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Three

Income

"The abundance that characterizes our nation is sufficient to assure that all Canadians enjoy a standard of living that will enable them to live in dignity and some degree of personal comfort.”
Family Support Group, Winnipeg

“A problem inherent in the system is that there is little incentive for people on social assistance to become independent through vocational rehabilitation. In fact our taxation system on earnings penalizes a person on social assistance who is trying to move into full time work and become self-supporting.”

“Ensuring an adequate level of income for the disabled is probably one of the most effective ways of enhancing their sense of respect and dignity. All levels of government and voluntary sectors must play an active role in meeting the disabled person’s income needs.”

“Welfare payments contain limitations on earnings which prevent people from working their way gradually from full welfare to full independence and employment; yet the extra costs of working with a handicap are so great few can make the jump directly.”

39

ESTABLISH DISABILITY INSURANCE PROGRAM

RECOMMENDATION:

That the Federal Government gradually establish a Comprehensive Disability Insurance Program which would be integrated with the present system of Canada Pension Plan/ Quebec Pension Plan (CPP/QPP) benefits and which would:

• Eventually cover all disabled employees, spouses ad dependents;
• Be actuarily sound and paid for out of an expanded premium structure and CPP/QPP;
• Be indexed to the Consumer Price Index.

Living Death: Within the insurance industry disability is called "living death" because the family of the disabled person is deprived of a regular income as if the person were dead, but are left with equal or greater expenses because the person is still living. Between ages 35 and 65, the chances of an employee becoming disabled for an extended period of time are four times higher than the chances of a person dying. Without some kind of comprehensive disability insurance protection, it is clear that many disabled Canadians and their families will face severe financial hardships.

Program Coverage: The recommended Program should provide immediate regular income equal to a full pension, to offset the extra costs which are attributable to the person's disability, and to subsidize any special requirements which would enable the person to work again. The Program should provide some form of penalty for an employer who is unwilling to retain an employee who becomes disabled.

Encouragement: The most successful disability plans within the private insurance industry are those which facilitate rapid rehabilitation and reentry into the workplace. The proposed Program should provide incentives to the disabled person to encourage maximum rehabilitation and reentry. Along these lines, special attention should be paid to integrate these efforts with the provincial Workmen's Compensation Programs.

* * * * *

The most successful disability plans within the private insurance industry are those which facilitate rapid rehabilitation and reentry into the workplace.

40

EXPAND CANADA PENSION TO AID DISABLED PERSONS

RECOMMENDATION:

That the Federal Government, as a first step towards a Comprehensive Disability Insurance Program, expand the Canada Pension Plan as follows:

• To increase the “flat rate” component of the disability pension to an amount at least equal to that of the Quebec Pension Plan;
• To change the definition of disability so that it will exclude fewer people;
• To allow earnings on a sliding scale while in receipt of benefits;
• To provide for special needs for disabled pensioners.

Immediate Steps: Until the new Comprehensive Disability Insurance Program takes effect, greater insurance should be provided to disabled employees by improving the Canada Pension Plan.

Quebec Better: Under the Quebec Pension Plan, disabled employees receive monthly benefits starting at $146.78, with a maximum of $330.11. Under the Canada Pension Plan, the flat rate is $57.25, with a maximum of $240. The difference between the two plans is entirely attributable to the starting, or "flat" rate. The Canada Pension Plan's flat rate should be made equal to that of the Quebec Plan.

Stringent: The Canada Pension Plan has a very stringent definition of "disability" which can only be applied to persons who can never again be gainfully employed. This excludes all of those persons who are too disabled to work at the present time, but who eventually may be able to reenter the labour market on a full or part time basis. The definition of "disability" under the Plan should now be expanded to include them.

* * * * *

A disabled person can incur significant extra costs which result directly from the disability. Clothes wear out more quickly, taxis must be taken more often, attendant care may be required. There are also the costs of aids and devices which are not covered by existing programs.

41

PROVIDE TEMPORARY ASSISTANCE TO OFFSET COSTS INCURRED BECAUSE OF DISABILITY

RECOMMENDATION:

That, until the Comprehensive Disability Insurance Program takes effect, the Federal Government help offset the costs incurred due to disability, by sharing with the provinces the costs for an income tested flat-rate disability supplement, under the Canada Assistance Plan.

