Bill C-305 (Historical)

An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents)

The purpose of this enactment is to reduce from 85% to 50% the inclusion rate on United States social security payments received by Canadian taxpayers.
The “inclusion rate” is the percentage of United States social security payments to be included as income by a Canadian taxpayer. The Canada-United States Tax Convention Act, 1984 provides for 15% of such payments to be non-taxable in the hands of Canadian residents, thus resulting in an 85% inclusion rate.
This enactment provides for an additional 35% of United States social security payments to be excluded from taxable income. The enactment therefore increases the exemption to 50% and decreases the inclusion rate to 50%.

[Bill Trasher, Spokesperson, Canadians Asking for Social Security Equality]

Thank you very much for this opportunity to tell you our story. I collect U.S. social security so I'm well involved with the facts.

During the Christmas season of 1995, residents who spent part or all of their working careers in the United States received a letter that shattered their lives. The letter was from the U.S. social security administration stating that beginning January 1, 1996, there would be a 25.5% non-refundable withholding tax applied to their benefits. Why? Because Canada and the United States agreed to a new treaty that was amended to allow the country that issues the benefits to collect the tax. For decades prior to this amendment, the country of residence collected the taxes.

Pain and anguish cut through the hearts of retired citizens like a knife. Many of these seniors never had to pay any income tax before because their income was so low. Now they had just lost 25.5% of their social security benefits. How would they pay for food, and rent, when they already lived a meagre lifestyle?

The Honourable Herb Gray, M.P., Windsor West, told the Windsor Star on December 27, 1995, that he was assured that Canadians will not pay more in tax and could pay less. There was never any hint that the government felt recipients were not paying their fair share. In fact, it was said that we just fell through the cracks and that they were really after those few who didn't report their U.S. income on the Canadian returns. CASSE, Canadians Asking for Social Security Equality, a grassroots organization, sprung to life out of desperation and anger to fight this tax agreement. Expecting 25 people to show up at our first meeting, we were overwhelmed when more than 200 people crowded into the Viscount Estates clubhouse in Essex, a little town close to Windsor.

Two more meetings were held that year, each attended by 1,500 seniors, many of them handicapped by physical impairments. CASSE is made up of ordinary people who, in spite of their ages, were prepared to do battle with big government. They passed the hat for donations to support their cause. This was not some big business that could afford to pay millions of dollars to hire lobbyists to wine and dine powerful lawmakers. This was a group of ordinary people fighting for their pensions and the right to stay in their homes, and some in their nursing homes. Only when it became evident that these seniors were ready to fight for their rights did things start to happen.

Talks between Canada and the United States treasury finally resulted in a tentative agreement agreed to April 9, 1997. That agreement came full circle to what existed prior to 1996, with one major exception. Whereas 50% of social security benefits were taxable prior to 1996, Canada now taxes 85% of those benefits. This represented a 70% increase in tax on those social security benefits.

In Canada, premiums for CPP are deducted from wages before taxes are applied. In the U.S., wages are taxed before premiums for U.S. social security are deducted. Since 1962 the premiums for U.S. social security could be used as tax credits on Canadian taxes. In the United States, less than 20% of social security recipients pay any tax on their benefits, and less than 6% pay tax on 85% of their benefits. In Canada, every person is required to include 85% of their U.S. benefits for tax purposes, regardless of income.

There are some who use the argument that they made a choice to retire in Canada and therefore should accept Canadian tax rules. They made that choice based on the rules that were in effect at the time of their retirement. Most chose Canada because of their attachment to family and country. Many wanted to be near their children and grandchildren during their twilight years.

I'm going to get right down to the end page because I want to say that in 1999 all three Windsor MPs, Susan Whelan, Rick Limoges, and the Honourable Herb Gray, all representing the Windsor area, publicly stated they favoured grandfathering the tax rules.

Prosperity in border communities is due in part to the huge workforce that crosses the border every day and retires in those communities, where they spend their salaries and pension benefits on cars, on homes, in local shops, and on charities. The economy benefits from those U.S. cheques, as do the federal, provincial, and municipal governments by way of GST, PST, and other taxes. That is another reason we support the passage of Bill C-305.

The present rules seem to be telling those who work in the U.S. to retire there, and those who now live over there to stay over there. Will the cities, provinces, and country be better off by telling these people we don't want their American money? Can we afford to say we don't need the $0.5 billion U.S. that they spend on goods, services, and taxes every year in Canada?

Dividend income is treated differently from interest income because it is not the same kind of income. Social security income should not have to be taxed the same as CPP income, for the same reason. They differ in country of source, in rules, premiums, amount of earnings taxable, eligibility for benefits, and so forth.

[William Gleberzon]

No, he's a much taller fellow than I am.

