The other item that was previously distributed is a copy of a Status of Women Canada publication entitled Economic Gender Equality Indicators. If you have that, I'm going to make brief reference to a passage on page 3.
The focus of my presentation and the materials you will get in support of the tables after this meeting is on exactly what the Department of Finance did in its gender analysis of the 2006-07 budget. I'm going to organize my brief comments around the key questions I think this committee might want to ask the deputy minister, when that event takes place.
The first question is to ask the Department of Finance for a statement of the purpose for which the gender analysis was carried out. The federal plan for gender equality, adopted and implemented beginning in 1995, says that the key elements of a gender analysis are, first of all, the differential impact on women as a class, and second, any negative impacts that policy might have on women as a class, all in the context of the different social realities of women. I have outlined in the submissions that will follow some of the different types of gender analysis that can be used to put that purpose into play. But I think the second question that needs to be asked of the deputy minister is exactly what methodology of analysis, what type of analysis, was carried out.
As you look through the 2006-07 documents from the Department of Finance, you will see repeated references to their assuming that women will be affected more or less the same as men, or assuming that women will get a slightly smaller benefit but that there will be a larger proportionate reduction for women. One of the hallmarks of a proper gender analysis is not to make assumptions, not to use stereotypical thinking, but to use the actual data that are available to a department such as the Department of Finance. So the second question that I think needs to be asked is, what is the Department of Finance's definition of gender analysis, and what is the definition of gender neutrality? What is the definition of gender equity?
In the two tables that you have, I've gone through and scored the two Department of Finance documents, using a simple plus, minus, or zero method of scoring, because what I wanted to do in the table was to contrast how the Department of Finance assesses what these various tax measures do and what a person trained in gender analysis would do with these specific items. I'm just going to look at the first item for an illustration.
In table 1, the policy measure that I'm talking about right now is the reduction in the lowest tax rate paid under the personal income tax rate structure. This was addressed by the Department of Finance in both of its documents. In both of its documents, it basically came to the position that there would probably be a gender neutral impact on women, or the impact would be positive because women would experience a greater proportionate reduction in their total tax load.
As I've explained at length in the technical notes that will come afterwards, this is just a numerical way of turning upside down something that's negative for women and claiming that, when you have it upside down, it's helping women.
In the March 13 submissions I distributed to this committee--in table 2 on page 6 of that item, should you wish to make reference to it later on--I demonstrate in a detailed analysis of male and female beneficiaries of this 1% cut to the lowest federal income tax rate that men are the overwhelming beneficiaries of this in terms of dollars, so that even women who are in a taxable category such that they can get some benefit from that tax cut will only get $171 worth of tax benefit from that rate reduction, but men who are in the same class will receive a tax benefit of $196.
As you compare where women are versus where men are in terms of income, it becomes increasingly obvious that the lion's share of this tax benefit, as well as other income tax cuts, are all going to the benefit of men. So table 1 demonstrates how the Department of Finance has overstated the benefit to women of what it has done item for item for each of the 42 tax changes it has outlined in its document.
A short term paper could be written about each of these 42 items. Each one merits its own very detailed, complex analysis. That analysis can be done. I've done some of it in my March 13 submissions and the submissions that will be following from today, but from your perspective looking at this submission, you ask the deputy minister to explain how it can be that women receive fewer dollars as individuals and as a class from the reduction in this lowest tax rate, yet it is described as a gain for them.
That's a very specific, concrete question that should be answerable or, if it ends up being contradicted, will help disclose to you the way in which the department has gone through its analysis.
The other point I wanted to make--and then I would like to briefly touch on this question of tax cuts versus who really benefits--is that if you look at table 2, which was also distributed today, I've attempted to convey in numerical terms the overall impact of having budgetary documents, even though they're cast in the form of tax cuts, that consistently hurt women, that consistently give more money to men than to women or that take more money away from women proportionate to what they have than they do from men.
I've broken down into categories the 42 tax items that were analyzed in table 1. Over $16 billion worth of personal income tax items were proposed in these two budgetary documents that were given to you by the Department of Finance. Only one of those items has a beneficial impact on women, and it's a very limited beneficial impact. Ninety-four per cent of that $16 billion in tax cuts is now out in the economy working against the interests of women.
The cumulative effect with each year that passes is that these $16 billion worth of tax cuts are going to be incrementally benefiting men at the expense of women in widening the after-tax income index that measures the gaps between women and men. Similarly, only one item in the corporate and business tax category can be considered to have any arguable benefit for women. The other 96% of over $11 billion worth of tax cuts are going to overwhelmingly benefit male members of Canadian society.
It is similar to the sales and excise tax items in pension income splitting, which was not in the document but which was addressed by Finance when they were here last year.
The bottom line here is that we have nearly $42 billion worth of tax changes. We're not looking at the spending part of the budget at all, just the tax changes. And 96.3% of those are having a negative financial effect on women. The gender gap is growing with the impact of each of these items that add up to this 96.3%. No gender gap in the world can be closed with a budgetary impact like this.
So the final question that I would suggest you ask of the Department of Finance--and you may want to ask this ahead of time or during the actual testimony--is that they please calculate the total impact of each of these tax changes by gender, by age, and by income.
The Department of Finance has access to everyone's tax returns. It has access to all of the fiscal data generated by the operation of the government in Canada. It routinely makes use of the data it gets from these files to carry out complex analyses like this. So the Department of Finance ought to be able to give you a detailed table for each of these 42 items without any difficulty.
As part of that, you might want to give them a copy of these economic gender equality indicators from 2000 and ask that they please also calculate the total after-tax income index that's outlined on page 3 of that publication. Ask them to calculate that for each of these two years and show you what the overall cumulative impact of these items is on women. The Department of Finance is uniquely situated to carry out that analysis.
Now I'd like to make a final comment about corporate income tax cuts. The claim the government has made is that these are intended as economic stimulators, and the Department of Finance produced a detailed analysis purporting to show that cutting income tax rates for corporations increases the amount of investment in corporations. I won't go into the methodological problems with those tax incidence studies, but the basic problem is that the analysis that was carried out was based on very questionable comparisons that should not have been made, and the results are at variance with most of the long-standing research on the incidence of the benefits of corporate income tax cuts.
There is a working paper referenced in that explanatory memo that is attached to the 2007 tax expenditures budget. I'll send the reference to the clerk. That working paper, which is the authority for the study that the Department of Finance is relying on, still has not been published. They're basically footnoting as their primary authority a study that as yet does not seem to exist.
So I would just say that certainly in the area of corporate income tax cuts, it's absolutely true, it is not possible to claim that you can willy-nilly stimulate an economy by simply running into the tax system and slashing various kinds of taxes. It just doesn't work that way.
Thanks.