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CANADA House of Commons Debates VOLUME 141 Ï NUMBER 072 Ï 1st SESSION Ï 39th PARLIAMENT OFFICIAL REPORT (HANSARD) Monday, October 30, 2006 Speaker: The Honourable Peter Milliken CONTENTS (Table of Contents appears at back of this issue.) Also available on the Parliament of Canada Web Site at the following address: http://www.parl.gc.ca 4379 HOUSE OF COMMONS Monday, October 30, 2006 The House met at 11 a.m. A major change occurred on January 1, 1996, for about 85,000 Canadian seniors in Ontario, Manitoba, British Columbia, Quebec and New Brunswick, who lived in Canada but happened to work in the United States and upon retirement collected U.S. social security Prayers cheques. What happened on January 1, 1996, is that their entire retirement changed. They were given a pretty substantial tax increase that changed the economic presumptions for their retirement years. PRIVATE MEMBERS' BUSINESS Of course, that all started three weeks before January 1, a week Ï (1105) before Christmas in 1995. When most kids were writing letters to [English] Santa Claus about all the good things they would like, these seniors received letters from a government agency informing them that in INCOME TAX ACT three weeks the way they were taxed was going to change. Mr. Jeff Watson (Essex, CPC) moved that Bill C-305, An Act to amend the Income Tax Act (exemption from taxation of 50% of United States social security payments to Canadian residents), be We have a Canada-U.S. tax treaty that exists for some very read the second time and referred to a committee. important reasons. The two countries came together and agreed, for He said: Mr. Speaker, I am very pleased to rise today to speak to example, on how a Canadian resident in the United States, or an Bill C-305, an act that is designed to lower from 85% to 50% the American who collects CPP, the Quebec pension plan or old age inclusion rate for the amount of income taxable for Canadian seniors security, was going to be taxed and treated. We had to define on this who collect the U.S. social security pension. side how we were going to treat Canadians who collect U.S. social security pensions or Americans who happened to be resident here as I spent a lot of this past weekend in reflection, thinking about well. things that are important. I thought back to about 10 years ago and how very different things were for me, when I was unmarried and worked at a job scrubbing giant inflatable balloons as they came At one time, these seniors were not taxed at all but in 1984 two back from parades. Ten years later, some things have changed in my protocols to the Canada-U.S. tax treaty changed the way they would personal life. I am now married with four kids. I am no longer be taxed. They were taxed in the country of residence, not in the scrubbing inflatable balloons but have the great privilege of being a source country, where the benefit came from. The maximum member of Parliament representing the communities of Essex. inclusion rate was set at 50%, so half their income would be included for taxable purposes. That was the situation that existed Sadly, 10 years later some things have not changed. Bill C-305 from 1984 to 1996. exists because an injustice was committed a little more than 10 years ago and still needs to be righted. Then came the third protocol, in the dreaded Christmas letter that As I said earlier, Bill C-305 is about lowering the inclusion rate these seniors got. The change was that their taxation would be done from 85% to 50% for retired Canadian seniors who collect a U.S. in the source country, where the benefit came from. They would social security benefit. This follows on the heels of two previous have 25.5% of their income withheld at source. private members' bills, one by the member for Calgary Southeast and my own private member's bill in the last Parliament, Bill C-265, which passed second reading, as members of the House may know, Let us imagine this change. There was literally no time for these and went to the finance committee, where it died a very slow death. seniors to respond. There was no ability to cushion against the shock of such a change. There was no control over the benefit they There are a lot of new members in the House since the last received because it was withheld at source, so what they would get is election and there may be Canadians looking in on this debate this all they would get. It was a tremendous and very drastic change that morning who may not know exactly where this particular bill fits in happened over that Christmas season. Starting January 1, suddenly history, so I want to take a few moments to go back and look at how 25.5% of their income was withheld at source and they got a much we got to where we are today. smaller pension cheque. 4380 COMMONS DEBATES October 30, 2006 Private Members' Business At that time, a citizens' group mobilized in the region. Canadians Let us go back and imagine these seniors in their prime. World Asking for Social Security Equality mobilized very quickly and in War II has ended. They set about growing families and building large numbers, because many seniors were affected. In our region, I homes and barns, hospitals and fire halls in their communities, think the member for Windsor—Tecumseh will recall some of the delivering the services that were necessary and starting the meetings at the time. They came out in the thousands and forced the businesses that employed others. They built community centres government of the day to go back to the table and renegotiate with and churches, improving the quality of life in their communities. the United States. They went to work in the auto factories, building the cars their generation would drive. They worked the fields, harvesting and In Canada at the time, the finance minister, the current member for sending product to market. LaSalle—Émard, was looking to balance his budget. In the United States, President Clinton was looking to balance his budget and saw an opportunity to tax the richest of the seniors in the United States. Former NBC news anchor Tom Brokaw called these seniors “the He saw this as his opportunity to do that. greatest generation”. I do not call them the greatest generation; I call them the selfless generation, a good example to my generation. They Ï (1110) were the dreamers. They had a good vision for this country. They were the builders. With their bare hands and their hard work they Therefore, we had a fourth protocol negotiated between the two built this country and made it what it is today. countries. It changed back to residence taxation instead of these seniors being taxed in the nation where the benefit came from. But something interesting happened. After these seniors were promised Ï (1115) that this was going to be a revenue neutral change, many of them were expecting that we were going back to the 50% inclusion rate. They had a really nasty surprise. The inclusion rate was set at 85%. It Those people were selfless because they thought about the did not go back to the way it way before January 1, 1996, so instead generations to come. They did not think about what they wanted or of the wrong being righted, it was compounded. what they could get from everyone else. They thought about what they could save and invest in their children and grandchildren. That It would be nice to point out, of course, that the finance minister of is the kind of thinking of this generation. They planned for their own the day left a convenient loophole for family ships not to be taxed. self-sufficiency. They did not ask anybody else to do anything for That was in the same piece of legislation, the same treaty whereby them. They saved their pennies. They worked hard. They did not just these poor seniors were getting a whopping 70% tax increase. What suddenly get to retirement and wonder who would take care of them. a cruel irony that the rule-maker got to make the rules in his favour They were thinking long before that. This is why this was such a while thousands of seniors, who do not have any ability to make or cruel thing. They knew that if they lived to a certain age they would change rules but are affected by them, had a tax increase instead. need to save enough to be fine when they retired. As for Canadians Asking for Social Security Equality, what an incredible group. They mobilized in four successive elections, in They were the givers. They gave to others and to charities. They 1997, forcing the government of the day to go back and renegotiate, started community groups that worked hard to meet the needs of and in 2000, 2004 and 2006. I say this with some bittersweet people in their community. They were fundraisers. They went out feelings. This group is very successful at mobilizing and at keeping and raised money for all kinds of noble purposes in their community. this issue before candidates, prospective members of Parliament and They were the generation that never asked for anything in return. prospective governments. However, I was talking not long ago with some of the folks doing the phone calls.

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