Public Hearing on FATCA at the European Parliament in Brussels

Here is the video of the EU FATCA public hearing that was held in Brussels last Tuesday.  Part II is here.  Many thanks to Tim who put it up on YouTube.  The sound is not always perfect and sometimes it moves from those speaking to the interpreters, but the essentials talks are there.  Transcripts of some of the speeches are being posted over at Isaac Brock in this thread by Just Me.  Also see Lucy Laederich's (FAWCO U.S. Liaison and AARO President) comments on the meeting and read her letter to MEP Sophie in't Veld here.

There were reactions to yesterday's post about some of the events around our participation.   I think we are all genuinely confused by what organizations like the OECD and the EU mean by "public."  For us mere mortals that word says to us that we, the public and the eggs being broken in the making of policy, are welcome to attend and hear what is being said about things that concern us.   Well, that is clearly a misunderstanding on our part.  For the OECD it was, "Yes, you can attend if there is space once everyone else (the bankers and bureaucrats) has a seat."  For EP security it was, "The meeting is public but you have to be invited in order to access the building."

Yes, there was pre-registration process, but this was not mentioned in the draft agenda that was published nor was it clarified in the calls we made to confirm the meeting time, date and place.  We were very fortunate to have someone there who could help us.  Not everyone did and we have a confirmed report of an AARO person who came and was turned away.

About the member of our group who had a chilling close encounter with someone during the meeting, I would like to make it very clear that this gentleman, who held up his passports and had a sign next to his seat, was not being disruptive, nor was he asking to get up and make a speech.  Furthermore, he is an EU citizen, this issue is of direct concern to him, and these were his representatives in that meeting.  There was no reason (and I should know because I was sitting right next to him) for someone to come over and get in his face.

These kinds of things could make one very paranoid.  They certainly lend credence to charges of "policy laundering" - a term that means policy made in secret outside of the open, transparent  democratic process.  Are they afraid of what "the people" will say on this issue?   Perhaps they think we aren't capable of understanding the complexities around information exchange, FATCA and the fight against tax evasion.  Looks like some of them have decided to do our thinking for us.  And when the public is finally made aware of what has been done - and they will be once the search in the EU for the pesky U.S Persons who are not necessarily U.S citizens  begins - will FATCA and an automatic system of information system be presented as a fait accompli for the good of us all?

The EP meeting resembled the OECD meeting in another respect as well - lots of discussion about the importance of fighting tax evasion, the "nuts and bolts" of implementation, and speakers falling over themselves to prove that they are "cooperating" by revealing their own proposals for their own systems.  The most interesting speaker, I thought, was the gentleman from Action Aid who pointed out quite rightly that such systems and the information they contain must be made readily available to developing countries.  He's right.  If such systems exist, then the Latin American, African and Asian governments should be able to access the information they want about their citizens in Europe and North America.   I personally doubt that this is what the proponents of such systems in developed countries had in mind, but it would be hypocritical of them to deny access to the poorer sending countries of many international migrants (and their children) who have found themselves a home in more developed countries. I'm sure Eritrea which has a diaspora tax like the U.S., would be deeply grateful for help tracking down their citizens outside the country in order to get them to pay up.

That is a possible impact on global migrants which is a worthy topic but not the focus of this public meeting. It was very startling to see that the impact of information exchange systems on people who are EU citizens was dismissed as being unimportant.  MEP Sophie in't Veld tried to refocus the discussion with limited success.  She asked about the duals and the Accidentals (those who are not aware of their status as U.S. citizens).  The reply was that member states should be responsible for protecting their rights.  Did the person who responded really think this was a satisfactory answer?  Is he aware of the scope of the problem?  This was a moment where I really wanted to leap out of my seat to ask further questions.  This is what I would have said:

My neighbor who lives in an adjacent apartment building here in France told me that she was born in Texas, USA.  Her parents were in the U.S. for a short time and they (and she) returned to France when she was an infant.  She did not grow up in the U.S., she has never returned to the U.S.,  and she does not speak English.  

Is it up to her local French bank to explain to her that she is a U.S. citizen?    Can that bank legally deny her services (access to a checking or savings account, a retirement account or an "assurance vie" or even pull her mortgage) because she is a U.S. person?    Or will she be required to waive her EU privacy rights in her own country in order to retain access to banking services which she needs in order to lead a normal life? 

What would happen if she was either turned in by someone wishing to collect the IRS bounty on U.S. tax evaders, or her name came up on the list sent by the French government to the American government?   How would France and the EU respond if the American government decided that she indeed was a "tax evader" and went after her for American taxes?   

Is the EU aware that if she wishes to renounce her U.S. citizenship, once she knows she is one, that she may be asked to pay a penalty of 5%  even if she was completely unaware of the ramifications of having been born in the U.S. much less that she might be considered a citizen?

EU citizens in this case, be they duals or accidental U.S.persons, need answers to these questions as do EU citizen spouses of American citizens who have a right to know how this will impact them - will they be considered "guilty by association" and see their private data shooting off to the U.S. or their banks accounts closed, even though they are not U.S. citizens, Green Card holders or U.S. taxpayers?

These are THE questions that regular people, EU citizens and their families, are asking right now.  This forum did not address them adequately.  The reply that this was a matter for member states is a non-answer.  It's not only ducking the question, it's almost a slap in the face to those whose lives will be seriously impacted.

MEP Sophie in't Veld expressed it very well when she said that the question of whether or not to tackle tax evasion has already been decided.  The answer is a resounding "yes" and there is a broad consensus on this.  The MEP's might be very surprised to learn that many of us who have questions about FATCA and its implementation in the EU don't have a problem with the basic premise that states go after people who illegally remove their money from a country with the express purpose of avoiding that country's tax laws.

The issue on the table right now is how to do it.  What are the unintended and very destructive consequences of the proposed systems of automatic information exchange on EU citizens and their families?   I humbly suggest that if they were brought to light, perhaps they could be mitigated.

What we need is a real public forum where these questions can be asked, answered and possible solutions discussed.  We spoke to some people after the meeting and they were very surprised by what we had to say.  They had no idea of the scope of the problems FATCA implementation might pose for regular EU citizens.

The pro-FATCA MEPs seem to be seizing the day and using FATCA to do for Europe what Europe can't do it for itself.  Fair enough.  What is not acceptable is that the only concerns they seem willing to raise publicly is how much it will cost financial institutions and access problems for developing countries.

And the cost to their own citizens?  If they can't raise those questions and get direct answers from their representatives in a truly public forum, then everything I've heard about the EU "democracy deficit" is, alas, true.

Update 31/5/2013:   Tim just posted a link to MEP Sophie in't Veld's blog and this post which has links to the information she asked for and managed to get finally from the European Commission about their contact with the US government on the topic of FATCA.  Very interesting reading.