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Evidence of meeting #68 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was workers.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Arthur Sweetman  Professor, Ontario Research Chair in Health Human Resources, Department of Economics, McMaster University, As an Individual
Michael Wolfson  Professor, As an Individual
Vangelis Nikias  Project Manager, Convention on the Rights of Persons with Disabilities, Council of Canadians with Disabilities
Frank Zinatelli  Vice-President, General Counsel, Canadian Life and Health Insurance Association Inc.
Keith Ambachtsheer  Director, Rotman International Centre for Pension Management

10:10 a.m.

Professor, Ontario Research Chair in Health Human Resources, Department of Economics, McMaster University, As an Individual

Dr. Arthur Sweetman

Well, that's what Sweden did, and it's certainly something that we should be looking at very seriously for Canada.

10:10 a.m.

Conservative

The Chair Conservative James Rajotte

As well, I have a question for the three of you with respect to simplification and coordination. Maybe I'll start with Mr. Ambachtsheer.

In terms of GIS and OAS, is there a reason to have the two separate, or should the government actually look at, say, combining the two and means-testing it so that you'd cover low income? Is that a simpler way of doing it?

10:10 a.m.

Prof. Keith Ambachtsheer

I think simplification is important. To the degree that we are now already means-testing OAS and GIS, but very differently, why would we not rethink it as to what we are trying to do with this piece of public pension support? Why don't we rethink who we're targeting and what's the best way to do it? That's what I would like to see happen.

10:10 a.m.

Conservative

The Chair Conservative James Rajotte

Okay.

Mr. Wolfson.

10:10 a.m.

Professor, As an Individual

Dr. Michael Wolfson

I agree. I actually simulated some options like that, where I'm saying, look, if we're going to have a guarantee, why have a 50% effective tax rate on the first $6,000 or more, which, with the provincial top-up, claws back a large part of what the private sector is doing with workplace pensions, and then have a zero effective marginal tax rate? Then the income tax kicks in and then the clawback kicks in. It's a dog's breakfast.

10:10 a.m.

Prof. Keith Ambachtsheer

Then add the TFSAs—

10:10 a.m.

Professor, As an Individual

10:10 a.m.

Prof. Keith Ambachtsheer

—which create another level of complication, in the sense that you pay the tax up front and you don't pay the tax later, and the income from that is not related to whether you get GIS or not. So it's hugely complex—all these pieces....

10:10 a.m.

Conservative

The Chair Conservative James Rajotte

But on the TFSA, how do you...? I mean, I love the TFSA, frankly, and I'll just be very candid about that. So how do you actually coordinate that better with the system, then?

10:10 a.m.

Prof. Keith Ambachtsheer

Well, right now if you have this piece that you can take a low tax rate on today, not pay taxes on later, and have it not impact the eligibility for OAS and GIS—

10:10 a.m.

Conservative

The Chair Conservative James Rajotte

Okay—

10:10 a.m.

Prof. Keith Ambachtsheer

—clearly it makes a lot of sense for most people to go the TFSA route. Now, if you create a PRPP system that doesn't allow you to go into TFSAs.... It's complex, right? Or should we in fact allow the PRPP system to use the TFSA instrument, if you like it so much?

10:10 a.m.

Conservative

The Chair Conservative James Rajotte

I guess the other thing that all of you would say.... I'm running out of time here, but if a person stays in the labour force—which many of you have mentioned as one of the reasons for changes to OAS—and earns some income, we should obviously not be clawing back so that there's no benefit to them staying in the workforce. I assume the three of you would agree with that.

10:10 a.m.

Professor, As an Individual

Dr. Michael Wolfson

Well, you can't get away from some clawback. There's going to be an effective marginal tax rate somewhere in the system.

10:10 a.m.

Conservative

The Chair Conservative James Rajotte

Yes.

10:10 a.m.

Professor, As an Individual

Dr. Michael Wolfson

But what I would really feel much happier about would be if somebody were actually looking at it comprehensively as a system and doing the analysis. The tools exist to do that. One way or another, there's going to be an effective tax rate, whether it's a GIS reduction, or an OAS clawback, or the actual formal income tax rate.

10:10 a.m.

Conservative

The Chair Conservative James Rajotte

The last word on this goes to you, Mr. Sweetman. Do you have any further comments on that?

10:10 a.m.

Professor, Ontario Research Chair in Health Human Resources, Department of Economics, McMaster University, As an Individual

Dr. Arthur Sweetman

I would agree with what everyone has said, with one caveat. There's a trade-off with simplification. Simplification is good on its own, but a slightly more complex system allows you to target very carefully. So if there's something worth targeting, and if we really want to target, then the complexity might be worthwhile. The problem, of course, is that this is a two-hour question and a 30-second response.

10:10 a.m.

Conservative

The Chair Conservative James Rajotte

Yes, and I appreciate that, but I did want to take advantage of having the witnesses here and ask a few questions. I'm a person who loves information, so if any of you have anything further for the committee to look at.... I know that we did look at this issue in the last Parliament—I don't think as extensively, perhaps, as we should have in terms of our own committee—but if any of you have anything further for us to consider, please do submit it. I will submit it to all members.

I want to thank all of you for being with us today.

Mr. Sweetman, thank you for joining us from Hamilton.

It was a very good discussion.

Thank you, colleagues. We'll see you on Monday.

The meeting is adjourned.