finance Mr. Hogg warned that a FATCA agreement with the United States would likely be unconstitutional and in violation of Section 15 of the Charter. He wrote: “To the extent that any implementing legislation adopts provisions similar to those found in the Model IGA, in my opinion, the legislation would violate S. 15 of the Charter… The source of this problem is the fact that the Model IGA requires financial institutions to treat people differently based on such innate characteristics as place of birth or citizenship…”
    His full letter is here:
    https://www.greenparty.ca/multimedia/2013-03-13/peter-hogg-letter

    The U.S. government is asking the Canadian government to create two classes of Canadian citizens and residents. The first class: those who have a right to private banking information, and a right to not be discriminated against because of their national origin. The second class: Canadian citizens and permanent residents who are also so-called “U.S. Persons”, who would lose these rights. And the selection of the people for the second class (in other words, who is a “U.S. Person”) is made in a foreign state.

    The attribution of “U.S.-person-hood” and “U.S. tax residency” based solely upon a U.S. place of birth is the “fruit of a poisoned tree” – and that poisoned tree is national origin discrimination. It is remote to claim that a Canadian citizen who was born in the US decades ago, and subsequently has no concrete tie of residence or economic activity in the US, is somehow a “U.S. tax resident”. It is remote because it is based solely on foreign laws, and it is imposing this definition upon certain citizens of Canada and is not based not upon economic nexus or residency. The concept of “U.S. person” put forth by FATCA is build on a foundation of sand: national origin discrimination.

    As well, the Canadian Human Rights Act governs chartered banks in Canada. “Ethnic or National Origin” is an enumerated ground for discrimination. Canadian banks clearly should not be asking their customers where they were born.”

    Also cc’d Peggy Nash who is NDP Finance Critic

  3. James Jatras has placed a notice on the Repeal FATCA website: Canada’s Shadow Revenue Minister Warns Government About A Sell Out to FATCA.

    In this post, James says:

    In short, whether it was Rankin’s intention or not, his letter essentially is saying the NDP will oppose the IGA currently being negotiated by Flaherty. Indeed, since the same defects he identifies in his letter – violations of the rights and civil liberties of Canadian citizens and residents (“individuals residing in our own country”), inequality with the U.S. – would apply if Canada allows extraterritorial enforcement of FATCA even without an IGA, Rankin’s letter is tantamount to opposing FATCA itself.

    James believes Canada is key to this fight not just for us but for the rest of the world.

  4. Received a few days ago from NDP Finance Critic Peggy Nash, MP Parkdale. In response to cc of letter sent to Mulclair.
    (received auto reply from Mulclair’s office acknowledging receipt)

    ———————————– reply ——————————–
    “Thank you … for sharing your concerns regarding the US Foreign Account Tax Compliance Act (FATCA).

    I have been contacted by constituents from across the country who are deeply concerned that this legislation will have serious detrimental effects on a large number of Canadian citizens. I share these concerns about the potential burden placed on so many Canadian families.

    My New Democrat colleagues and I have repeatedly written to Minister Flaherty to urge him to work immediately with his US counterparts to ensure that Canadian citizens are not unnecessarily punished by this US initiative.

    Closing the loopholes on tax havens is without doubt an important goal. However, Canada is not a tax haven, and the large majority of Canadians targeted by FATCA are not evading taxes. They live and work in Canada, invest and save in Canadian financial institutions, and file Canadian taxes. Any cross border tax enforcement initiatives must effectively target those with wealth deliberately evading taxes, but must not punish average people who annually report their income and pay taxes in Canada.

    Thank you again for writing. You can rest assured that New Democrats will continue to push the Government to stand up for Canadians on this matter.

    Feel free to contact my office at any time.

    Sincerely,

    Peggy Nash
    Member of Parliament – Députée | Parkdale – High Park”

    • @wondering, seems unfortunate wording here;
      “to ensure that Canadian citizens are not unnecessarily punished by this US initiative. ” “Unecessarily” ?

