House of Commons Hansard #90 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was air.

Topics

Income Tax Act
Private Members' Business

11:35 a.m.

Conservative

The Acting Speaker Royal Galipeau

(Motion agreed to)

Income Tax Act
Private Members' Business

11:35 a.m.

Liberal

John McCallum Markham—Unionville, ON

Mr. Speaker, I am very pleased to congratulate the hon. member on his private member's bill. As my colleague from Scarborough—Guildwood pointed out, we in the Liberal Party are certainly very happy that this bill go to committee, as I think we have already agreed. We think that tax fairness is a matter of primary importance. We think that this bill may be appropriate in terms of enhancing tax fairness, but we are not quite sure. We need to have further information which we think the finance department will be able to provide when this bill goes to committee.

Just to reiterate the general point about tax fairness that was made by my colleague, I will not repeat the summary of the bill because that has already been done by a number of speakers, but let me spend a few minutes focusing on the fairness issue.

We take the example where there are two neighbours. Neighbour A receives social security payments in 2006 which are taxable by his country of residence, which is Canada. The Government of Canada allows him to exempt 15% of those payments from his taxable income. If neighbour A were to receive a $100 U.S. social security cheque, he would only have to pay tax on $85 of that money. That is fairly clear. Now we can consider his neighbour who is a Canada pension plan recipient with a similar total income. When neighbour B receives his $100 CPP cheque, he has to pay tax on the entire $100.

If we are talking about tax fairness, it would seem that the two neighbours with a similar amount of income should pay a similar amount of tax on their government pension plans. It is a matter of very simple fairness that two neighbours with like incomes should be treated in a like manner by the tax system. What this bill proposes to do is to lower the amount that neighbour A would count as taxable income from $85 to $50 for every $100 of social security that he receives.

Where does this 50% exclusion rate come from? This is the nub of the matter and the essence of the bill. Was it just pulled out of the air or is there some analytical foundation to it? Is it an attempt to return to the 1980s when only 50% of social security payments were counted as taxable income?

It would seem that this bill is striving to ensure tax parity between Americans who receive a CPP pension and Canadians who receive social security. It does not seem to have tax fairness between Canadian taxpayers at its heart. It would seem to me at least on the surface that what the bill should try to do is ensure that Canadians in like circumstances pay similar amounts of tax on their pensions whether they be social security or the Canada pension plan.

That being said, that is a simple example and a general point of principle, but I do not have the figures in front of me to give a proper answer to the question. I would certainly be interested to know if in fact social security recipients are worse off than their CPP counterparts.

For this reason, I will be voting for this bill at second reading, with the view of getting these numbers during the committee's examination of the bill. The Department of Finance has a lot of expertise and should be able to provide the committee and through it this House with an accurate picture of the difference in the tax burden borne by the social security recipients versus the Canada pension plan recipients.

If there is an unfairness here and social security recipients are indeed being taxed more, then I agree and I am sure my colleagues would agree, that it should be rectified, but it should be rectified by a real number and not a number that appears to be arbitrary. Since it is a round number, 50%, it somewhat raises the suspicion that perhaps this number has been pulled out of the air. Perhaps it does not, but that is why we want to send it to committee, to try to get facts from the Department of Finance. The U.S. does not use that system based on 50% any more. That raises another question about why the number of 50% has been used.

Once again I would like to congratulate the hon. member for Essex on his bill. Tax fairness is something we must always strive to deliver for Canadians. It was on the basis of tax fairness that we preferred our income tax cut rather than the government's GST cut. That is another example of tax fairness because the Liberals' income tax cut was only at the lowest income level. The maximum benefit that any Canadian, no matter how rich, could get was in the order of $300, whereas the GST cut, if a person is very rich and buys a yacht or an expensive car, they would receive more than a $300 benefit with that single purchase.

That is another example of tax fairness. We on this side of the House argued very strenuously, and ultimately we did not have the votes, but we certainly argued strenuously on the grounds of tax fairness for an income tax cut to the lowest level rate rather than a GST cut.

We are all in favour of tax fairness. I am sure the hon. member is in favour of tax fairness in principle too. It is difficult to oppose it in principle.

When Bill C-305 goes to committee and we find that the member's bill does indeed move in the direction of greater fairness in the tax system, then we on this side of the House would most likely support the bill, but we do not have those facts yet. That is why we are voting to send the bill to committee where it will have greater scrutiny and we will have greater access to the facts of the matter.

Income Tax Act
Private Members' Business

11:45 a.m.

NDP

Brian Masse Windsor West, ON

Mr. Speaker, I would like to begin my remarks by congratulating the member for Essex for his hard work on this file. It has been one that he has pursued in opposition and now in government, and we have yet to have the results that we want.

