Mr. Speaker, I am pleased to offer my support to this motion which calls for the government to amend the Income Tax Act so that child support payments are no longer considered taxable income for the recipients.
I would first congratulate the hon. member for Nepean for raising this matter in the House of Commons.
Last March I wrote to the Minister of Finance urging him to make changes to the Income Tax Act in order to rectify this inequity. In the past few weeks the issue was thrown into a state of chaos by the Federal Court of Appeal rendering its judgment in the well publicized Thibaudeau case.
In effect the court ruled that separated custodial parents did not have to include child support payments as part of their income when filing income tax returns. This decision has raised public attention to the urgency of reforming the Income Tax Act with respect to child support payments. I am proud to see that this government recognizes the importance of this issue and is already taking measures to address the matter in the fairest way possible.
I have no problem supporting this motion as well as the government's recent decision to appeal the Federal Appeal Court's ruling. I must admit that, at first, I was having my doubts regarding the government's decision, but I then realized that appealing this judgment would better serve the interests of those who were the most concerned, namely children.
The government appealed the Thibaudeau decision so it may come up with a better arrangement to avoid a potentially disastrous situation in the meantime. It is my understanding that the court's ruling is causing much confusion among both support payers and recipients.
Lawyers from across the country are receiving phone calls from clients who want their support payments lowered. If the court ruling was allowed to stand thousands of applications would have to be litigated, Canadian courtrooms would be clogged and the result would be needless anguish and expense for all parties concerned.
In addition, it is also thought that the recent court decision would further aggravate the problem of failure to pay support payments since non-custodial parents would have less incentive to comply with court mandated support payments without the benefit of tax deductions.
Moreover, since the federal appeal court's decision did not deal with the deductibility of child support by the payer it left in question how the tax will be paid on income that is directed to child support.
If the ruling was left untouched its effect would be that separated parents unlike other parents would not be required to pay taxes on money they use to support their children. Clearly this type of scenario would create a very unfair situation for married couples with children.
The government, realizing that a change is due, is going to consult Canadians who are the most directly affected. The Secretary of State for the Status of Women will head a task force made up of MPs, which is to hold a series of public hearings, very shortly, on various issues regarding child support, including the tax system, and report to the government.
Moreover, the Minister of Justice asked a federal-provincial-territorial committee on family law, which is presently looking into a whole range of issues concerning child support, to present its report before the end of the summer.
The findings of the task force and of the family law committee will guide the government in its review of a new and fair child support system.
Currently there are over 1.2 million children who live in poverty. If we consider that among female lone parent families 62 per cent have income below the poverty line it is easy to see where the majority of these children come from.
In my opinion, the tax rules relating to child support payments probably have something to do with these grim statistics.
I believe the question at hand is one of fairness for single parents and their children. Child poverty has reached frightening levels in this country. It must be dealt with now. This government will soon introduce measures that will improve the circumstances of single parents and their children. By making reforms to the tax system and legislating child support formulas to simplify the system, this government will demonstrate its commitment to tax equity and reducing child poverty.
This is a very important area of social policy and merits a great deal of the government's time and attention. Unfortunately the opposition parties are much more preoccupied with constitutional issues and questions such as law and order. The threat of Quebec separation creates economic instability and stifles our growth, but worst of all it detracts our attention from important social matters that need to be addressed urgently.
I am sure the members of the Reform Party would notice a huge difference in the crime statistics they quote so often if issues such as child poverty were the priority of all members of this House.
