Finance Committee Budget Consultations 2007

Submission to the House of Commons Standing Committee on Finance 2007 Pre-Budget Consultations

Using Taxation Policy to Improve the Lives Of Those In Greatest Need

Women Elders in Action (WE*ACT)

Vancouver - August 15, 2007

House Finance Committee 2007 Pre-Budget Consultations

Using Taxation Policy to Improve the Lives of Those in Greatest Need

Summary 

In response to the Committee’s first question posed for this tour:

This submission articulates our position that tax policy in Canada must be harnessed to encourage increased corporate productivity. As well, it must be used to relieve seniors living in poverty of their tax burden. We are most especially concerned about unmarried, divorced or widowed senior women who are disadvantaged when the majority of retirement income depends on an individual’s lifetime ability to earn and save.

Research showing that most Canadians should now expect to work until 67 or even 73 to achieve some semblance of economic security coincides with the government’s growing desire to have aging workers boost projected low labour productivity levels, one factor in our overall declining productivity. This strategy is very grim news indeed to almost 40% of working women. They hold non-traditional jobs offering few benefits with little chance to increase retirement income regardless of lengthening job attachment.

This strategy also does not reflect the understanding that Canada’s disappointing productivity record is largely attributable to industries lack of re-investment in infrastructure, technology, training, research and development.

Corporate income tax now accounts for only 7% of federal revenue, down from 20% forty years ago. Research also shows that deep cuts in the corporate tax rate have not benefited the average Canadian. The income gap between the richest 10% of families raising children and the poorest 10% has almost tripled over the last 30 years.

WE*ACT recommends that the federal government toughen corporate tax policy at a minimum to require more re-investments in this country with the goal of increasing productivity.

Regarding personal tax levels, we observe the enormous tax expenditures estimated for 2007 for Registered Retirement Savings Plan (RRSP) and Registered Pension Plan (RPP) savings that are out of reach for one third of Canadian families. Given the inequities of other tax expenditures benefiting some seniors, we recommend:

• Eliminate tax on income below the pre-tax Low Income Cut Off, and

• Convert deductions for RRSPs and RPPs savings to credits to make contributions more equitable between those in higher and lower tax brackets. The subsequent revenue increase could support Old Age Pension (OAP) payments and increases to Guaranteed Income Supplement (GIS).

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