The bill has had a number of different opportunities to move forward and has not made it yet. However, the member for Essex has always been pursuing this very important issue not only in terms of fairer taxation as described in Bill C-305 but also as a social justice issue. We have citizens across the country who are being unfairly taxed because laws have changed and have had an impact on their daily income and livelihood. It has created a considerable amount of grief, angst and a number of their plans have changed which has been rather unfortunate.

It is important to recognize that in the Windsor-Essex County we have many seniors who had previously been paying social security taxes to the United States and work over there on a regular basis even to this day. We have thousands of nurses for example going to the United States from Canada every day.

Ten years ago when this change was enacted in the tax treaty law, it basically usurped the traditional taxation that they had expected to receive when they got their social security upon retirement. It is not just Windsor-Essex County. This affected individuals in British Columbia, the Atlantic provinces and individuals who have worked in the United States from across Canada. It is not just our area, although we do have a significant number there but it is important to all Canadians.

It is important to note that it seems that this bill will go forward with the unanimous consent of the House to the finance committee where any questions about the bill will be resolved. I hope it will be passed quickly by the finance committee and sent back to this Chamber, and finally to the Senate to be ratified.

When Canadians are looking at Parliament, they look for opportunities for all parties to work together on issues. We have demonstrated that there is common support for this legislation. The previous administration had problems acting on this which led to some of the current delays that we have today. However, if we can put that behind us and move the bill forward and pass it quickly, Canadians will be rather pleased to see something come from this Chamber that is supported by all and is going to benefit all Canadians.

This is a bill that will cost Canadians some money, but we need to put the bill in perspective. It may cost perhaps $25 million, but it will go back to seniors who should not have lost that money to begin with and this is a government that had over $13.5 billion to put on the debt unilaterally. There is the financial capability to rectify this injustice.

The Chamber passed a seniors charter of rights, which was an NDP motion. It called for fairness, equity and respect for seniors when bills come through the Chamber that relate to them. This bill fits that mould. Therefore, I think there is a greater onus on the Chamber to move the bill quickly through the system.

I have had a number of opportunities to talk to constituents and it is important to put a face to the effects of what has happened. They have watched their savings and earnings disappear because of this change and what has been sad is that some of these people have passed away. The original tax treaty that was changed when this problem emerged goes back to 1996 and it has been 10 long painful years for individuals who had expectations eroded and eliminated as the amount of income they would have coming back to them has been affected.

We have heard from different constituents who have had to change their lifestyles. Some have had to sell their homes or go to a different lifestyle option that they did not want to do or have not been able to support their grandchildren the way that they wanted to because they are literally losing hundreds of dollars per month. This was part of their calculated income which they expected to receive.

These are law-abiding citizens who crossed the border for years and worked in the United States and brought those earnings back to Canada. They were very good citizens to the country, have retired here, and are contributing in many different ways. To have this happen has been very frustrating to watch. They have heard a lot of rhetoric over time about this being fixed and their expectations of Parliament are warranted to have this bill move quickly through the process.

I am going to read a letter which encapsulates the debate we have had here today and it is important that Craig Ridsdale does get noted. He has been an outspoken voice on this issue and he wrote a letter called “unfair tax laws burden seniors”:

Many Canadian seniors across Canada have been sitting on their hands since 1997 waiting for the Liberal government to move forward on a pledge made to them to rectify a system of taxation that threatens to leave many of them, particularly low income seniors, in a very difficult financial situation.

In 1984, the Canada-U.S. Tax Convention Act was implemented, primarily to protect the citizens of both countries from being taxed twice on their pensions, be they social security in the States or the Canada (and Quebec) Pension Plan here in Canada. However, differences in our taxation systems (Canadians pay taxes when collecting benefits while Americans pay the taxes on their contributions) has meant that Canadians receiving social security benefits were being taxed twice.

A series of protocols to amend this bill have made matters even worse for many retirees. Specifically, the third protocol, implemented in 1995 and applicable for the 1996 fiscal year allowed the United States government to charge what amounted to a more than 25% withholding tax on Canadians' pensions. Previously, the second protocol to this treaty allowed only the country of residence to tax social security benefits. For many retired Canadians who paid into the American system over the span of their working lives what this meant was that over one quarter of their income essentially disappeared overnight.

The fourth protocol, implemented after the disastrous third protocol, allows the Canadian government to tax 85 % of social security, and increase from the 50% agreed upon in the 1984 act. It also provided the government with the latitude to reduce the 85% limit which it has refused to do.