CARP is pleased to support Bill C-305 to exempt from taxation 50% of United States social security payments to Canadian residents because of the number of calls, emails, and faxes we have had from those adversely impacted by the current policy. Nevertheless, I want to propose an amendment to the bill, which I'll get to in a few minutes.

As Mr. Watson pointed out, the history of this particular change of policy between 1995 and 1997 is quite convoluted, and again you can read what I've written there. But I'll just move on, because the main point of those two years was that the taxable amount on U.S. social security received by Canadians was raised by a whopping 35% in one fell swoop. The two years of experimentation in determining the amount to be taxed caused shock, uncertainty, and consternation among the estimated 100,000 Canadian recipients of U.S. social security living in Canada.

Those affected had no time or way to prepare for the high increase in the taxation amount that was imposed on them other than to reduce their quality of life. CARP heard terrible stories of how their well-being was thrown for a loop, and spoke out on their behalf to the government at the time and to Parliament about the change in policy.

Today some of the same U.S. social security Canadian recipients who were impacted by the change in 1997 are getting older and frailer. Some are beginning to move into nursing homes or are receiving home care, both types of services being quite expensive for them, regardless of which province they live in, as more costs are off-loaded onto seniors. By restoring the pre-1995 50% tax exemption, their quality of life during their twilight years can be greatly enhanced.

Of course, today the post-1997 older Canadians who worked and contributed to social security and were taxed by the American government when they did so and came home when they retired face the 85% taxable amount of their retirement income. Some welcome for our returning citizens or those Americans who choose Canada as their home and become citizens.

The tax regime for social security is quite different in the United States compared with that imposed on Canadian social security recipients. As noted, in the United States income tax is paid when contributions are first made to social security. However, a few years ago additional taxation of social security benefits was introduced, consisting of a sliding scale, depending on income, that ranges from 50% to 85%. It is our understanding that only about 20% of seniors in the United States actually pay any tax on social security, based on income and how the taxable amount is assessed.

I ask you to turn to the appendix, which is the way in which the system works in the United States, from an expert in these matters, for expatriate Americans. By the way, I spoke to the author, and she confirmed to me that this is the way the system works today. Most telling, taxing 85% of social security is the maximum in the United States based on income, whereas in Canada 85% is the only percentage for taxing social security, regardless of income.

I'd like to remind the committee that the change in the taxable amount was introduced as part of a bundle of pension income changes at a time when the Canadian government faced high deficits. That period is long past. Indeed, on the 10th anniversary of the rise by 35% of the taxable amount of U.S. social security received by Canadians, the opposite is true. As you all know, today the Canadian government enjoys very high surpluses—in fact, a continuum of high surpluses.

Can I just say that was recognized in yesterday's budget, when the age at which RRSPs have to be converted to RIFs was raised to 71 years, which is what it was prior to 1997. Moreover, the government's coffers should not be stuffed on the backs of the retirement income of older Canadians who have already paid tax in the United States on this retirement income.

At this point I'd like to introduce an amendment to Bill C-305 regarding the taxable amount of U.S. social security received by Canadians for this committee to consider.

[The Chair, Conservative, Brian Pallister]

Could the next witnesses please come forward as quickly as possible?

We'll now continue pursuant to the order of reference

of Monday December 4, 2006 with respect to Bill C-305, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents)

We have several witnesses with us today, including our colleague Mr. Jeff Watson, who I will invite to speak for no more than five minutes.

Mr. Watson, I'll indicate to you and to other witnesses when there is a minute remaining. Of course, I'll then unceremoniously cut you off.

Committee members may want to consider that during these five-minute presentations—I believe we have three of them—there will be a balance of approximately 20 minutes remaining for discussion and, if possible, clause-by-clause.

I welcome Mr. Masse to our committee as well. Thank you for being here.

I will invite committee members to ponder that and possibly the need to extend the time to further discuss it, if they so desire.

We go now to Mr. Watson. Welcome.

Finance

[Brian Pallister, Conservative, Portage—Lisgar, MB]

Mr. Speaker, it is with mixed emotions, both honour and some regret, that I present today, in both official languages, two reports, the first being the 11th report of the Standing Committee on Finance in relation to Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions).

This report was made necessary by the need to delay the consideration of Bill C-253 and we are asking for an extension to do so because of all the urgent business, such as income trust discussions, that has been before the finance committee over the last number of weeks.

Mr. Speaker, I have the honour to present, in both official languages, the 12th report of the Standing Committee on Finance, relating to Bill C-305.

The report deals with the exemption from taxation, 50% of United States social security payments to Canadians residents. Again, this report was made necessary because of the ongoing incredible workload of the finance committee and the need for us to have an extension to deal with this until a later date.

[The Chair, Conservative, Brian Pallister]

Order.

Committee members, allow me to review quickly the work schedule for committee members and their staff.

