Mr. Chairman, of course, what the honourable member's really asking us to do is change how the Americans apply their own laws, which they have a right to do. We don't have to agree with it, but they tax based on citizenship and that's simply how it is. Worse yet, his amendment would really not just change the way the Canada and the United States enhanced tax information exchange agreement works, but it would actually override the terms of the intergovernmental agreement negotiated with the U.S. providing that the terms “U.S. Person” or “Specified U.S. Person” do not include a person ordinarily resident in Canada who is a Canadian citizen or a permanent resident. Of course, what they leave out of that is that person would also have to be a U.S. citizen or a dual citizen.
The amendment would mean that the financial accounts of U.S. citizens who have such connections to Canada would not be reported. It is clear, Mr. Chairman, that the scope of persons in respect of which the U.S. seeks information under the IGA consistent with the U.S. tax legislation includes all U.S. citizens, including those who are dual citizens or residents of another country. This is based on the requirements of the U.S. tax system, as I mentioned earlier, which places tax filing obligations on all U.S. citizens, even those who are also citizens of another country. At the end of the day, this would result in Canadian financial institutions and their clients being exposed to the U.S. FATCA withholding tax.
Finally, I want to say there's really some misleading information being put out here. U.S. citizens have always been applicable to paying taxes in the U.S. if they were following the tax regime of the U.S. Most of us have some U.S. relatives or U.S. family members or U.S. connection, especially if you live in Atlantic Canada. The reality is the difference here is no different from U.S. tax law. The difference is they're enforcing the rules that have always been in place. If you're a U.S. citizen, you have to comply with U.S. tax rules and you have to file income tax. It doesn't mean that you're going to pay income tax, but you've always been responsible to file. That comes with the duty of citizenship. We can like it or not, but it's not up to us to make that judgment.