Mr. Speaker, what we are discussing today is a 1942 tax law which defines the regulations for child support payments following a divorce settlement. I am
pleased to join the debate because I believe that a wise society should strive to give its children the best possible start in life.
Canadians were appalled when in 1993 the United Nations committee on social, economic and cultural rights blasted Canada for the fact that half of all single mothers and their children live below the poverty line. In conclusion the report stated that Canada has not outlined any new or planned measures to remedy the situation.
The question we are debating today is whether the tax laws should be altered in the interest of fairness where child support payments are concerned. As our system stands presently, payers of child support are given a tax break, whereas recipients of child support, the mothers who have the custody of the children, are required to treat those payments as taxable income.
I ask the public, my colleagues and the bureaucrats who defend this 1942 regulation to clarify in their own minds whether it is the principles of the income tax system or whether it is the rights of children that must be defended?
Fifty-two years ago when the policy was developed there were 10 tax brackets for Canadian citizens. The parent paying support was usually in a higher tax bracket than the recipient parent. As a result it was determined that providing the donor with a tax break while taxing the recipient in a lower tax bracket would reduce the total amount of taxes paid on this sum.
At the same time these bureaucrats reasoned that allowing the non-custodial parent to deduct payments from their taxable income would provide an incentive to maintain regular payments. While this is convincing in theory, it fails miserably in practice.
The speakers today have waxed eloquent on the outdated basis of the child support taxation policy. In 1942 it was likely that by giving the non-custodial parent at tax break and taxing the custodial parent more money would end up benefiting the children. Today it is much more likely that both parents fall into the same tax bracket.
We must decide, given the 1990s setting, which parent will benefit from this subsidy. I believe that the mother who is in 98 per cent of instances the recipient of child support should not have to pay taxes on her child support payments.
Although it is true that women still on average earn less than men, they are much more likely than before to be in the same tax bracket as their former spouse. As pay equity legislation takes root we hope women will reach parity with men's wages in this country. Therefore a child support system which assumes that women make less than men is anachronistic and must be revised.
The revisions we seek are those that will divert moneys from the tax system to the children. In Nova Scotia one in five children lives below the poverty line. These proposed changes would be one small step to help those children.
One alternative that has been proposed and that is currently before the courts offers that income be considered the child's income and be taxed accordingly. Another option is for the parents of the children to negotiate among themselves the tax break they generally receive to ensure this is channelled toward the children's expenses.
Discussion of the intricacies of the tax system or tax reform should not sway us from the larger issues at play here. A report by Ellen Zweibel and Richard Shillington for the Policy Research Centre on Children, Youth and Families stated that the basic pre-tax child support amount being awarded is stunningly low.
Our government will prove its commitment to youth by following through with the promises in the red book.
Apprenticeship programs will ease the transition from school to work. We are establishing a youth services corps and we are restoring full funding to the national literacy program. But we must start earlier. We must invest all available resources in our children during their formative years.
A House of Commons resolution in 1989 to abolish child poverty by the year 2000 was adopted by the entire Parliament. We must recommit ourselves to this challenge and redouble our efforts.
In 1991 more than 1.2 million Canadian children were living in poverty. I was involved for five year in the metro food bank society in the Halifax-Dartmouth area and I know that sustainable and systematic changes are needed.
In 1992 an estimated 900,000 children were fed by one of the 436 food banks across this country and these numbers are growing. As a matter of fact in 1980 there were no food banks in Canada and now we have more than 400 food banks. That is astounding and appalling.
To reverse this frightening trend we must make the required changes to the Income Tax Act so that children are not financially devastated by their parent's divorce or separation. We must ensure that fathers, and in 98 per cent of cases it is the father who is the payer, keep up with their child support payments.
Some insight into the breakdown of the whole system can be derived from statistics from the legal world. In Nova Scotia the family court system administered maintenance payments for about 13,000 families. In 1990-91 that court issued 7,000 summonses to individuals who had failed to pay court ordered
support. These are not meaningless numbers. For each summons there is a story of hardship.
I mentioned earlier that the tax break for non-custodial parents was meant as an incentive-some incentive. Fifty-two years later child support dodgers are rampant in our society. We have made some inroads in this area. There is legislation in every province to garnishee wages from defaulters. That is not enough. A lot of work is needed to standardize child support levels and enforcement mechanisms across this country.
Loopholes abound in our system of taxation with no clear rationale for who benefits and who does not. Commons sense tells us and groups that have coalesced around this issue insist that women despite gross-up payments should not be paying tax on child support payments. Adopting this resolution as the shared opinion of this House is a positive step, one that makes sense.