First of all, in terms of orders of business for the coming week, next Tuesday, February 6, we will be dealing with a draft report on income trusts. I'm going to endeavour to get the room fifteen minutes earlier so that you can come in and read the draft prior to beginning discussion, just to expedite the process of dealing with the draft report.

Next Thursday, February 8, we have private members' bills. We have Bill C-294, Bill C-253, and Bill C-305 to deal with at that point in time.

Following that, very likely beginning on Tuesday, February 13, we will be dealing with Bill C-37, the Bank Act review, which should encompass a fair bit of the committee's time over the next while. I would suggest to you, committee members, that you forward names of witnesses to the clerk's office. Begin that process now and we'll give you some deadlines later on, but give some thought to Bill C-37, the Bank Act review, as soon as you wish.

At this juncture, Mr. McCallum, I believe you have a motion that you'd like to bring forward. I'd like for us to deal with it now if we could.

Income Tax Act

[Rick Dykstra, Conservative, 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.

[Brian Masse, NDP, 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.

[John McCallum, Liberal, 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.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Mr. Speaker, I apologize if the member did not hear me correctly. It is Bill C-305.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I welcome the opportunity to speak to this private member's bill, Bill C-305, a proposal relating to the tax treatment of a very particular kind of income, the social security benefits that some residents in Canada receive from the government of the United States.

I understand that the principles, which have motivated the hon. member to craft this bill, are ones that my constituents and I support. Those principles include tax fairness for all Canadians and special consideration for our seniors who have given this country so much and deserve our full support.

Canadians who want to know what Canada's seniors have contributed only need to look around them. The entire fabric of Canadian life was built on foundations that were laid for us by those who are now in their retirement years. An obvious example is the freedom we enjoy, freedom that people in many other parts of the world would dearly love to have. We are free to speak our minds, free to worship as we choose or not at all and free to hold and enjoy property and to participate in institutions that govern us, all because of sacrifices of a generation of Canadians who are now in retirement.

We owe a debt to the senior members of our communities. Indeed, the government does a great deal for seniors right now. Old age security benefits and the guaranteed income supplement ensure that seniors are able to enjoy a basic minimum standard of living. In this fiscal year, these programs will provide over $31.5 billion to over 4.2 million, many of them low income seniors.

Seniors also benefit from a number of tax expenditures and programs that are targeted to their needs and particular circumstances. These range from a newly increased pension income tax credit, which reduces income tax paid by seniors, to the new horizons seniors program which provides financial support to community based projects for seniors. These targeted programs are in addition to the strong retirement income support that is in place: the OAS, the GIS and the financially secure Canada pension plan.

The results speak for themselves. The number of low income seniors currently is at an all time low. Bill C-305 proposes to extend the exemption from the tax credit to U.S. social security benefits from 15% to 50%. I know this measure would help many seniors in this country who worked in the United States or whose spouses worked in the United States and now qualify for these benefits. However, I also know that the taxation of these benefits has a long and complex history involving lengthy negotiations between the Department of Finance and the U.S. treasury department.

Let me explain by providing some background on the taxation of social security benefits as set out in the Canada-U.S. Tax Treaty and why it is that Canada agreed to the 15% exemption. As I have mentioned, this history has been complex and the current state of affairs represents a delicate balance between competing interests.

The Canada-U.S. Tax Treaty has included rules for the taxation of social security benefits paid by one country to residents of the other country since 1984. The evolution of these rules has progressed in three distinct phases.

First, between 1984 and 1996 the treaty contained a residence based taxation rule; that is, only the country of residence was allowed to tax social security benefits. During this time, a resident of Canada receiving U.S. social security benefits would only pay tax to Canada. There was, however, a 50% deduction in computing taxable income in respect of these benefits because at that time the U.S. only taxed a maximum of 50% of the U.S. social security payments. This represented a tax advantage over Canadian benefits which were fully subject to tax. In addition, U.S. residents receiving Canadian benefits were not subject to Canadian tax and benefited from the 50% maximum inclusion rate in the United States.

One consequence of this was that high income U.S. taxpayers were not subject to the clawback of old age security benefits which applies to Canadian taxpayers with incomes above a certain amount. This residence based rule was seen to be unfair.

At the time, the public called for the rules to be changed so that all participants of Canadian benefits were taxed in the same way, regardless of residence, and the rules were changed. In 1995, Canada and the United States agreed to replace the residence based rule with a source based rule. In other words, the new rule would allow only the country from which the payment arose to tax that payment. The result was that a Canadian resident receiving U.S. social security benefits was taxed only by the United States.

In addition, the maximum inclusion rate under U.S. law had risen over time from 50% to 85%. A U.S. citizen in receipt of a U.S. benefit would be subject to ordinary U.S. rates only on a maximum of 85% of that income. If the recipients were Canadian residents, they would either pay U.S. rates if they were a U.S. citizen or they would be subject to a final withholding tax of 25.5%. This rate was computed at 85% of the standard U.S. withholding rate of 30%. This was a final tax and was non-refundable.