Since 2001, Canadians Asking for Social Security Equity (CASSE) have been lobbying the federal government to either restore the second protocol or at the least grandfather its provisions to include all seniors who were negatively affected by the third protocol. To this date nothing has been done.

Nothing has been done, aside from a number of bills that have made it to the finance committee in different machinations.

In conclusion, I want to note that this is very important. The expectation of Canadians is that when we do have bills which are generally supported in this chamber by all parties, they should move forward rather quickly. It is important that this work is done. It is about fairness and justice for senior citizens who had expectations and the country changed those things. That unfair inequity must be rectified. The New Democratic Party is committed to seeing this bill move forward, not only through the finance committee but as quickly as possible to final ratification, so our seniors are treated with the equity and fairness that they so justly deserve.

Income Tax Act
Private Members' Business

11:50 a.m.

Conservative

Rick Dykstra St. Catharines, ON

Mr. Speaker, I would also like to thank the member for Essex for moving this private member's bill. It certainly speaks to the heart of what we need to do for seniors in his community and my community. The member for Burlington spoke so eloquently about the relationship we have with the United States, in terms of tax treaties, and what we need to do to help our seniors here in our country. So, it is much appreciated.

I welcome the opportunity to speak to the bill put forward by the member for Essex, in that the bill would exempt from taxation 50% of the U.S. social security benefits received by taxpayers here in Canada. Currently, the exemption is only 15%.

Bill C-305 would amend subsection 81(1) of the Income Tax Act. This part of the act provides that certain items shall not be included in calculating the income of a senior or a taxpayer for a taxation year. The amendment would add to this category a couple of items and, thus, exempt from income tax 35% of the aggregate of all benefits paid by the United States government as a benefit under U.S. social security legislation. The amendment also makes clear that this 35% exemption would be in addition to the 15% exemption provided by paragraph 5(a) of article XVIII of the treaty.

It is estimated that approximately 90,000 Canadians receive U.S. social security benefits, of whom approximately 53,000 earn sufficient income to be liable for tax. The bill would affect the taxation of certain pension payments and would grant an additional 35% exemption in the case of U.S. social security benefits.

The bill is really about the taxation of retirees in Canada and this is an important subject. This is such an important subject because we owe it to Canadian seniors to provide a coherent and comprehensive approach to how their income is treated. I commend the hon. member for Essex for bringing this bill forward. I know that the member shares the same strong commitment to Canadian seniors as I do. This commitment to seniors in his riding and throughout our country is certainly to be commended. We owe our seniors a great deal and when we have the opportunity to extend something as simple as tax relief, we have to do that.

We are fortunate to have a new government that is committed to tax relief. We are committed to tax relief for all Canadians, but especially for seniors and retired Canadians who currently receive a pension.

The relief would benefit nearly 2.7 million taxpayers who receive eligible pension income, providing up to $155 per pensioner. I am speaking about Canada's new government's promise to double the pension income amount to $2,000. We would also take about 85,000 of those same pensioners off the tax rolls.

Many of our seniors who would benefit from Bill C-305 live near our borders, so they, and Canadians, want safer streets. We want to protect Canadian families and communities, to secure our borders, and to increase our preparedness to address public health threats.

It is as important for seniors to feel safe and secure in their homes and their communities as much as it is for them to feel tax relief. Canada's new government has introduced a number of measures in this House to tackle crime, including mandatory sentencing and house arrest to name a few.

One very important feature of making our streets safer is the commitment made in budget 2006. The budget earmarks funds giving the RCMP the tools and people it needs to strengthen its federal policing role. Budget 2006 includes $26 million to give victims a more effective voice in the federal corrections and justice system, and to give victims greater access to services. In every riding in our country, seniors have been victims in criminal acts. This funding would help ensure that they have a voice in our justice system.

There is an organization called Grand-PARENTING AGAIN Canada which was formed for grandparents across the country who, for one reason or another, become caregivers to their grandchildren. It happens across the country, not always for great reasons but it happens.

The proposed bill, along with the universal child care supplement, will help grandparents who face the tough issue of bringing up their grandchildren. With over 23,500 seniors in my riding, any time I have the opportunity to stand and promote a bill that has their interests at heart, I will not hesitate to do so.

The issue dealt with in the bill is an important one, as are all issues that relate to the taxation of retirees. Once again, I commend the hon. member for his commitment to seniors and retired Canadians and certainly wish him every success with the bill.

I want to add one final note. If everyone recalls the movie that starred Tom Cruise called Jerry McGuire, at one point actress Renée Zellweger, responded to a long speech by Tom Cruise, said, “You had me at hello”. The member for Markham—Unionville had me at hello, except that he went on to speak against all the tax advantages that were given to seniors with respect to GST and tax credits in the budget, which disappointed me. I am glad he is supporting it, but he only needed to speak about half as long as he did. I think we all would have been happier on this side of the House.