That consideration be given to the implementation of cost-sharing formula for the disability supplement which would allow for varying federal contributions depending upon the province’s financial situation.

Extra Costs: A disabled person can incur significant extra costs which result directly from the disability. Clothes wear out more quickly, taxis must be taken more often, attendant care may be required. There are also the costs of aids and devices which are not covered by existing programs. The Canada Assistance Plan does not provide funds to cover these extra costs for a person on a low or limited income. On the other hand, attempts by the disabled person to correct this situation through employment usually endangers his or her eligibility under the Plan. Not only might the basic allowance be lost, but also the free medical, drug and dental benefits that are provided.

“Income Tested”: The Committee recommends that a supplementary allowance be provided to enable disabled persons to offset their extra costs. This supplement would be "Income tested", that is, based on the person's income. Above a certain level of earnings, the person would not be eligible.

* * * * *

Attempts by the disabled person to correct this situation through employment usually endangers his or her eligibility under the Plan. Not only might the basic allowance be lost, but also the free medical, drug and dental benefits that are provided.

42

MODIFY CANADA ASSISTANCE PLAN TO AID DISABLED WORKERS

RECOMMENDATION:

That, until the Comprehensive Disability Insurance Program takes effect, the existing Guidelines under the Canada Assistance Plan be modified as follows:

• The Liquid Asset Exemption should be substantially increased to allow for the additional costs related to a disability;
• The Earnings Exemption should be increased to enable a permanently disabled person who is working part-time to retain a larger share of his or her earnings;
• The Earnings Exemption Guidelines should allow for a longer transition from social assistance to employment, taking into account the nature of the disability, up to a period of two years.

“Rainy Days”: The Liquid Asset Exemption says that a person who is receiving Canada Assistance benefits may keep only a certain amount of savings in the bank for a "rainy day", that is, for emergency purposes. A ceiling is placed on savings to guard against a person living off the benefits while stockpiling money from other sources. The ceiling, established by the provinces, is $1,500 for individuals and $2,500 for families. The Committee recommends that this ceiling be substantially raised in the case of disabled persons, who are confronted with extra and unexpected costs arising from their disability.

More Earnings: For the same reason, the Committee recommends that the Earnings Exemption be raised and extended for disabled persons who are employed part-time. Ordinarily, a person is eligible for benefits only if his or her earnings are below a certain level. Disabled persons need more money and they also need more time to secure new employment.

* * * * *

The mere fact of being institutionalized automatically casts a disabled person further into a dependent role, in which he or she can exercise few personal decisions.

43

PROVIDE CASH ALLOWANCE FOR PERSONAL NEEDS TO DISABLED PERSONS IN INSTITUTIONS

RECOMMENDATION:

That the Federal Government discuss, with the Provinces, the provision of a minimum persona allowance to institutionalized disabled persons; that this allowance be an amount which adequately meets basic personal needs, and that it be indexed to the cost of living.

Small Choices: The mere fact of being institutionalized automatically casts a disabled person further into a dependent role, in which he or she can exercise few personal decisions. One small exception to this lies in the possibility of purchasing personal items such as toothpaste, candy, newspapers, and magazines. It's not much, but at least the person can exercise a free choice in these matters and not be accountable to the institution's regulations and schedules.

Maybe Yes, Maybe No: This opportunity, however, for many disabled persons depends upon a "comfort allowance" which may or may not be provided. Under the cost-sharing agreement with the Federal Government, provinces may pay a personal allowance to persons in need who are residing in a hospital or a home for special care.

“Charity”: In some cases, this allowance is sent to the institution, rather than to the individual. In other cases, the individual is required by the institution to sign over this allowance as a condition of residence. The sums involved may vary from $30 to $90, depending on the province. But many disabled persons say that after extra expenses such as laundry that they end up with as little as $9 per month. Whatever the arrangement or amount, many disabled persons find this "comfort allowance" demeaning in the way it is provided, because it smacks of "charity" on the part of the institution --when in fact, the funds are provided by the Provinces and the Federal Government.

Make it Uniform: Human dignity is a crucial issue for disabled persons. This personal allowance should not be another instance where they are made to feel inferior. The Committee recommends, therefore, that the Federal Government and Provinces agree to provide a minimum allowance which goes directly to all disabled persons in institutions.