For high income Canadians, this tax was usually acceptable since, if they had to pay tax in Canada on this income, their marginal rate of taxation would likely have been higher than 25.5%. However, for low income taxpayers who otherwise rely on the progressive nature of the Canadian tax system to fairly distribute the tax burden, the 25.5% withholding tax constituted excessive taxation and caused, in many cases, severe hardship.

These taxpayers, had they been subject to tax in Canada on this income, would have paid little or no tax. Because they were subject to U.S. taxation, a quarter of their income was lost. Conversely, a U.S. resident receiving Canadian benefits under this rule could choose between a 25% withholding tax or, if they filed a tax return in Canada, a graduated income tax at ordinary rates. For low income U.S. taxpayers, this meant they paid little or no tax. At that time there was a great discrepancy in the taxation of these benefits to the detriment of many low income Canadian seniors.

Canada and the United States recognized this unfair treatment and we came together again to change the rules. To relieve hardship on low income Canadians, we agreed to restore residence only taxation. The current rule provides that social security payments are taxed as if they were payments from the home country's benefit plan.

A Canadian recipient of U.S. social security is treated as if the payment were from CPP, QPP or OAS. U.S. recipients of CPP, QPP or OAS are treated as if they were receiving U.S. society security benefits. This meant that Canadians receiving U.S. benefits could avail themselves of the graduated rate of our taxation system and were no longer subject to the flat 25.5% withholding tax.

As I mentioned, the maximum inclusion rate in the United States had changed from 50% to 85%. That is the history of the taxation of social security benefits between Canada and the United States. As this history reveals, it is a complicated issue that is related to the negotiations of our most important tax treaty.

I thank the hon. member for tackling such a complex issue and for working hard to represent the seniors and retired people, not only in his constituency but also in mine, as I have many residents who live in the riding of Burlington who receive both a Canadian pension and a U.S. pension.

I appreciate all the support I have heard so far this morning on this item. I look forward to having it go to committee so we can debate this further and get the proper representation from those who are truly affected on a daily basis by this measure.

The House resumed from October 30 consideration of the motion that Bill C-305, 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.

[Diane Ablonczy, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I welcome this opportunity to comment on Bill C-305. The subject of the bill is the income tax treatment of social security benefits that some residents of Canada receive from the government of the United States.

I applaud my colleague, the hon. member for Essex, for his initiative to provide a higher standard of living for Canadian retirees. Indeed, this government has taken action directly to raise their standard of living. It is, of course, important to approach such issues in a disciplined and focused manner. We have to set priorities and take action where we see the potential for the greatest gains overall, gains in terms of fairness, gains in terms of raising standards of living, and gains also in terms of unleashing Canada's long term economic potential, something that will be essential if we were to guarantee secure support for all tomorrow's seniors and today's seniors as well.

One of this government's key priorities is tax relief. Canadians have been shouldering an unduly heavy tax burden for far too long, but we are working hard to lighten that load. In budget 2006 we delivered on our promise to double the pension income that can be claimed tax free to $2,000. This relief will benefit the nearly 2.7 million taxpayers who receive eligible pension income and it will take 85,000 of them completely off the tax rolls. That is certainly not all. Retired Canadians, like other Canadians, will benefit from many of the tax relief measures in our first budget. This includes dropping the GST rate by one percentage point to 6%, effective last July 1.

The GST cut will make a real difference to Canadians. In fact, it will benefit all Canadians by close to $9 billion over two years, even those who do not earn enough to pay personal income tax. In fact, the National Anti-Poverty Organization, as well as academics and think tanks have undertaken research on the distributional effects of various tax cuts. They have found that lower income families pay about 8% of the money collected from the GST, but only half a per cent of income taxes. Conversely, the richest families, those with incomes over $100,000, pay about 4% of all GST and 10% of income taxes.

In consequence, according to the National Anti-Poverty Organization, the general principle is clear. Families with incomes under about $50,000, which include many, many seniors, will gain more benefit from reductions in the GST than from reductions in income tax.

Also, even though we reduced the GST rate, we have kept the GST credit at current levels to further protect low and modest income Canadians, including seniors. In fact, including the GST cut, budget 2006 delivered almost $20 billion in tax relief for individual Canadians over two years. That is more tax relief in one budget than in the last four budgets of the previous government.

All Canadian taxpayers, including seniors, will benefit from permanent increases in the basic personal amount, the amount of income Canadians can earn without paying federal income taxes. By 2009, this amount is legislated to reach $10,000.

All taxpayers will also benefit from the permanent reduction to 15.5% in the lowest personal income tax rate. This is the rate that applies on the first $36,400 of income.

