Mr. Speaker, I would like to thank the member for Laval—Les Îles for introducing this bill, which addresses a very significant problem for seniors.
While it is not illegal for guaranteed income supplement benefits to be reduced if recipients take a small amount of money out of their RRSP to prepay for a funeral, it is morally unacceptable.
The member for Laval—Les Îles tried to limit his bill to something quite reasonable and suggested a $2,500 maximum withdrawal. Once taxes are withheld—because money taken out of an RRSP is taxable—the remaining amount can pay for cremation. I am not talking about an entire funeral, just something very simple.
That is why I feel this bill is reasonable. The bill is designed to keep guaranteed income supplement recipients from seeing a drop in their benefits the following year. That is important, not from a taxation point of view, but from the recipients' point of view.
It is important to understand what these people want to do. They feel it is important not to burden the next generation with their personal problems. It is a question of dignity. They simply want to avoid problems for their children when they pass on. It is not complicated. That is all they want to do. Can we support them in this simple human wish? That is what I am asking.
We have to remember that these people do not have a lot of income. To be eligible for the guaranteed income supplement, a single person's taxable income cannot be more than $16,600. For a couple, the figure is a little less than $22,000. This is not asking too much. These people are living in poverty.
What is more, we cannot forget that the $2,500 they take out is taxable. On top of that, their guaranteed income supplement benefits would be cut. According to Human Resources and Skills Development Canada, which oversees the program, I believe, how much money would they lose out on each month?
Depending on the individual's or the couple's income, that would be between $50 and $100 per month. That means that a person who withdraws $2,500 will keep just 20% or 25% of that amount to pay for a pre-arranged funeral. To me, this smacks of double taxation, the kind of double taxation that even the wealthiest are not subject to.
I would like to talk about costs. The Library of Parliament estimates that this would cost $132,000 for a very simple reason. Not everyone is going to rush out to pre-pay their funeral the day this bill is passed. That is not how it works. It was determined that some people would do so over the next 10 years. That is why the costs are so low.
It is important to remember that only 11% of retirees at all income levels pre-arrange their funerals, and 47% of them use their RRSPs to pay for it. That is about one person in 20, which is relatively few people. I am not suggesting that this is a measure for everyone.
Had the government listened to our proposal to get all seniors out of poverty by enhancing old age security, my colleague would not have had to introduce his bill. The problem would have solved itself.
According to the government, the Office of the Chief Actuary determined that this measure would cost $81 million plus $12 million in administration costs. The government might have exaggerated a little and spoke about $100 million. That is a lot of money.
Considering what I just said about individuals who pre-arrange their funerals and about how much of their RRSPs they use to pay for it, and considering a third element, their income, I doubt it will cost that much. It looks like somebody wanted to do the math quickly.
I would like to know how they came up with $81 million. Even more surprising is the $12 million it will cost to say that the money is not taxable income.
Some were saying that people would be receiving money from the government twice, because, on the one hand, the guaranteed income supplement is not taxed, and on the other hand, there are various public pension plans that pay benefits for funeral costs. However, as I said earlier, personally, I think this smacks more of double taxation, rather than double payments to people.
At one point, someone else said that this would introduce a new method for calculating GIS income. Basically, that is false. Technically, all this would do is stipulate that when the RRSP is cashed out for this purpose, it would not count as taxable income. It is as simple as that. Not everyone seems to understand the tax mechanisms. The RRSP counts as a deferred tax. In some cases, the government could even withdraw some money, but we are not talking about those kinds of calculations.
I would like to point out that we are talking about a population that spends 60% of its income on housing and food. These people want to make an additional effort. In fact, all they want to do is sacrifice part of their future income to pre-pay for their own funeral.
I think it is only reasonable to support this bill at second reading. As I said, the parliamentary committee can look into the real costs associated with this measure, and we can then further debate its merits at third reading. I think this deserves further consideration. A parliamentary committee could look into this matter, call in some experts and thoroughly examine the issue—all in the name of dignity for our seniors.
I would like to close by thanking my hon. colleague from Laval—Les Îles for addressing one of the concerns of those less fortunate. I thank him very much.
By passing this bill here in the House, we have an opportunity to show the most financially vulnerable people in our country that Parliament is here to help them. I therefore invite everyone to support this bill at second reading.
