moved that Bill C-265, an act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents), be read the second time and referred to a committee.
Mr. Speaker, I am proud to announce that yesterday morning my wife, Sarah, delivered a beautiful son, Thaddaeus David, into the gentle hands of our midwife, at home with my children gathered around.
For much of my day I had the pleasure of spending time appreciating things of value, the nurturing help of my two daughters, Sophie and Emma, to their labouring mother, to my new son's big hands and long toes, and the quiet whisper of “Hi” from his 22 month old brother, Elijah, welcoming him to the family.
It is not only the start of life that is worth reflecting upon. Today my thoughts turn to men and women in their golden years. I am pleased to rise and speak to Bill C-265, an act to amend the Income Tax Act to grant an exemption from taxation of 50% to Canadian residents who collect U.S. social security as a basis of their retirement incomes.
The bill represents a near eight year promise kept to seniors in the riding of Essex to restore tax fairness. It also gives hope to tens of thousands of seniors across Canada from British Columbia to Ontario, from la belle province to the Atlantic, who have experienced the same plundering or their retirement income.
The bill is a reincarnation of two bills that were previously before the House which were sponsored by my distinguished colleague from Calgary Southeast who fought tenaciously, though unsuccessfully, to prevent a 70% tax hike on vulnerable Canadian seniors in 1997.
The bill would also gives form to the aspirations of my New Democrat colleagues from Windsor West and Windsor—Tecumseh who joined the House after the tax increase passed into law and who desire and have worked to see tax fairness restored to these seniors. I understand the member for Windsor West will be speaking shortly and I thank him for his support.
Together we have demonstrated an ability to work cooperatively across party lines. It is this cooperation in a minority Parliament that gives us and the seniors who we represent the most realistic opportunity to see the tax relief they deserve.
For government members opposite, it is my hope that they will support this measure.
My own quest to see tax fairness began with the stories of real people. They moved me to act for justice. I believe their stories will move all members of the House to endorse Bill C-265.
At issue here is the 70% tax increase in 1997 to Canadian seniors collecting U.S. social security. Bill C-265 seeks to reverse this tax hike by lowering the amount included for taxable income from 85% to 50%.
I am new to this chamber. In fact more than one-third of my colleagues are new to this chamber, so to understand how we arrived here I must take a couple of minutes to relive some painful history.
Canada and the United States signed the Canada-U.S. Tax Convention Act in 1984. Among other things, the act addressed the flow of social security benefits across the Canada-U.S. border, that is, t it dealt with the taxation of CPP or QPP and our OAS benefits received by persons resident in the U.S. and U.S. social security benefits received by persons resident in Canada. The tax treaty gave the power to tax benefits to the country of residence rather than the country paying the benefit.
Further, the rule was that only one-half of the benefit went into a taxpayer's income. For example, a Canadian collecting $15,000 benefit from the U.S. was taxable on only $7,500. This situation existed under the first and second protocols of the Canada-U.S. tax treaty up to December 31, 1995.
However something horrible happened to Canadian seniors. The Liberal government of the day entered into negotiations with the U.S. to change the tax treaty producing a third protocol. Taxing benefits moved from the resident country to the source country. Canadian seniors collecting U.S. social security were told shortly before Christmas 1995 that effective January 1, 1996, the U.S. would be withholding 25.5% of their benefits. This changed seniors' retirement assumptions entirely. Many low and modest income seniors were forced from their homes because they could no longer afford them. Moreover, they could not file a U.S. tax return to be taxed on a net basis. There was no way to avoid being taxed at 25.5%.
It was not the Grinch who stole Christmas 1995 from 85,000 Canadian seniors. It was their Liberal government in Ottawa.
However, rather than roll over, these seniors banded together to fight. A grassroots group was born in Essex called CASSE, Citizens Asking for Social Security Equality. It was an idea that soon drew thousands of seniors to rallies. It was not a glamorous army of idle rich seniors either. They came in wheelchairs and they came in walkers. One senior did not even have return bus fare because her fixed income was slashed. They gave the Liberal government every reason to go back to the U.S. to renegotiate the tax treaty.
After pressure on the then finance minister, on April 9, 1997 a fourth protocol was reached with the U.S. that restored taxation of benefits to the resident country as it had existed prior to December 31, 1995 under the second protocol.
The Liberals faced this issue and CASSE during the federal election in 1997. Seniors were told the new protocol would be revenue-neutral and should be supported. The issue was supposed to finally be over.
What the fourth protocol did not restore however was the 50% inclusion rate for taxable income that existed under the second protocol. Instead, it set the rate at 85%, a whopping 70% more than the pre-1996 rate. It was a crushing blow to seniors hoping to see their retirement income restored.
The fourth protocol was ratified by our members in the Bloc, not because it was fair but because it held the promise of retroactive tax rebates to affected seniors. The rebates proved to be few however because the 85% inclusion rate was also retroactive. Today, without those same urgencies but with the same need for justice to be swift, the bill gives Bloc members of Parliament the opportunity to fully restore tax fairness to Quebec seniors. I urge them to seize the moment.