Providing a secure retirement for seniors will also mean investing to ensure a strong, productive and growing economy in the future. It is vitally important that Canada's economy is poised to meet the challenges of an aging population in an increasingly competitive economy. Again, this government is taking action, focusing our investments on the highest priorities.

Budget 2006 proposed measures to help federally regulated, defined benefit pension plans make an orderly return to full funding while protecting the security of pension benefits. Budget 2006 also took important steps toward building a competitive tax system. This is a key priority if Canada is to continue on the path to more and better jobs and stronger economic growth.

For a start, we delivered on tax relief that was only promised by others, but never delivered. In particular, we eliminated the federal capital tax as of January 2006. We will eliminate the corporate surtax, starting in 2008. We will reduce the general corporate tax rate. These proposed reductions will allow Canada to regain the solid statutory tax advantage that we had prior to the 2004 tax changes in the United States. This is important since 85% of Canada's trade, and we are a trading nation, is primarily with the U.S.

In terms of health, budget 2006 provides $1 billion over the next five years to improve Canada's ability to respond to a pandemic or other health emergencies to which seniors may be particularly vulnerable. We have set aside an additional $52 million per year for the next five years to implement a Canadian strategy for cancer control.

Finally, seniors deserve to feel safe in their homes and communities. The 2006 budget provides over $200 million in funding to vigorously combat crime. This includes funding to hire an additional 1,000 RCMP officers and federal prosecutors. It includes enhanced training for the RCMP and also provides funding for crime prevention in communities.

Early in my remarks I flagged the importance of identifying priorities and acting on them. All the things I have mentioned, reducing the tax burden, increasing spending on health and on ensuring safety in our communities, including ensuring that our economy continues to flourish, and supporting the benefits we provide to seniors and to other Canadians, are very important. We must ensure that we not only identify priorities but have the importance to act on them as well.

This brings us back to the private member's bill before us today. My hon. colleague from Essex has raised an important issue. We believe this issue deserves to be considered, along with many other potential budget priorities that are on the minds of each and every member of the House. The goal must always be to proceed in a fair and balanced way for all seniors and for all Canadians.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Speaker, I am happy to speak about this issue today. I also had the opportunity to talk about Bill C-265.

This is not the first time a bill on taxing social security payments has come before this House. In November 2004, my Conservative colleague was on this side of the House, and we shared his joy when his spouse gave birth to a child. Naturally, we congratulated him.

Today, I congratulate him on again raising this issue by introducing Bill C-305. The purpose of this bill is to reduce the tax rate from 85% to 50% for Canadians and Quebeckers who receive United States social security payments.

At first glance, this bill might not seem very important. But this issue affects thousands of Quebeckers and Canadians. For over 20 years, we have been looking for an equitable way to solve the legislative problem facing Quebeckers and Canadians.

Why could Canadian and Quebec citizens who receive payments from the American government not benefit from the same conditions as American citizens who receive a pension from the Canadian and Quebec governments?

To help members understand where we are at today, I will give some background on this issue. Four protocols have been negotiated between the United States and Canada. I want to talk about the fourth protocol, signed in July 1997 with a number of other countries, including the United States. Under this protocol, only the country of residence is able to tax social security benefits. Since then, Canada has been able to tax American benefits paid to residents of Canada and Quebec.

The problem is that the protocol gave Canada, under the U.S. Social Security Act, the right to increase the tax rate from 50% to 85%. Bill C-305, before us today, would correct this situation.

The Bloc Québécois supports the bill, because it rectifies an error the previous government made in 1997. Several thousands of Quebeckers left their families to go work in the United States, often for years, and have been punished by the provisions of this legislation. These are people who, in many cases, were close to their roots and did not want to leave their country for the United States.

The 1997 legislative amendment enabled the federal government to bring in a lot more revenue at the expense of a population that could be considered vulnerable and economically weak. It is important to understand why Bill C-305 is now before the House and how it corrects a past blunder.

As I mentioned, historically, four protocols have modified the Canada-United States tax convention. In 1980, the income tax convention provided that social security benefits are taxable only in the originating country. It was only sometime later that the benefits were initially taxed in the United States.

The portion of benefits deemed taxable rose from 0% to 50%, depending on the taxpayer's net revenue and when the benefits were paid.

Modest income families and individuals were generally exempt from paying taxes on their benefits. In March 1984, a second protocol modified the Canada-U.S. tax convention. This agreement made social security benefits taxable only in the taxpayer's country of residence. From then on, 50% of the benefit amount was exempt from taxation.

For example, an American citizen residing in Canada was taxed on 50% of the benefits received from the United States. Bill C-305 is designed to return to this situation.

A third protocol was signed in March 1995. It gave the country paying benefits under social security legislation the exclusive right to tax those benefits.

This means that the United States taxed social security benefits paid to Quebec and Canadian residents at a rate of 25.5%, while Canada did not tax benefits received by American taxpayers.

