Government, Opposition to meet on FACTA legislation
PORT OF SPAIN, Trinidad, Sept 10, CMC – Government and opposition legislators are to meet here on Monday as the deadline for meeting the September 30 deadline for passing the Foreign Account Tax Compliance ACT (FATCA).
Caribbean financial executives have in the past bemoaned what they deem as an uneven playing field in negotiations towards compliance of the controversial law that demands that foreign banks provide information to America’s Internal Revenue Service (IRS) on any customer deemed a “US person” if they have more than US$50,000.
It aims to crack down on tax dodgers who hide hundreds of millions of US dollars in offshore accounts annually in an effort to avoid paying Washington its due.
Legislators Friday could not agree on the legislation with opposition legislators indicating that parts of the bill were unconstitutional and places too much power in the hands of the Minister of Finance.
Finance Minister Colm Imbert warned that the banking system and the local economy could be adversely affected if the legislation is not passed by September 30.
“I hope every person in this House understands. We have to do this. If we do not do this the banking system of Trinidad and Tobago will crash, the economy of Trinidad and Tobago will crash.
“If we don’t pass this legislation, time will run out on us. We are coming now to the Parliament to see if we can get the necessary support from the Opposition to ensure that Trinidad and Tobago does not become a pariah state in terms of the global financial community,” he warned.
The legislation required a special two-thirds majority for its passage and Imbert said the Bill was part of a global trend towards information-sharing and transparency.
“We are not fighting anybody. We have come here to ask for cooperation and support. We are not playing politics here.” Imbert said, warning that failure to pass the measure by the deadline would result in every single transfer of funds from Trinidad and Tobago to the United States, including to buy basic goods, engage in trade, and buy medicine, would be subject to an automatic 30 per cent deduction by US banks for IRS purposes.
“I am very well aware that members opposite received this legislation at short notice. However…they were familiar with this matter for five years and now six years and three months,” Imbert said.
But Opposition Leader Kamla Persad-Bissessar said the opposition was not prepared to “buy cat in bag” and could not support the bill in its current form.
She described the legislation as “overreaching” noting that while the bill follows the same model as that used in Barbados, The Bahamas and several other countries in the region it differs in those provisions that give it an overreaching effect.
She said one of these provisions would be of concern to citizens who have foreign bank accounts or own property abroad, which are many, and there are provisions that would have to be enforced by breaching the Constitution.
The Opposition Leader said she had also noted with concern a “complete override” of the secrecy provisions of any statutes, but it was not clear which laws would be subjected.
She said that this must be made clear, adding that secrecy provisions existed in a number of places, including in the books that govern the Strategic Services Agency (SSA).
The former prime minister also asked whether the Board of Inland Revenue (BIR) had been properly consulted, as she did not see that facility being ready to cope with the demands of the legislation.
But acting Attorney General Stuart Young produced what he termed as documentary evidence to show that the former People’s Partnership (PP) government, which Persad Bissessar headed until September last year, had failed to ensure Trinidad and Tobago was FACTA complaint.
Young quoted from a Cabinet Note dated May 23, 2013, indicating that the then government was aware that FATCA, “became law on March 18, 2010.
“The then government… led by the then Member for Siparia …were aware of the obligations and the international obligations that had to be fulfilled by Trinidad and Tobago,” he said, adding that it was interesting that in May 2013, Persad-Bissessar’s Cabinet considered the matter and “the implications for the failure to subscribe to this legislation and to execute the agreement that was only executed a few weeks ago in August by this administration”.
Young said that the legislation will have no effect on Trinidad and Tobago nationals, unless they are resident in the United States and have an obligation to pay tax in the US.
Parliament will resume on Wednesday to further discuss the bill.