Income Tax Act
Private Members' Business

11:55 a.m.

Conservative

Jeff Watson Essex, ON

Mr. Speaker, it is a very good day for seniors today. I want to start by thanking hon. members in the chamber for their unanimous support in getting the bill to committee.

I want to point out a few honourable mentions. Of course my colleague, the hon. member for Chatham-Kent—Essex, is the seconder of the bill. I want to commend the hard work especially by the New Democrat members for Windsor—Tecumseh and Windsor West. Before I came to the House, they took up this battle from the member for Calgary Southeast, who was one of the original sponsors of the bill in a couple of forms before that. The official opposition today has seen fit to ensure that this at least gets to committee for some study.

In light of that, I want to move this debate away from the issue of tax fairness, of which we have heard an awful lot, to what this issue really is about, and that is tax justice. In committee we have an opportunity to finally move the debate to this issue. It needs to be started by first acknowledging that an injustice was committed January 1, 1996, when the tax rules changed for a number of Canadian seniors who collected the U.S. social security pension after retirement. That changed their entire retirement assumptions, the money they had available for living out their years.

Many wound up extremely bitter. To this day, those who survive, fewer in number and many stricken with ailments, are still very bitter about this. They long for the day when all parties acknowledge in the House that an injustice was committed with respect to taxation. Those who retired after the rule changed have not experienced the same injustice.

I know the bill asks for an across the board lowering of the inclusion rate. I hope the committee will come up with a real solution which would achieve a grandfathering for seniors who were originally affected after retirement. The bill hopes to address that. Perhaps the committee could hear testimony and attain the desired wording for the change to achieve that. This will send a clear signal if we can achieve a result like this in committee and beyond, and that being the fact that the House is concerned with tax justice for seniors.

I will conclude with a very humble thanks to all hon. members in the House for their support for the bill. This is indeed, as I stated in my opening comments, a great day for Canadian seniors. It will be a better day when the change is finally passed, whether as a budget item, or by this bill or by whatever means, to address the tax injustice. That will indeed be the greatest day for seniors in Canada.

Income Tax Act
Private Members' Business

Noon

Conservative

The Acting Speaker Royal Galipeau

Is the House ready for the question?

Income Tax Act
Private Members' Business

Noon

Some hon. members

Question.

Income Tax Act
Private Members' Business

Noon

Conservative

The Acting Speaker Royal Galipeau

Pursuant to order made earlier today, the motion is deemed carried on division.

Accordingly the bill stands referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)

Business of the House
Private Members' Business

Noon

Conservative

Daryl Kramp Prince Edward—Hastings, ON

Mr. Speaker, after consultation with the other parties in the House, I present the following motion. I move:

That, notwithstanding any Standing Order or usual practices of this House, after no more than one speaker per party and provided that the members may be permitted to split their time by so indicating to the Chair, for the second reading stage of Bill S-5, An Act to implement conventions and protocols concluded between Canada and Finland, Mexico and Korea for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes and income, Bill S-5 shall be deemed to have been read a second time and referred to a committee of the whole, deemed considered in committee of the whole, deemed reported without amendment, deemed concurred in at report stage and deemed read a third time and passed; and

after no more than one speaker per party and provided that the members may be permitted to split their time by so indicating to the Chair, for the second reading stage of Bill C-34, An Act to provide for jurisdiction over education on first nations lands in British Columbia, Bill C-34 shall be deemed to have been read a second time and referred to committee of the whole, deemed considered in committee of the whole, deemed reported without amendment, deemed concurred in at report stage and deemed read a third time and passed.

Business of the House
Private Members' Business

12:05 p.m.

Conservative

The Acting Speaker Royal Galipeau

Does the hon. member have the consent of the House to move the motion?

Business of the House
Private Members' Business

12:05 p.m.

Some hon. members

Agreed.

Business of the House
Private Members' Business

12:05 p.m.

Conservative

The Acting Speaker Royal Galipeau

Is it the pleasure of the House to adopt the motion?

Business of the House
Private Members' Business

12:05 p.m.

Some hon. members

Agreed.

Business of the House
Private Members' Business

12:05 p.m.

Conservative

The Acting Speaker Royal Galipeau

(Motion agreed to)

(Bill C-30. On the Order: Government Orders)

October 19, 2006—The Minister of the Environment—Second reading and reference to a legislative committee of Bill C-30, An Act to amend the Canadian Environmental Protection Act, 1999, the Energy Efficiency Act and the Motor Vehicle Fuel Consumption Standards Act (Canada's Clean Air Act).