Mr. Chair, thank you very much.
Thank you to all committee members here. It is indeed a very different experience to be on this side of the microphone and not being the one grilling potential witnesses here.
I also want to thank the witnesses who are appearing here with me—Mr. Gleberzon from CARP, and Mr. Bill Thrasher from Canadians Asking for Social Security Equality. We do have one witness who apparently was unable to make it today—the Canadian Union of Transportation Workers—but I certainly appreciate their contributions to this discussion.
I have one other note of thanks on this issue, and that is to the member for Calgary Southeast, who has been a strong advocate on this particular issue since 1997.
As a brief course of history for the committee—some members may be much more aware of this bill than others—we're dealing with provisions flowing out of the Canada/U.S. Tax Treaty and its treatment under the Income Tax Act. There are three protocols I want to address.
As a brief moment of history, the second protocol under the Canada/U.S. Tax Treaty, in which U.S. social security benefits were taxed in the country of residence—that is, in Canada—and 50% of the amount was included for taxable income, existed up until January 1, 1996, when a third protocol was entered into with the U.S. whereby the benefit was then taxed in the country of source, rather than residence, and 25.5% was withheld.
That existed until 1997, when the fourth and current protocol entered into use, that is, it reverted back to residence taxation, and the inclusion rate moved back not to 50% but to 85%. This is a profound change that occurred to the income of seniors who were already retired at the time. I think some of my colleagues who are here, witnesses who are here with us, can get into some of the detail of that probably a little bit better than I can.
I know this is a committee about details. That is part of your task. I would simply ask the committee that in the consideration of this we don't miss the forest for the trees here. There are some big principles that are important in this.
For the benefit of the committee's understanding, I have a possible amendment that's being worked on by the clerk of private members' business, but I don't have it here yet for the committee's consideration. We're trying to work on that.
There may be some issues. I know one of the big issues that have been raised before is the issue of equity in how people are taxed. I will address those issues. I don't know if I have enough time in my opening statement to address them, but I may do so in the questioning round.
There's been a question of comparisons of equity between how one collecting a U.S. social security benefit but living in the United States is taxed versus someone who lives in the United States and collects a CPP or QPP benefit.
There's also been a question raised in the debate about the question of equity among neighbours living in Canada--one who collects a CPP benefit and has 100% of their benefit included for taxable income, and that constituting a benefit for a similar Canadian who lives next door and collects a U.S. social security benefit taxed at only the 85% level. I believe that argument is a bit of a red herring. I'll address that, probably in the questioning round.
The third issue around the equity question is that the Government of Canada at the time, in 1997, had never advanced the argument about the equitable treatment of neighbour A versus neighbour B in Canada. That was an argument that came later on, I think, to justify the tax increase.
So I'm pleased that we're addressing this today. I'd much rather you hear a little bit more from some of the witnesses who are here with me. I'm going to turn the microphone over to them to let them talk about some of the impacts of the bill, what it's meant to seniors, Canadian seniors particularly. We'll look forward to some discussion around the possible solutions to this.
Thank you very much, Mr. Chair.
