The Standing Senate Committee on National Finance
Rethink change to Old Age Security eligibility, senators say
July 21, 2016
Ottawa - The federal government should reconsider its pricey plan to reduce eligibility for Old Age Security (OAS) from age 67 to age 65, senators argued in a detailed analysis of a government budget bill.
Members of the Senate Committee on National Finance revealed potentially problematic aspects of Bill C-15, An act to implement certain provisions of the budget, in a report tabled late Monday, June 20, 2016.
Currently, the cost of OAS is projected to be $92 billion in 2029-2030. Reducing OAS eligibility to age 65 would cause the cost of the program to rise to $104 billion; the net cost of the change would be $9.9 billion. In light of these high costs, the committee urges the government to reconsider its decision.
Bill C-15 also risks burdening small businesses with higher-than-expected taxes and plunging territorial finances into disarray, senators found.
Meanwhile, maintaining the small business tax at 10.5% — instead of dropping it to 9% by 2019 as the current law provides — will deprive small businesses of $825 million each year. The committee is concerned about the potential effect of this change on small businesses, which make an immense contribution to the Canadian economy.
Bill C-15 is also of particular concern to territorial governments. In December 2015, a change in methodology for making certain calculations resulted in the federal government providing $90 million less than the territorial governments had expected. Despite the restoration of some of this money, Nunavut is expecting a $7.7 million shortfall and Yukon is expecting a $6.5 million shortfall, leading to significant budgetary pressures. The committee urges the federal government to reinstate the shortfall.
Committee members will continue to scrutinize government spending to ensure taxpayer money is spent prudently, effectively and transparently.
Other Areas of Concern
- The replacement of the Canada Child Tax Benefit and the Universal Child Care Benefit with the new Canada Child Benefit is expected to cost $3.8 billion more than the two existing benefits, for a total cost of $22 billion a year. The committee is concerned with the high cost of this measure.
- A change to the Income Tax Act would allow the Canada Revenue Agency to share some taxpayer information. While this is intended to promote efficient and effective administration, the committee believes strong privacy protection measures must be put in place to protect Canadians’ personal information.
- Budget 2016 was entitled Growing the Middle Class — but the government has not defined “middle class.” The committee believes the government should define this term so Canadians can know if government budgetary measures are having their intended effect.
“Canada has been recognized around the globe as an economically stable and strong country and with the change from a balanced budget to a projected annual deficit of $29.4 billion, I am concerned that our position of strength will be diminished.”
- Senator Larry Smith, Chair of the committee.
- Click to read a copy of the committee’s report on Bill C-15.
- Committee homepage
- Twitter: @SenateCA – follow the committee using the hashtag #NFFN.
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