Finally, the fourth agreement to amend the tax treaty was signed in July 1997. It provided that benefits paid under U.S. social security legislation to a resident of Canada would be taxable only in Canada, as if they were benefits under the Canada Pension Plan, except that 15% of benefits were made tax exempt in Canada.

Under this agreement, the tax rate became 85% of the payments made to Canadian residents.

However, the last agreement provides that the benefits paid under Canada's social security legislation to a resident of the United States are taxable only in the United States.

Essentially, the purpose of Bill C-305 is to reduce from 85% to 50% the tax rate on United States social security payments received by Canadian taxpayers.

For over 20 years now we have been trying to find a fair and equitable solution for all Quebeckers and Canadians dealing with this problem.

Thousands of Quebeckers and Canadians live near the border and have been suffering the never-ending repercussions of these tax reforms over the past 20 years.

Of course, this measure does not come without a price, but it is a small price to pay considering the thousands of people who have sacrificed their lives and their families to work far from home and their loved ones. These people wanted to stay here and keep their identity.

We, the Bloc Québécois, support lowering the tax rate on benefits paid to taxpayers, from 85% to 50%, because it corrects certain injustices. For this reason, I would like to congratulate the hon. member for his bill, which we will support.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to speak to Bill C-305, which has been before Parliament before. I took the opportunity to look back at some history and noticed that this bill passed at second reading and was sent to committee where it died. Some members of Parliament are fortunate enough to get high enough in the lottery so their bills can be considered, but I have a great deal of sympathy for those members who face the worst possible outcome of not getting them through the entire legislative process before an election is called.

Bill C-305 raises an important question. I think the member has a reasonable argument but he will need to convince members about some of the differences that have occurred since the time we entered into a tax treaty with the U.S. in 1984.

Before I became a member of Parliament, I had a CA practice in which I did tax returns mainly in Canada but had some experience with United States returns. The member will know that the tax systems between the two countries are very different. The Americans charge a capital gains tax on the sale of a home, but they also have mortgage interest deductibility. They have deductions for taxes paid to other jurisdictions. They also have joint filing for couples. However, members should understand that it is not the filing of one tax return for two people using the same tax tables as one person. It is a separate schedule of taxation for joint filers. It is not exactly seamless but at least it is a bit better than what we have here.

I would not even try to do a quantitative analysis about the tax burden between Canada and the U.S. Our health care system is paid by our tax dollars, whereas it is not in the United States. The cost of buying health insurance in the United States is very prohibitive for many people. I just want to point out that there are some differences.

Interesting enough, the tax treaty treatment of U.S. social security payments received by Canadians who worked in the U.S. and are eligible for U.S. social security are outside the ambit of the traditional tax treaty treatment.

Something that is important for members to acknowledge is that this is not a simple issue. It is a complex issue. Members need to understand where we started so that when we look at where we end up to determine whether or not there is an inequity compared to where we started as opposed to whether there is an inequity compared to somebody else? That happens to be the crux of the issue here.

The member's argument has basically been that people receiving U.S. social security were treated in a certain way back in 1984 when in fact they were taxed in the country in which they were resident. Any payments received from the United States were taxed in Canada. It had a 50% exclusion rate which meant that if someone received a U.S. social security benefit of $100, they person only had to include 50% of that in his or her Canadian income tax return.

That changed in 1996 when the third protocol was negotiated. It was decided to change where the taxation would occur. It was changed so that a Canadian receiving a U.S. social security benefit would actually be taxed in the United States which had a withholding tax of 25.5%. I could go into the details of how the differences were worked out but I do not believe that is the fundamental issue.

The member referred to what happened on April 9, 1997 when the fourth protocol was negotiated with the United States. It reverted back to where the tax benefit would be taxed in the country of residence. However, it did not restore the 50% exclusion rate that was in the 1984 tax treaty.

Therefore, we have a situation where in 1984 only half of U.S. social security payments were included in Canadian income taxes. In 1997 it was all included, except for a 15% exclusion. This was basically to mirror the withholdings that generally would happen when a United States corporation would pay, for instance, investment income to a Canadian where there was withholding at source.

If we look at some of the machinations that the finance department had to go through in terms of the tax equity between two countries in dealing with payments to non-residents or to foreign jurisdictions, we can see that it really is not very easy to explain. One of the things I conclude from this is that the inequity the member is referring to is the fact that back in 1984 there was a 50% exclusion rate. He would like to have it back now because in both instances individuals were taxed in the residence of the person who received the money. That is a non sequitur. It does not follow because there were other things that were taken into account.

The inequity is not an inequity between a Canadian receiving U.S. social security payments and an American receiving Canada pension plan payments. Argument has been made that, and if we look at the Debates from the last Parliament, the Americans have a different system. They have to make $59,000 before they have to start including any, and even then there is an exclusion rate.