      What would be necessary punishment? Is that saying that to make an enforcement omelette, unfortunately some Canadian nesteggs will be broken as collateral damage if necessary? AND, is the reference to “citizens” a deliberate distinction – vs. permanent residents – even if of decades longstanding? I thought that the Charter does not allow for discrimination between citizens and permanent residents, or single citizenship Canadians and duals for this or most other relevant purposes?

  5. My reaction is similar to that of Joe, Broken Man and Tim. This isn’t nearly as forthright and clear a statement as was the BC Caucus letter two years ago, but it is miles ahead of Mulcair’s waffling and McQuaig’s published inanities.

    I’m beginning to think that there still is some spine and sense in the NDP caucus, notwithstanding Mulcair’s comment and Chantal Hebert’s column in the Star two days ago about it sounding like the NDP leadership/national office is going to veer off into a Tory-like attack mode of campaigning and tight control over caucus and leader statements.

    This letter is dated today, and Rankin is the party’s National Revenue critic. I don’t see how Mulcair can say the NDP has no policy; either they do and he forgot, or his Revenue critic is setting his policy independent of the leader. Which is just fine with me; I’ve never been a fan of party discipline, which is why I’ve never run for public office and why I never even joined the NDP except for the leadership race. Like Andrew Coyne (see current issue of Walrus magazine), I think there is far far too much obsession with party discipline in our House of Commons, unlike e.g. the UK House of Commons.

    Anyway, this is an improvement of sorts. I still don’t trust the NDP overall, given their crowing about having an Obamacrat planning their campaign strategy for them, and the fact that Mulcair has NEVER replied to anything I’ve ever sent him, even though former NDP MP Denise Savoie replied to a couple of my emails and she was representing a riding in BC and I live in Ottawa. There is a real split in the NDP between people who actually listen to their own (and others’) constituents, and those who ignore party members and consider them merely cannon fodder for the next election and a milk cow for funding. Which for a once-socialist, once-populist party is utterly shameful.

  6. I don’t know. I think there are the seeds of real opposition here:

    ” In the interest of transparency, fair taxation and respect for privacy rights, we are asking the government to reject an y agreement that violates the rights Canadians or that fails to offer Canada equal benefits to those provided to the United States.”

    Now, given that FATCA is never going to be truly bilateral, ie., there may be Canadians hiding money from the CRA in Delaware, but FATCA is certainly not going to give Canada the tools to find them, I’d call this a clever and promising approach on the NDP’s part.

  7. I am going to agree with Joe Arvay for now. The letter could be better and there is too much wiggle room for Flaherty and the US but it puts Flaherty on notice that this is a “political” issue and his constituency is not just the banks and the US.

    Flaherty has to know if he signs a bad deal people will VERY QUICKLY know about it and the political attacks will become unrelenting.

  8. I’m not worried about the NDP being able to waive Canadians rights. I am worried that this is a letter that accomplishes a little bit for the NDP and nothing for us. Is this letter a way to ease everyone into a direct CRA exchange? Then they will say “We protected Canada’s sovereignty and your rights” which isn’t true. If CRA can share anyone with any U.S. connection directly to U.S. authorities then they are putting innocent people at risk of ridiculous fines and penalties on zero tax owed no matter WHO does the innocent sounding “exchange” And it’s not “information” It’s people. They will exchange *throw under the bus* some people and not others in return for Canada not getting a penalty on their banks but, the outcome is the same for the information……people.

    Canada should just not comply with FATCA. Period. One good thing he is saying is that Canada should expect equal treatment. Well, how will they do that? There’s nothing in this for Canada really when you count up the cost to comply.

    NDP’s position should have been as clearly stated and stayed the exact same as it was two years ago. This wishy washy business is not going to be good for them. I hate political ambiguous answers. Are you for FATCA in Canada? Yes or No. That is all we need to know not some whirlpool of an answer which after wards needs untangling and analysis. We get enough of that from the IRS forms.

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