Mr. Speaker, if adopted, Bill C-282 would amend the Income Tax Act to remove, for taxpayers aged 65 and over and eligible to claim the disability credit, the requirement that only expenditures on goods and services required for medical reasons in excess of the lesser of 3 per cent of net income or $1614 may be used in calculating the medical expenses tax credit.
We in the Bloc Quebecois support this proposal, since all medical expenses would be fully deductible from the income of disabled seniors. This change in the system would be made by changing the definition of formula symbol "C" in subsection 118.2(1) of the Income Tax Act.
Disabled seniors have substantial medical expenses that are often higher than those of other tax filers. The 1993 national advisory council on seniors sketched the following picture of the health of seniors in Canada: About 80 per cent of seniors aged 65 and over said they were suffering from one or several chronic conditions, while only 20 per cent said their activities were restricted to the point where they required assistance in getting on with their daily lives-this according to statistics compiled in 1991.
It is clear that limited deductibility represents an enormous expense for disabled seniors, considering their many medical expenses and low incomes. These people pay taxes on amounts that may represent up to 3 per cent of their income, which is not in accordance with currently recognized tax principles.
The proposed amendment would only provide tax relief in terms of expenses actually incurred. It would not change the provisions on production of receipts, which are already included in the Income Tax Act. The 1993 national advisory council on seniors also described the health problems of seniors, saying that seniors aged 65 and over were twice as likely as the rest of the population to report respiratory problems, arthritis and hypertension, and three times as likely to report cardiovascular problems.
Among seniors, the percentage of mentally or physically disabled in 1987 was 47 per cent for women and 44 per cent for men. These ratios, together with the rate of multiple disabilities, tend to increase with age. During the 1991 tax year, the latest year for which data are available, 153,490 tax filers aged 65 and over claimed the disability credit.
Of this number, 91,050 had taxable income. This is the group for which the proposed amendment could represent an additional cost to the federal tax system. Of the 153,490 filers, 18,380 claimed medical expenses greater than the deduction limit.
Basically, if the amendment were passed, all these taxpayers could see their medical expense credit increase by three per cent of their net income, that is to say by the amount they used to have to subtract on their return.
On the other hand, this amendment affects a larger group: taxpayers with medical expenses lower than the deduction limit, often under $200, who would also be claiming the medical expense tax credit.
The approximate figure of 91,050 disabled senior citizens with a taxable income is indicative of the potential number of claimants. If you subtract those who are already claiming the medical expense credit, the total number of persons affected is 80,000.
Combined tax expenditures in terms of basic federal income tax on both groups, the old and new medical expense credit claimants, for 1991 are about $2.6 million, without the federal surtax which, if it were added on, would bring the grand total to about $2.7 million. This amendment to the Income Tax Act is needed to improve the quality of life for handicapped seniors.
A Canadian Press article published in the January 26 edition of Le Droit quotes a just released study by the national advisory council on aging as saying that Quebec seniors are the poorest in Canada and that Quebec holds the dubious record of the highest poverty rate among people aged 65 and over in Canada. According to the council, despite some improvement in their economic situation, many seniors, especially those living alone, live in poverty. The council also found that women aged 65 and over have less money than their male counterparts, a gap which increases after 75.
Old age security is still the main source of income for seniors, especially women. People aged 65 and over get over 50 per cent of their income from government programs.
The study shows that in 1992, the percentage of people making less than $15,000 increased with age, especially among women.
A Canadian Press article published in the January 21, 1995 edition of Le Droit stated that middle-class workers would not be able to spend their old age in comfort and that, according to the Canadian institute of actuaries, taxing RRSPs would have disastrous consequences. The institute feels that this measure would lower the savings rate in Canada and increase public
expenditures in the long term, when the baby boom generation reaches retirement age.
In the future, the challenge for individuals and decision makers will be to balance the various sources of retirement income, so as to ensure that private and public retirement funds, along with personal savings, will be such that the largest possible number of Canadians and Quebecers can enjoy an adequate standard of living in their retirement years.
It is essential for the government to realize that it must not cut into social programs and thus reduce the quality of life of our seniors. Rather, it must cut into the family trusts of rich Canadian families, since assets held in these trusts are not subject to capital gains tax for several years.
These trusts allow rich families to protect part of their family assets from generation to generation. Family trusts, which were introduced in 1972 by the Trudeau government, required a deemed disposal of assets in trust after 21 years, that is in 1993 for trusts set up before 1973.
The Bloc Quebecois has nothing against family trusts; however, it does object to their use as tax loopholes. For example, the Bloc is against the deferral, to the next generation, of the tax payable on capital gains. We also ask the government to release the figures on the value of assets held in family trusts and on the loss of tax revenue resulting from the deferral of the tax payable on capital gains.
The Income Tax Act should also be amended to prevent Canadian companies with subsidiaries abroad from using the fiscal losses of these subsidiaries to reduce their taxable income in Canada.
Bill C-282 is an act to amend the Income Tax Act so as to eliminate, for taxpayers aged 65 and over who are eligible to the credit for disability, the applicable reserve. This bill is acceptable, since disabled senior citizens are often among the poorest people in our society.
As spokesperson for Canadian associations and organizations representing seniors, I once again pledge to ensure that this social program review does not become a mere exercise to cut into programs which protect the poor, and particularly the elderly.
I have always been firmly opposed to letting the federal government reduce the deficit at the expense of our seniors, who have worked all their life and who deserve a decent standard of living.
We support this measure because all the medical costs would be deductible from the income of disabled seniors, and we feel that this amendment is essential.