Thank you.
On behalf of the Canadian Association of Retired Teachers, representing 125 members, the issues we address are not only retired teacher issues but senior issues as well. Our presentation will be done in English and French. I will be doing the English and my colleague will be doing the French, and we will answer the questions in the same way.
On the first page of our brief that we have submitted to you, we have our summary of recommendations. I am going to address the first one, which is the pension income splitting. The concept of pension income splitting is to allow spouses to split their pensions for income tax purposes in order to reduce the total amount of income taxes paid by both spouses. We have some scenarios listed there and the recommended approach.
We feel that pension splitting is consistent with a fiscal policy that is family based. The family is an important entity of Canadian society. Within it, there is much sharing of financial resources, tasks, and decision-making. According to family law, each spouse has rights on family assets and income.
There are precedents. Retirement pensions payable under the Canada and Quebec pension plans may be split for income tax purposes. A spouse may contribute to a spousal RRSP, which is a form of pension splitting, giving rise to reductions in a couple's total income taxes.
Pension splitting aims at improving the economic situation of seniors, ensuring them a better quality of life and maintaining their autonomy and independence. Recent changes to some fiscal rules have undermined the economic well-being of seniors: mandatory withdrawals from RRIFs, withdrawals of all outstanding RRSPs--which many of us contributed to under the old rules--by age 69 instead of 71, clawback of the old age security pension, etc.
Pension splitting would follow through section 15 of the Canadian Charter of Rights and Freedoms. The norm used to be that one of the spouses would be in the labour force while the other would stay home for child rearing and homemaking. Only one of the spouses was entitled to a pension. The individuals most affected by the present income tax system are senior women. Many women had chosen to be homemakers, while some have had to let go of jobs pursuant to discriminatory measures such as being forced to leave in case of pregnancy or marriage. When I started teaching, that was the norm. Thankfully, nowadays it is different. Women live longer than men, on average, and many will face difficult financial conditions resulting from those past practices.
Another group of people who I would like to point out really suffer from this kind of situation is armed forces personnel. In many cases, one spouse is in the services working and the other spouse moves from place to place and is either unable to gain any employment or, if they do gain employment, it is not at a good wage.
The cost is affordable. According to a recent study, allowing pension splitting to all senior couples would entail a reduction in government tax revenues that will be relatively modest in comparison to the current annual federal budget surpluses. It's not an escalating cost, because both spouses who are working now will receive pensions that are fairly close to the same, so there will be minimal difference.
Pension splitting is essentially a matter of fairness and equity for all taxpayers. The family, as opposed to the individual, should be the basis of the Canadian income tax system.