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Time to Retire the Seniors' Discount?

With many older Canadians better off than their kids, it might be time to end those price breaks.

Jeremy Nuttall 28 Feb 2015TheTyee.ca

Jeremy J. Nuttall is The Tyee's Parliament Hill reporter in Ottawa. Find his previous stories here. 

This coverage of Canadian national issues is made possible because of generous financial support from our Tyee Builders.

A new study says the country should retire the widespread practice of seniors' discounts and switch to a new system in which all low-income earners are eligible for price breaks.

The non-affiliated think tank, the Institute for Research on Public Policy, which is based in Montreal, released its report yesterday titled No Seniors' Specials: Financing Municipal Services in Aging Communities by economist Harry Kitchen, detailing the results of the one-year study.

"If you use a service, you should pay the cost of that service," Kitchen said. "What you pay for that service should not be dependent on age."

Currently 15.4 per cent of Canada's population is above age 65, he said. Within 20 years, that number will reach 24 per cent. Kitchen said the finances of the country's elderly are healthier than they were decades ago so the discounts make little sense.

Right now, seniors are eligible for discounts on a range of items, from property taxes to transit. Kitchen said those discounts should end because they were created at a time when many seniors lived in poverty, which is no longer the case.

As a result, Kitchen said, many middle-aged people, who are low-income earners, are subsidizing financially secure seniors who don't need the help.

"Do you ask somebody in the middle-aged group who may be poor to pay a higher price so they can subsidize a price for someone who's a senior, but is quite well off?" he asked.

Kitchen argued that if municipal governments had access to new taxes or revenues, they would have more flexibility to respond to local needs.

"As seniors' importance as a constituency grows, it will become more difficult for local government to introduce the changes necessary and to provide and finance the services their aging communities need," writes Kitchen in the report. "Failing to set the right course may have severe consequences in the near future."

But Judith Wahl, the executive director of the Advocacy Centre for the Elderly, a Toronto-based legal clinic for low-income seniors, said she doesn't think the study was broad enough and misses some key points.

Deserve benefits

Wahl said poverty in Canada needs to be addressed, but chipping away at seniors' benefits is not the way to do it.

"There's a very serious problem with depression among seniors," she said. "All these little recreation programs that people access, that helps reduce the isolation, it helps keep people connected."

Losing such programs could potentially lead to an increase in costs to the health care system as the lack of seniors programs could increase other mental and physical health issues, Wahl suggested.

She said cancelling discounts could potentially pull some seniors below the poverty line, or if they live much longer than expected, eat into their retirement savings through the years, leaving their funds depleted as they age.

"Reductions of these things would push a lot more people into poverty or increase the cost of health care," she said. "It's the real impact of these things and how you spin it out."

But Kitchen insisted it is possible to fund the programs through other sources of tax income, such as gas taxes and possibly introducing municipal sales and income taxes.

He said he has heard that some seniors disagree with the report, but said most of their arguments are knee-jerk reactions based on the premise that seniors have paid taxes all their lives and should now be exempt.

He points out municipal taxes are paid for services rendered in the year the taxes are collected.

"Why all of a sudden should you get them free and expect someone who is younger to pay for them?" He said. "There's no substance to the argument."  [Tyee]

Read more: Politics, Federal Politics

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