Similar grassroots challenge in Switzerland
Grassroots movements in both Canada and Switzerland are challenging their governments to deny signatures to the U.S. Internal Revenue Service and the “intergovernmental agreements” committing them to the Foreign Account Tax Compliance Act.
The agreements, in negotiation for more than a year, will give FATCA the force of law in each jurisdiction where it is signed, committing local financial institutions – banks, investment funds, insurance companies, pension plans – to reveal the names and sums under management of all U.S.-affiliated account holders, enabling the IRS to pursue tax demands and penalties worldwide.
More than 6,000 people in Cayman expect to be affected by FATCA, which is scheduled to take effect in July next year.
Canada expects that nearly 4 million people, almost 12 percent of the population, would be affected. In Switzerland, a self-appointed referendum committee is seeking 50,000 signatures by Jan. 16 on a petition calling the nation to the polls in the first half of 2014.
FATCA opponents from the Isaac Brock Society and Maple Sandbox, in a Nov. 12 letter to Terry Campbell, president of the Canadian Bankers Association, asked the CBA to resist Washington.
“We implore the CBA to use its considerable influence and resources to insist that the Canadian government categorically reject Washington’s demands and to lobby for FATCA’s repeal by the American Congress,” the letter states.
The letter claims that an intergovernmental agreement to hand over private financial data to Washington “would represent a gross violation of Canadian sovereignty and would violate the rights of Canadian citizens and residents under the Charter of Rights and Freedoms, the Canadian Human Rights Act, the Personal Information Protection and Electronic Documents Act, and other legal guarantees.”
Minister of Finance Jim Flaherty, who recently called FATCA “extraterritorial and “unwarranted,” saying it would “turn Canadian banks into arms of the IRS,” declared his opposition to FATCA as early as 2011, stating Canada “is not a tax haven. People do not flock to Canada to avoid paying taxes. We have existing ways of addressing these issues with the United States through our Bilateral Tax Information Exchange Agreement. We share the same goal of fighting tax evasion and we already have a system that works.”
Nonetheless, Mr. Flaherty, as part of the conservative Stephen Harper government, continues to negotiate with the U.S. Treasury, while the Canadian Bankers Association has said an IGA would resolve privacy and confidentiality issues.
“Based on the [IGA] it would not,” said Lynne Swanson, spokeswoman for Maple Sandbox.
“Asking Canadians where they were born or about other citizenship violates Canada’s banking, privacy and human rights laws. Changing those laws would violate Canada’s Charter of Rights and Freedoms,” she told the Caymanian Compass.
Protesters gathered outside Toronto’s Metro Convention Center on Nov. 13 and 14 for the Canadian Institute’s conference on Regulatory Compliance for Financial Institutions. The same protesters were looking forward to a FATCA debate on Nov. 18 organized by the Toronto Centre Debates as part of a local by-election.
Peter Dunn, spokesman and administrator for the Isaac Brock Society, said he thought the Ottawa government was “already thinking twice” about agreeing to FATCA.
“There is no question FATCA is violating the Canadian Charter of Rights and privacy rights,” he said.
Cayman has preliminary agreement with U.S.
On Aug. 13, local government announced it had signed a preliminary agreement with the U.S., clearing the way for the formal conclusion of an intergovernmental agreement “in the near future,” according to the Ministry of Financial Services. No date has been set.
Earlier this month, the Cayman Islands and the U.K. signed an intergovernmental agreement governing the automatic exchange of information about British taxpayers who hold Cayman Islands accounts.
While the U.K. does not tax citizens living abroad, officials are seeking information to fight offshore tax evasion.
“This is critical not only to protect the public finances but also to reinforce the public’s confidence in the tax system, as well as the international economic system as a whole. Central to tackling offshore evasion is the sharing of financial information between governments,” said a June 26 document from Her Majesty’s Revenue and Customs Department.