Why are we comparing, or trying to compare, Canadian tax burden to U.S. tax burden for the same receipt of U.S. social security payments? It is not possible to do that in a clear fashion. In fact, here is the real comparison that we should be looking at. If a Canadian receives a Canada pension plan of $100 and has to include that $100 in his or her income tax return, why is it that a Canadian receiving U.S. social security payments should only include one-half of the amount in the Canadian income tax return?

In fact, two people receiving a $100 benefit, one paid by Canada and one paid by the U.S., would be treated totally differently. In fact, the inequity that is being proposed by this bill would increase, but if we make the argument about a Canadian receiving U.S. social security compared to an American receiving social security, it is suggested that we should have this changed so that it gets us back to what we had in 1984.

Members can see this is very convoluted. Having said that, this issue has gone on for some time and I do know that the member and many members in this place have expressed some concern about the tax burden of Canadians who receive foreign pension payments. It is not possible to actually explain it to members in the two hours of debate.

I suspect that there may be an appetite for this matter to go to the finance committee to get the full details out. The finance department has to explain all of the implications that it took into account in negotiating for separate protocols since 1984 on how to deal with these matters.

Further, I would respectfully suggest to the member that in consultation with finance officials, he may be able to provide members with some analytical samples which could show, in very simple terms, the difference in the tax burden today between a Canadian receiving CPP and a Canadian receiving U.S. social security payments.

He may also want to consider that, in my view and I think many share it, the best outcome of a private member's bill is to get the government to adopt it as its own and to make appropriate other consequential changes, or maybe inconsequential changes, which will make absolutely sure that there is as little inequity between taxpayers as possible.

[Jeff Watson, Conservative, Essex, ON]

moved that Bill C-305, 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 very pleased to rise today to speak to Bill C-305, an act that is designed to lower from 85% to 50% the inclusion rate for the amount of income taxable for Canadian seniors who collect the U.S. social security pension.

I spent a lot of this past weekend in reflection, thinking about things that are important. I thought back to about 10 years ago and how very different things were for me, when I was unmarried and worked at a job scrubbing giant inflatable balloons as they came back from parades. Ten years later, some things have changed in my personal life. I am now married with four kids. I am no longer scrubbing inflatable balloons but have the great privilege of being a member of Parliament representing the communities of Essex.

Sadly, 10 years later some things have not changed. Bill C-305 exists because an injustice was committed a little more than 10 years ago and still needs to be righted.

As I said earlier, Bill C-305 is about lowering the inclusion rate from 85% to 50% for retired Canadian seniors who collect a U.S. social security benefit. This follows on the heels of two previous private members' bills, one by the member for Calgary Southeast and my own private member's bill in the last Parliament, Bill C-265, which passed second reading, as members of the House may know, and went to the finance committee, where it died a very slow death.

There are a lot of new members in the House since the last election and there may be Canadians looking in on this debate this morning who may not know exactly where this particular bill fits in history, so I want to take a few moments to go back and look at how we got to where we are today.

A major change occurred on January 1, 1996, for about 85,000 Canadian seniors in Ontario, Manitoba, British Columbia, Quebec and New Brunswick, who lived in Canada but happened to work in the United States and upon retirement collected U.S. social security cheques. What happened on January 1, 1996, is that their entire retirement changed. They were given a pretty substantial tax increase that changed the economic presumptions for their retirement years.

Of course, that all started three weeks before January 1, a week before Christmas in 1995. When most kids were writing letters to Santa Claus about all the good things they would like, these seniors received letters from a government agency informing them that in three weeks the way they were taxed was going to change.

We have a Canada-U.S. tax treaty that exists for some very important reasons. The two countries came together and agreed, for example, on how a Canadian resident in the United States, or an American who collects CPP, the Quebec pension plan or old age security, was going to be taxed and treated. We had to define on this side how we were going to treat Canadians who collect U.S. social security pensions or Americans who happened to be resident here as well.

At one time, these seniors were not taxed at all but in 1984 two protocols to the Canada-U.S. tax treaty changed the way they would be taxed. They were taxed in the country of residence, not in the source country, where the benefit came from. The maximum inclusion rate was set at 50%, so half their income would be included for taxable purposes. That was the situation that existed from 1984 to 1996.

Then came the third protocol, in the dreaded Christmas letter that these seniors got. The change was that their taxation would be done in the source country, where the benefit came from. They would have 25.5% of their income withheld at source.

Let us imagine this change. There was literally no time for these seniors to respond. There was no ability to cushion against the shock of such a change. There was no control over the benefit they received because it was withheld at source, so what they would get is all they would get. It was a tremendous and very drastic change that happened over that Christmas season. Starting January 1, suddenly 25.5% of their income was withheld at source and they got a much smaller pension cheque.