* * * * *

44

PROVIDE EXTENDED BENEFIT PERIOD TO DISABLED WORKERS WHO ARE UNEMPLOYED

RECOMMENDATION:

That, until a Comprehensive Disability Insurance Program takes effect, the Federal Government amend te Unemployment Insurance Act to:

• Provide an extended benefit period for unemployed disabled workers in addition to their basic entitlement;
• Increase the amount paid to an unemployed disabled worker from the current rate of 60% of an average weekly wage to 75%, in consideration of the extra costs incurred by the person in searching for new employment.

Greater Difficulties: Unemployed workers who are disabled face greater problems and costs in securing a new job than do workers who are not disabled. In many instances, the disabled person is forced to pay taxi fares to attend job interviews which non-disabled persons can travel to on foot, by public transit or by personal car. The time involved for each job interview is much greater for the disabled person. This cuts down on the number of possible interviews, and lessens the ability of the disabled person to respond quickly to a new job opening.

Common Sense: The Committee sees it simply a matter of fairness and common sense to provide extra assistance to unemployed disabled workers. The proposed Disability Insurance Program would provide this protection. Until it takes effect, the Unemployment Insurance Act should be amended as a temporary measure to provide the required assistance.

* * * * *

In many instances, the disabled person is forced to pay taxi fares to attend job interviews which non-disabled persons can travel to on foot, by public transit or by personal car. The time involved for each job interview is much greater for the disabled person.

45

PROCEED WITH PENSION CONFERENCE BEFORE THE END OF 1981

RECOMMENDATION:

That the Federal Government proceed with the proposed Pension Conference and that it be held before the end of 1981.

That the background papers prepared for the Conference be available to the general public.

That the Conference examine all aspects of disability insurance, including the practice of reducing benefits under private plans where a beneficiary is, or becomes, entitled to benefits under a public plan.

Confusion: The sale of pension plans both to individuals and to groups is one of the fastest growing product areas within the private insurance industry. It is also one of the most confusing subjects to understand for many consumers. The plans differ from one insurance company to the next, and from one customer to another. There are different terms, different rates, different types of coverage, and different exclusions. As a result, disabled persons are faced with a mountain of confusing and sometimes conflicting information about a subject that is of vital importance to their income.

Proceed: A Federal Government sponsored conference to clarify the pension policies and practices of the Canadian insurance industry has already been planned, but then was postponed. The Members of the Committee feel that this is a topic of great importance to all Canadians, but especially to disabled persons. The Federal Government, therefore, should proceed with the Conference as planned. It is important that the agenda deal specifically with all aspects of disability plans, since these directly affect the income of many disabled persons. The Conference should be organized and held before the end of 1981.

* * * * *

There are different terms, different rates, different types of coverage, and different exclusions. As a result, disabled persons are faced with a mountain of confusing and sometimes conflicting information about a subject that is of vital importance to their income.

46

AMEND INCOME TAX ACT TO OFFSET COST OF DISABILITY

RECOMMENDATION:

That, in order to help offset the cost of disability, the Federal Government amend the Income Tax act as follows:

That the current flat rate deduction be replaced by a disability deduction whereby a person may claim for himself/herself or a dependent the full cost of goods and services directly attributable to a severe arid prolonged disability;

That those goods and services currently included in the medical expenses deduction and which are clearly attributable to a severe and prolonged disability be transferred to the proposed disability deduction; and

That a severe and prolonged disability refers to those persons who live at home and:

• Are covered presently by a flat rate deduction, or
• Are deaf of have a major hearing loss, or
• Are in receipt of full disability benefits under the Canada Pension Plan, Quebec Pension Plan, Department of Veterans Affairs or Workmen’s Compensation, or
• Are or were registered in a provincial vocational rehabilitation program for disabled persons funded by the Federal Government.
  or

That a refundable tax credit be provided if the disabled person’s income is too low to take advantage of the entire deduction.

Expanded Coverage: Disabled persons often lose much of their income at a time when basic expenses are significantly increased. The Income Tax Act should now be amended to assist disabled persons in carrying these extra costs. The amendment would expand the number of persons who can apply for a disability deduction. It would also reflect more accurately all of the extra costs that are directly attributable to a disability.

* * * * *

A private home owner who renovates his dwelling to make it accessible for a disabled person, receives no tax break.

