THE Eritrean consulate in Toronto was the subject of much controversy last week over claims by the National Post and the CBC about the alleged “extortion” of a 2% rehabilitation tax on expats residing in Canada.
The CECCO deems it necessary to point out some crucial points that often are ignored by the mainstream media.
1. The Tax
The 2% rehabilitation tax of course is not alien to the Eritrean diaspora. The 2% recovery and rehabilitation tax was enacted in 1994 by Eritrea’s National Assembly, shortly after it gained its independence from neighboring Ethiopia. For Canadians of Eritrean origin who hold dual nationality, the 2% tax serves as a vehicle to participate in the development of a young nation and serves as a prerequisite for receiving certain public services from the Eritrean government.
Amongst these services include: the purchase of property, passport renewals, inheritance claims, requesting government documents (marriage certificates, state university transcripts), and acquiring and renewing business licenses.
The media reports demonstrate that the tax wasn’t sought or entreated the way a revenue agency might do to someone who owed taxes, or the way a company solicits customers by advertising its wares. A cursory examination of recent media reports reveals that an individual was contacting the consulate to inquire about obtaining services in Eritrea – is the consulate not legally allowed to inform the individual of their legal obligations as well as what their potential tax burden might be without violating their undertakings? If that is the case, then the staff at the consulate will have to sit on their hands and refuse to answer any questions regarding what our tax burden might be and how we can pay it.
2. Threats of Shutting Down the Consulate
If the consulate is shut down, then everybody including the individuals complaining to the media about the unfairness of having to pay taxes to renew passports or order transcripts will be objectively worse off because we will still be required to find a way to pay our 2% to obtain the services we want.
Canadians across the board dislike having to pay taxes and by that nature all forms of taxation could be described as coercive; but for the National Post to call the 2% rehabilitation tax extortion is misleading. Furthermore, the Eritrean Consulate in Toronto cooperated fully with Canadian authorities in all reported cases of threat and intimidation—none of which have resulted in any legal prosecution.
What is referred to as extortion by the national media would be akin to saying that almost 1 million Canadians who are also U.S citizens are extorted when required to file and remit taxes earned on savings income to the IRS. The FACTA rules apply to all dual citizens including Americans citizens who symbolically renounced their country in favor of Canada for political reasons. The analogy is admittedly not perfect because the United States and Eritrea are not politically or economically analogous countries, but the point is nevertheless a valid one. If those accusing the consulate were dual U.S citizens instead of Eritreans, the expectation that they pay taxes in exchange for the ability to transfer property into their names in the country they left for whatever reason would not be decried as extortion. It’s true, the United States may not have U.N. sanctions placed on it for its foreign affairs policy the way Eritrea does—but for dual U.S citizens living in Canada who oppose their conflict-prone government and its funding of armed rebel groups in Syria, it is hard to see why the effects on one Canadian resident would not apply to the other. The bottom line for those choosing to retain their civic affiliation to a second country after taking an oath to become a Canadian should not entitle them to service in the former country.
A small part of this controversy stems from a misunderstanding of the complicated laws relevant to the application of the 2% rehabilitation tax. Unlike Canada, Eritrea taxes its subjects based on citizenship and not residence—for that reason it is closer in nature to the U.S tax model stated above. The Income Tax Act of Canada is different because it defines the tax subject by where they reside and not by their citizenship. Therefore, the income generated by a Canadian who no longer resides in Canada for a definite period of time will generally not be taxable. Saying this to the Canadian media today will usually result in being publically labeled as a mouthpiece or loyalist to the Eritrean government.
3. The Effect of the U.N Sanctions on the 2% Tax
The most common argument given for to ban the 2% rehabilitation tax is the existence of U.N. sanctions on Eritrea for the alleged “support of armed rebel groups in Somalia”. Not surprisingly these sanctions have no legal impact on our rights as dual citizens to remit taxes to Eritrea. In fact, the website of the Department of Foreign Affairs and International Trade indicates that “the UN Security Council adopted Resolution 2023 (2011), calling upon Eritrea to “cease using threats of violence, fraud and other illicit means to collect taxes outside of Eritrea” and deciding that Member States should take measures to hold accountable the individuals perpetrating these acts.” It goes on further to say “the Criminal Code creates offences for uttering threats, fraud and other related conduct; any victims or witnesses of possible offences should report them to their local police.” We also call upon anyone who claims to have been threatened, harassed or has been a victim of fraud by the Eritrean consulate to report the matter to the RCMP. As it is clearly outlined above, the sanctions warn against threats and other illicit means of collecting the tax and not the tax itself.
The U.N. Security Council voted in favor of introducing sanctions against Eritrea in 2009 – which the parliament of Canada adopted in the form of federal regulation SOR/2010-84. Further and subsequent U.N. sanctions that specifically target “Diaspora taxes” were introduced in 2011 but the Canadian Parliament has not implement them into law, which is a necessary prerequisite for its enforceability in Canada.