During debates to ratify the fourth protocol, seniors were told many things by the government. The deputy prime minister of the day said that the move to the 85% inclusion rate would be revenue-neutral. Finance officials testified that that would not actually be the case. Of the hundreds of seniors affected in my region, I still have yet to meet even one who has received a rebate.
During these debates in 1997, seniors were told by the then finance minister, now Prime Minister, that the U.S. was moving quickly to ratify, so he and his government had no control over the inclusion rate. Federal finance officials testified before a Senate committee that Canada could have set the Canadian inclusion rate at zero if it wished.
During these debates seniors were told, believe it or not, to be grateful, that after all, Canadians collecting CPP in Canada have 100% of their benefits taxable. What the government failed to admit to seniors was that residents in the U.S. collecting CPP or QPP were treated far better than they were. In fact, a senior collecting Canada pension plan or Quebec pension plan in the U.S. has to earn about $59,000 Canadian before they have any income included at the 85% rate. The social security benefits worksheet provided to me by one of my constituents is absolute proof of that.
What seniors in Canada were not told by the Liberal government was that seniors in the United States pay no tax unless they are the richest of the rich. Eighty per cent of those collecting CPP or QPP in the U.S. pay no tax at all. A paltry six per cent pay at the 85% rate. By comparison, every senior in Canada collecting U.S. social security has 85% of his or her income taxable above the basic and perhaps the age exemption. Seniors at modest and the lowest income levels pay tax in Canada. If the inclusion rate had been restored to 50%, most seniors in Canada would have paid little or no tax.
Worst of all, during the debates of the fourth protocol, seniors in Canada were told to be grateful for their 70% tax increase because they had a public health system they never paid for. My predecessor in the riding of Essex not only argued this in this House, but she argued that the inclusion rate should have been 100%. It is right in Hansard . I could not believe what I read.
I would like to remind the House who these seniors are. These seniors are the women who waited six years alone or with small children while their husbands went to war to fight for Canada. These seniors are the men who sacrificed six of their productive years to the cause of freedom. After the war, these men and women married, built homes, paid for and raised money for hospitals, ambulances and schools. They built churches and helped build their neighbours' homes and barns. They spent every dollar they earned in neighbourhood grocery stores. They clothed their children with clothes from the local department store. They bought the cars their neighbours built. They volunteered in rural fire halls.
In my area these men and women helped start Windsor Medical, the first public health system in the province of Ontario. Liberals think these seniors should be happy for their inclusion rate not being 100% because they get a public health system? No, the government should be grateful these seniors built this country.
Canadian seniors who received U.S. social security more than paid their fair share. The government was wrong in 1997 to raise their taxes 70%. It is still wrong today, and it still needs to end this injustice.
That was yesterday for today's seniors. Let me talk about seniors today. We will find many of them in mobile homes dotting communities in British Columbia, Ontario, Quebec and the Atlantic. We will find others in tiny apartments or nursing homes living alone. Many have been forced to decide between paying for prescriptions or paying for utilities.
One woman in my riding has since survived cancer of the colon and of the right eye. Many are in wheelchairs because they can no longer walk. June, in the town of Harrow in my riding, told how her husband died recently of a heart attack. He died still under the stress of being unable to pay their bills. Now June is left to struggle with only her meagre social security and under the 70% tax increase from the government.
I can also talk about letters of great hardship, but valiant determination to fight by seniors in Quebec. I can talk about letters with horrifying stories. Joan and Ivan in Amherstburg in my riding told me that the 70% tax increase by the Liberals has “turned the golden years to sickness, sadness and bitterness”.
I urge ministers and even the Prime Minister to come with me on Monday to visit seniors in Viscount Estates in my riding of Essex. These are not sprawling mansions on hundreds of rolling acres in the countryside. Viscount Estates are not million dollar homes fronting on Lake St. Clair. Viscount Estates is mostly a mobile home community.
In the recent election, I knocked on every door there. I heard every terrible story. Not all seniors started their lives in Viscount Estates, but many ended up there because of the third protocol. They were promised by the Liberal government that the fourth and current protocol would make life better. Not one of the seniors still alive has moved out of Viscount Estates.
There are a couple of sad realities. The same seniors who had to leave their modest homes for mobile homes did not have the means to hire fancy lawyers to fight for them. They still do not. Nor can they launch full colour, glossy ad campaigns on billboards, in print or on TV. Instead, they have spent eight long years in suffering silence.
The other sad reality is that many are no longer alive to fight. The more than 85,000 affected seniors have been whittled away by disease and age. Eight years without reversing the 70% tax increase is not a strategy for justice and fairness. It is a wait and die attitude by the Liberal government.
My colleagues do not take my word for this. I urge my colleagues to pass Bill C-265 at second reading so that seniors from the west and the east, from Ontario and Quebec, those who can still make the trip to Ottawa, may come and tell their stories themselves.
My colleagues on the government side of the House pledged to lower taxes for low and middle income Canadians. These seniors will not believe it until you support a measure like Bill C-265. It will have a modest impact--