At that time, a citizens' group mobilized in the region. Canadians Asking for Social Security Equality mobilized very quickly and in large numbers, because many seniors were affected. In our region, I think the member for Windsor—Tecumseh will recall some of the meetings at the time. They came out in the thousands and forced the government of the day to go back to the table and renegotiate with the United States.

In Canada at the time, the finance minister, the current member for LaSalle—Émard, was looking to balance his budget. In the United States, President Clinton was looking to balance his budget and saw an opportunity to tax the richest of the seniors in the United States. He saw this as his opportunity to do that.

Therefore, we had a fourth protocol negotiated between the two countries. It changed back to residence taxation instead of these seniors being taxed in the nation where the benefit came from. But something interesting happened. After these seniors were promised that this was going to be a revenue neutral change, many of them were expecting that we were going back to the 50% inclusion rate. They had a really nasty surprise. The inclusion rate was set at 85%. It did not go back to the way it way before January 1, 1996, so instead of the wrong being righted, it was compounded.

It would be nice to point out, of course, that the finance minister of the day left a convenient loophole for family ships not to be taxed. That was in the same piece of legislation, the same treaty whereby these poor seniors were getting a whopping 70% tax increase. What a cruel irony that the rule-maker got to make the rules in his favour while thousands of seniors, who do not have any ability to make or change rules but are affected by them, had a tax increase instead.

As for Canadians Asking for Social Security Equality, what an incredible group. They mobilized in four successive elections, in 1997, forcing the government of the day to go back and renegotiate, and in 2000, 2004 and 2006. I say this with some bittersweet feelings. This group is very successful at mobilizing and at keeping this issue before candidates, prospective members of Parliament and prospective governments. However, I was talking not long ago with some of the folks doing the phone calls. With every election and every phone call, the cold hard reality is that yet another member is deceased, and another and another, or the latest ailment or disease is afflicting the few who survive.

Of course, this news kept coming, election after election. I can tell members that CASSE does not want to mobilize for another election. Quite frankly, its members should not have to. In my opinion, it is time to pass this private member's bill and get on with this measure. Or also, I would be pleased if this wound up being a line item in a budget, something for which I am working hard.

These seniors have been waiting a long time. They are looking for justice. Who are these seniors? Let us go back and look at what that generation achieved. Certainly they worked in the United States, but they lived in our communities. They built our communities across Canada. Talk about great foreign investment: they went to the United States, brought back their wealth and invested it in our communities here.

Let us go back and imagine these seniors in their prime. World War II has ended. They set about growing families and building homes and barns, hospitals and fire halls in their communities, delivering the services that were necessary and starting the businesses that employed others. They built community centres and churches, improving the quality of life in their communities. They went to work in the auto factories, building the cars their generation would drive. They worked the fields, harvesting and sending product to market.

Former NBC news anchor Tom Brokaw called these seniors “the greatest generation”. I do not call them the greatest generation; I call them the selfless generation, a good example to my generation. They were the dreamers. They had a good vision for this country. They were the builders. With their bare hands and their hard work they built this country and made it what it is today.

Those people were selfless because they thought about the generations to come. They did not think about what they wanted or what they could get from everyone else. They thought about what they could save and invest in their children and grandchildren. That is the kind of thinking of this generation. They planned for their own self-sufficiency. They did not ask anybody else to do anything for them. They saved their pennies. They worked hard. They did not just suddenly get to retirement and wonder who would take care of them. They were thinking long before that. This is why this was such a cruel thing. They knew that if they lived to a certain age they would need to save enough to be fine when they retired.

They were the givers. They gave to others and to charities. They started community groups that worked hard to meet the needs of people in their community. They were fundraisers. They went out and raised money for all kinds of noble purposes in their community. They were the generation that never asked for anything in return.

What happened to these seniors? Many have been forced from their modest accommodations into nursing homes or forced to move in with siblings who were also senior citizens. However, this move was symbolic of something, I think, much deeper. They have been forced from independence to a situation of dependence, which is what this tax increase did.

Seniors have been forced into making choices that they never thought would happen. They do not know whether to pay for their prescription drugs this month or to pay the gas bill to keep the gas on in their homes. They do not know whether they should buy groceries or pay the electric bill? The wonder if they can buy a gift for their grandchild's birthday or if they can lend money to their son or daughter who is in a bit of financial difficulty. This is the generation that saved and planned so they could give to other generations but they cannot make those choices any more. That is what this tax increase did to them.

They are bitter. They were misled. They were told that things would go back to the way they were before. It never happened. Their esteem and their future plans for retirement have been shattered through no fault of their own.

There are several roots to bitterness but one of them is the feeling that we are owed something.

While tax relief for any senior is good thing, and I support those measures, for these seniors they are owed something. They are owed a change, a change that will help them heal and help them get to back on top of their lives.

I am calling on members of this House to come together and to find the will to act now so that these seniors get back on top. We owe it to them.