Under international law, Canada is known to have what is called a dualist legal system. This means that international resolutions like the 2011 U.N. sanctions must be introduced into Canadian law separately by Parliament in order to become an integral part of our domestic law. If you are a citizen of Eritrea or U.S citizen, your worldwide income is subject to tax unless you qualify for exemptions.
Furthermore, the preponderance of evidence for deciding what is a fact in the U.N. report cited by some newspapers such as the National Post are embarrassingly low and are not a proper alternative to the probative and evidentiary value in a serious investigation about extortion in Canada. While determining the validity of these reports go well beyond the scope of this opinion piece, it is well worth noting that the overreliance on these reports by the national media is viewed with some suspicion by many community members. As Eritreans, we are all brought up with misgivings about the U.N. A cursory examination of Eritrean history reveals that Ethiopia adopted Eritrea as a federated unit in 1952 with the open support of the United Nations. Before long the Ethiopians had banned Eritrean political parties, freedom of the press was disallowed, teaching in indigenous languages was forbidden and eventually the Ethiopian government dissolved the federation and annexed Eritrea, declaring it a province of Ethiopia. The U.N. is increasingly attempting to define and study our community, including on issues related to our relationship to our ancestral homeland. Yet these U.N. commissioned reports have a closed-door decision-making process that is not in the public interest. Consider the U.N. special rapporteur that considered submission and evidence from refugees inside Ethiopia and Djibouti but awarded no opportunities for anyone to present evidence for 300 other Eritrean communities around the world. The absence of such evidence is what prevents us from giving them more significance, but on which the National Post and the CBC rely on to justify its representation of Eritrea.
4. Charter Rights
If the federal government were to deny Canadians of Eritrean origin the right to remit taxes while allowing U.S citizens to do so, it would be discriminatory and not withstand Charter scrutiny in a Canadian court. A total ban by the Canadian government on our ability to remit taxes to Eritrea based on our citizenship and national origin would be differential and adverse treatment and the kind of legislation that would contravene the equality protection afforded to our community under Section 15 of the Charter.
Governments are allowed to tax their citizens living abroad as subtly admitted by the CBC and the National Post—but International law equally restricts the extraterritorial reach of the Eritrean government in regards to the collection of taxes out of respect for the overlapping sovereignty of the Canadian government. This conclusion was supported recently by a Swedish parliamentary Committee on Justice that recognized the legal right of Swedish residents of Eritrean descent to remit taxes to Eritrea in order to access services in their native country. Notwithstanding, the National Post and the CBC have not stopped privileging the allegations of extortion. Furthermore, Mr. Bell of the National Post and Rick MacInnes Rae of the CBC—and we say this with respect—continue to write about the 2% tax like the journalists in a conspiracy thriller pulling on some thread which will eventually unravel a vast and sinister cash-grabbing conspiracy.
5. Proposed Solutions
Perhaps the question the media should be asking—unless they still dispute the legality of the 2% tax under Canadian and International law—is how do we reconcile the competing rights we have as Canadians for remitting taxes to Eritrea while also respecting Canada’s discretionary right to prohibit the tax collection in Toronto because it would be inconsistent with Vienna convention?
There are several options for reconciling these competing elements. The first is using the consulate as a point of inquiry about the tax—while the consulate cannot collect they should be allowed to inform their citizens about the tax laws in Eritrea and even help them calculate what their potential burden would be. The key element here is that this advice should be unsolicited. As in the people interviewed by the National Post and the CBC, individuals should come to the office with questions and should not be actively solicited the way a national revenue agency might do. Secondly, we recommend the Eritrean government set up an Electronic Federal Tax Payment System, similar to the American one, that would be available to you if you had an Eritrean bank account. Furthermore, the tax instalments should be paid by check or money order payable to the Eritrean government and should not be sent in cash. All of this should be done in collaboration with the Canadian government to ensure the latter’s sovereignty is respected and that we as Canadians of Eritrean origin who wish to do so can continue to maintain a connection to our ancestral land in one way or another.
As community members, we have been very reluctant to speak out in the past because our perspectives on the truth are too often overshadowed in the mainstream media by the claims of politically motivated Eritrean ex-pats. The end game in demanding that Ottawa nix the tax we pay is simply to weaken the government of Asmara. In their extreme form of consequentialism the ends always justify the means and that includes a violation of our Charter protected rights in Canada. Luckily for us, the more moderate individuals in our communities still form the majority of our membership in Canada; these individuals may be pro-government, anti-government, refugees or economic migrants, first generation or second generation Canadians. Whatever their status may be or their views are on African politics, they all have something in common—a shared determination to see their ancestral homeland grow and prosper in peace.