47

AMEND INCOME TAX ACT TO ENCOURAGE HOME OWNER RENOVATIONS

RECOMMENDATION:

That the Federal Government amend the Income Tax act in order that a home owner may claim the following:

• A deduction based on the actual cost directly related to making a dwelling more accessible.
• A refundable tax credit, if no deduction or only a partial deduction, was available because the home owner’s taxable income was too low to take advantage of the entire deduction.

Fairness: Other recommendations in this report call for tax deductions to encourage accessibility in work places and revenue-earnings dwellings. But a private home owner who renovates his dwelling to make it accessible for a disabled person, receives no tax break. The Committee believes that a deduction should be provided under the Income Tax Act covering the entire cost of renovation. If the renovation costs are greater than the person's taxable income, then the difference should constitute a tax credit.

* * * * *

48

AMEND INCOME TAX ACT TO ENCOURAGE ON-THE-JOB TRAINING

RECOMMENDATION:

That the Federal Government amend the Income Tax Act and the Regulations thereunder in order that an employer may deduct for each new disabled employee up to 85% of the first year's wages, 50% of the second and 25% of the third, and combined with

A refundable tax credit if no deduction, or only a partial deduction, was available because the employer's revenue was too low to take advantage of the entire deduction.

Crucial: A major obstacle to employment for disabled persons is the fact that they cannot secure suitable work experience. They are faced with a perpetual situation where they cannot get a job because they do not have the experience, and they cannot get the experience because they do not have a job. The Income Tax Act should be amended to encourage employers to provide more on-the-job training opportunities.

* * * * *

A major obstacle to employment for disabled persons is the fact that they cannot secure suitable work experience. They are faced with a perpetual situation where they cannot get a job because they do not have the experience, and they cannot get the experience because they do not have a job.

49

DIRECT REVENUE CANADA TO CLARIFY TAXATION OF IMPORTED TECHNICAL AIDS

RECOMMENDATION:

That for importing aids, Revenue Canada make available to disabled persons and to disabled consumer groups, information clearly setting out:

• The technical aids which may presently be imported without payment of customs duties and federal sales tax;
• The documents and procedures required to import these free of duty and tax;
• A simple procedure and application for having additional items exempted from either duty or tax.

That customs officers be fully informed of the relevant exemptions for technical aids for disabled persons and procedures;

That the Federal Government amend the Customs Tariff and Excise Tax Act to provide a general category of technical aids exempt from customs duties, federal sales tax, or both.

Don’t Know: Many technical aids required by disabled persons must be imported into Canada. This causes many problems because information clarifying the taxation policies that govern these imports is not readily available. Customs Officers are not always familiar with exemptions or procedures. Disabled persons are not well informed of either. New devices are constantly being developed, but only those items specifically listed are exempt, and disabled persons have found great difficulty in getting the list amended.

Broader: Along with better information, Revenue Canada should also provide for broader exemptions. At the present time, institutional purchases are exempt, but those made by individuals are not. This is patently unfair since the individual disabled person is often in dire economic straits and the imported device will have more immediate practical consequences.

* * * * *

Many technical aids required by disabled persons must be imported into Canada. This causes may problems because information clarifying the taxation policies that govern these imports is not readily available.

50

EXEMPT AIDS FOR DISABLED PERSONS FROM CUSTOMS DUTIES

RECOMMENDATION:

That the Federal Government take the necessary steps to participate in the protocol under the Florence

Agreement and thereby exempt from customs and other duties those items needed by the physically and mentally disabled and imported from countries that are party to this Agreement.

Eliminate Taxes: The Florence Agreement eliminates tariffs, discriminatory taxation on a wide range of published materials, art objects, antiques, plus audio-visual materials with an educational, scientific, or cultural character when imported by an approved institution within one of the 68 countries that are party to this Agreement.

Educational: Included within the Protocols of the Florence Agreement are provisions for educational materials which are used to bring services to mobility-disabled persons. The institutions and organizations which provide these services to disabled persons are usually operated on very limited budgets. Participation by Canada in the Florence Agreement, will make it possible for them to import necessary materials of superior quality from abroad. It will also make it possible for Canadian organizations to create educational materials for disabled persons and sell it without taxation within those other countries which are party to the Agreement.