An Election Budget must Target Older Canadians

March 13, 2011: – Budgets are inherently political documents – but next week’s will probably be more political than most. Indeed, 63% of the over 2,000 CARP members polled this weekend expect it to be an election budget with targeted measures for key constituencies.

If that means specific measures targeted to older Canadians, that’ll be good news for CARP members. But what specifically?

Finance Minister Jim Flaherty has already hinted that there could be help for low income single seniors and that finds favour with nearly all of our members.

But CARP calls for a longer term view and a comprehensive set of income supports that ensures that no Canadian senior lives in poverty. Now, that’s an issue worth fighting an election over.

For lower income Canadians facing retirement without workplace pensions or personal savings, OAS and GIS provide a maximum of $14,000 a year – well below the accepted poverty line in a city of any size. CARP is calling for a substantial increase in these income supports and particularly for single people whose poverty rate is significantly higher than for couples.

Even changing the rules would help. Eligibility for GIS is eroded by casual earnings and modest RRSP/RRIF withdrawals. Low income earners should never have invested in RRSPs in the first place since they took deductions at low tax rates and can sometimes pay higher tax rates on the withdrawals when they are receiving OAS. CARP is calling for increasing the threshold for casual earnings and exempting modest RRSP/RRIF withdrawals from eroding eligibility for GIS.

Modest income Canadians with a few savings in RRSP/RRIFs saw their retirement dreams go up in smoke during the recent market meltdown but they didn’t have the choice of keeping their money invested in a tax deferred account because of mandated RRIF withdrawals that start at age 71. In 2008, this was made worse because the withdrawals [and tax payable on them] were based on the value of the funds at the beginning of the year. When the market plummeted, people had to withdraw even more shares or bonds in order to meet the withdrawal requirements.

CARP got a 25% reduction in such requirements for 2008 but is calling for a moratorium on them until people are able to recover their retirement savings.

Tax credits for more medical expenses or fitness memberships would be welcome along with extending the very popular home renovation tax credit for modifications to accommodate mobility and other challenges.

That’s what we might see in an election budget.

But if the budget were to set the stage for meeting the challenges of an aging population, there would also be a refundable caregiver tax credit to support the 2.7 million Canadians caring for loved ones at home instead of taxing the public health care system. We would start on the path to a national pharmacare program. Canadians spend $25 billion a year on prescription drugs and bulk buying and other structural changes can reduce those costs nearly in half. Why wouldn’t we try to do that?