|
BACK TO TABLE OF CONTENTS
FINANCIAL HELP GRANTED TO SENIORS - PENSION SPLITTING
REAL Women joined a coalition of organizations,
which lobbied the federal government to allow pension income
splitting for Canadians. Canadian Activists for Pension Splitting
(CAPS) is comprised of 23 organizations with 2.6 million collective
memberships. It includes Retired Teachers of Ontario, Bell
Pensioners' Group, Alliance of Seniors, Air Canada Pensioners,
Canada's Association for the Fifty Plus, CBC Pensioners National
Association, General Motors Salaried Retirees Association,
Royal Canadian Legion of Canada, and others. More information
on CAPS can be found at www.pensionsplitting.ca
Because Canadians are now taxed as individuals
rather than within a more comprehensive system based on family
income, seniors living on one pension have been taxed at a
higher rate than if they had been living on two pensions of
equal value. Today's seniors raised their families when society
functioned on the basis of a single family wage so that the
mother was free to care for children and home, and the father
provided for them. In other words, the father helped build
Canada's economic structure while the mother helped build
Canada's social structure. The penalty on the single income
lifestyle assumes that the role of mother at home is of little
value and that the nonearner is not 'working', and is only
a dependent of the earner.
Therefore the issue about the single income
tax penalty is closely linked to advocacy to recognize unpaid
labour as a vital part of an economy and to recognize that
caregiving work at home, a historical female role, has always
had great value to the nation. This division of labour should
be recognized under our tax system.
On October 31, 2006, however, Minister of
Finance Jim Flaherty did just that when he announced that
splitting of a pension between the husband and wife (or common
law partners) was to be available for 2007 and subsequent
tax years. This is a major change to our income tax system
which generally has required each individual taxpayer to report
and pay tax on all of the income he/she receives. This was
the case even if the individual, like many Canadians, actually
supported his/her family members such as his wife and children
on his single income. Under this new plan, he can now allocate
to his spouse up to one-half of his pension, which will reduce
the tax to be paid on that pension income.
For individuals aged 65 years and over, eligible
pension income includes lifetime annuity payments under a
registered pension plan, a registered retirement savings plan
or a deferred profit-sharing plan and payments out of or under
a registered retirement income fund. For individuals under
65 years of age, eligible pension income includes lifetime
annuity payments under a registered pension plan and certain
other payments received as a result of the death of the individual's
spouse or common-law partner.
There still is the problem remaining, nonetheless,
whereby a one-income family still pays more taxes than the
two-income family earning the same amount. However, this now
seems to be under examination by the Conservative government.
Parliamentary research estimates that pension
splitting or pension sharing, as some prefer to call it, will
involve a shift of $310 million dollars a year. In order to
implement income splitting for families with children under
18 years of age, however, the estimate is a shift of $1.6
billion a year, which is quite a difference. Income splitting
for families with children under 12 only, would amount to
$1 billion a year. With surpluses in the range of $13 billion
a year and with $26 billion a year being transferred to special
interest groups and companies in grants and contributions,
surely some of these grants can be eliminated in order to
provide for all the families who are being taxed unfairly.
The concept of income-splitting for tax purposes,
it should be noted, is not a new idea. It has been discussed
for decades but has always been put aside because of feminist
concerns that joint filing would force wives to reveal their
full incomes to their husbands and thereby threaten the "economic
autonomy of married women."
Conservative economists are suggesting however,
that a more family oriented tax system could be structured
gradually; starting with pension splitting, and then to income
splitting for families with children, then total inclusion
of all families. The family is already recognized as a unit
in taxation with regard to the Canada Pension Plan, child
tax benefits, GST credit and Guaranteed Income Supplement.
Other countries such as the United States, Germany and France
formally recognize families as a single unit for tax purposes.
The Conservative Party of Canada's policy
on family tax fairness is very promising. "Policy Statement",
September 8, 2004 states at #15. Family Tax Fairness: A Conservative
government will create tax fairness for families by eliminating
inequities between single and dual income families and introducing
a deduction for dependent children." The introductory
Message from leader Stephen Harper to the CPC "Policy
Document", March 19, 2005, stated: "We will provide
continuous tax relief so that all Canadians - including families,
seniors, and new Canadians - can prosper."
A very successful National Conference on Pension
Splitting, sponsored by CAPS, was held on October 3, 2006
on Parliament Hill, with excellent speakers explaining unfair
taxation in detail and suggesting remedies. The future looks
brighter now that so many groups are advocating improvements
supportive of families, long endorsed by REAL Women.
BACK TO TABLE OF CONTENTS
|
