Brian on Bill C-305: Canadians with US Social Security

Mr. Brian Masse (Windsor West, NDP):
Mr. Speaker, I would like to begin my remarks by congratulating the member for Essex for his hard work on this file. It has been one that he has pursued in opposition and now in government, and we have yet to have the results that we want.

The bill has had a number of different opportunities to move forward and has not made it yet. However, the member for Essex has always been pursuing this very important issue not only in terms of fairer taxation as described in Bill C-305 but also as a social justice issue. We have citizens across the country who are being unfairly taxed because laws have changed and have had an impact on their daily income and livelihood. It has created a considerable amount of grief, angst and a number of their plans have changed which has been rather unfortunate.

It is important to recognize that in the Windsor-Essex County we have many seniors who had previously been paying social security taxes to the United States and work over there on a regular basis even to this day. We have thousands of nurses for example going to the United States from Canada every day.

Ten years ago when this change was enacted in the tax treaty law, it basically usurped the traditional taxation that they had expected to receive when they got their social security upon retirement. It is not just Windsor-Essex County. This affected individuals in British Columbia, the Atlantic provinces and individuals who have worked in the United States from across Canada. It is not just our area, although we do have a significant number there but it is important to all Canadians.

It is important to note that it seems that this bill will go forward with the unanimous consent of the House to the finance committee where any questions about the bill will be resolved. I hope it will be passed quickly by the finance committee and sent back to this Chamber, and finally to the Senate to be ratified.

When Canadians are looking at Parliament, they look for opportunities for all parties to work together on issues. We have demonstrated that there is common support for this legislation. The previous administration had problems acting on this which led to some of the current delays that we have today. However, if we can put that behind us and move the bill forward and pass it quickly, Canadians will be rather pleased to see something come from this Chamber that is supported by all and is going to benefit all Canadians.

This is a bill that will cost Canadians some money, but we need to put the bill in perspective. It may cost perhaps $25 million, but it will go back to seniors who should not have lost that money to begin with and this is a government that had over $13.5 billion to put on the debt unilaterally. There is the financial capability to rectify this injustice.

The Chamber passed a seniors charter of rights, which was an NDP motion. It called for fairness, equity and respect for seniors when bills come through the Chamber that relate to them. This bill fits that mould. Therefore, I think there is a greater onus on the Chamber to move the bill quickly through the system.

I have had a number of opportunities to talk to constituents and it is important to put a face to the effects of what has happened. They have watched their savings and earnings disappear because of this change and what has been sad is that some of these people have passed away. The original tax treaty that was changed when this problem emerged goes back to 1996 and it has been 10 long painful years for individuals who had expectations eroded and eliminated as the amount of income they would have coming back to them has been affected.

We have heard from different constituents who have had to change their lifestyles. Some have had to sell their homes or go to a different lifestyle option that they did not want to do or have not been able to support their grandchildren the way that they wanted to because they are literally losing hundreds of dollars per month. This was part of their calculated income which they expected to receive.


These are law-abiding citizens who crossed the border for years and worked in the United States and brought those earnings back to Canada. They were very good citizens to the country, have retired here, and are contributing in many different ways. To have this happen has been very frustrating to watch. They have heard a lot of rhetoric over time about this being fixed and their expectations of Parliament are warranted to have this bill move quickly through the process.

I am going to read a letter which encapsulates the debate we have had here today and it is important that Craig Ridsdale does get noted. He has been an outspoken voice on this issue and he wrote a letter called “unfair tax laws burden seniors”:

Many Canadian seniors across Canada have been sitting on their hands since 1997 waiting for the Liberal government to move forward on a pledge made to them to rectify a system of taxation that threatens to leave many of them, particularly low income seniors, in a very difficult financial situation.

In 1984, the Canada-U.S. Tax Convention Act was implemented, primarily to protect the citizens of both countries from being taxed twice on their pensions, be they social security in the States or the Canada (and Quebec) Pension Plan here in Canada. However, differences in our taxation systems (Canadians pay taxes when collecting benefits while Americans pay the taxes on their contributions) has meant that Canadians receiving social security benefits were being taxed twice.

A series of protocols to amend this bill have made matters even worse for many retirees. Specifically, the third protocol, implemented in 1995 and applicable for the 1996 fiscal year allowed the United States government to charge what amounted to a more than 25% withholding tax on Canadians' pensions. Previously, the second protocol to this treaty allowed only the country of residence to tax social security benefits. For many retired Canadians who paid into the American system over the span of their working lives what this meant was that over one quarter of their income essentially disappeared overnight.

The fourth protocol, implemented after the disastrous third protocol, allows the Canadian government to tax 85 % of social security, and increase from the 50% agreed upon in the 1984 act. It also provided the government with the latitude to reduce the 85% limit which it has refused to do.

Since 2001, Canadians Asking for Social Security Equity (CASSE) have been lobbying the federal government to either restore the second protocol or at the least grandfather its provisions to include all seniors who were negatively affected by the third protocol. To this date nothing has been done.

Nothing has been done, aside from a number of bills that have made it to the finance committee in different machinations.

In conclusion, I want to note that this is very important. The expectation of Canadians is that when we do have bills which are generally supported in this chamber by all parties, they should move forward rather quickly. It is important that this work is done. It is about fairness and justice for senior citizens who had expectations and the country changed those things. That unfair inequity must be rectified. The New Democratic Party is committed to seeing this bill move forward, not only through the finance committee but as quickly as possible to final ratification, so our seniors are treated with the equity and fairness that they so justly deserve.