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.