Mr. Speaker, I rise today to speak in support of Motion No. 14, introduced by my colleague, the hon. member for Nepean.
The motion urges the government to amend the Income Tax Act so that child support payments are no longer considered
taxable income for the recipients. This debate presents an opportunity for Parliament to correct a contentious longstanding problem with the Income Tax Act.
The provisions in the tax legislation which provide for tax deductible child support payments were brought into force in 1942. Canadian society has progressed a great deal since the 1940s, but unfortunately where the issue of child support is concerned the tax laws have lagged behind the new realities of today's society.
In Canada today there are nearly one million single parent families, or 20 per cent of all families with children. Eighty per cent of these one parent families are headed by women. Over half of these households live in poverty. Although they represent a small number of Canadian households, only 3 per cent, these single parent families headed by women bear 17 per cent of this country's total poverty burden.
The issue we are debating today involves more than changing legislation. The fundamental issue in this debate is justice for single parents, especially single mothers.
During this debate we must examine the intent of the current legislation and the effect it has on today's families. Because 98 per cent of child support recipients are women, it is fair to say that the present child support provisions in the Income Tax Act have a detrimental effect upon women and children of single parent families.
The tax treatment of child support payments actually decreases the ability of single parent women to support their children after separation and divorce. It creates even greater disparities between custodial and non-custodial households. The income of support payers is roughly double that of recipients and their dependants.
It is a fact that after divorce women and their children tend to suffer a decline in their standard of living while the man's tends to rise. With 57 per cent of single parent families headed by women living below the poverty line, the Income Tax Act must be changed to reflect the realities faced by single parent families in the 1990s. By changing the legislation the government would be helping to foster a healthy environment for children of single parent families.
The finance department views the tax deduction provided to child support payers as an incentive to make support payments. However, the Canadian Advisory Council on the Status of Women has stated that studies show child support payment default rates as high as 85 per cent.
Furthermore the finance department feels that the current deduction also encourages higher support payments. Since taxable income is shifted from the payer who is presumed to be in a relatively high tax bracket, to the recipient who is presumed to be in a lower tax bracket, there results an overall tax saving which will lead to greater resources and therefore increased support payments. In reality this is rarely the case.
When the original legislation was written 52 years ago the assumption was that the custodial parent, the mother, had less income than the payer, the father. Today this assumption is no longer always valid. Even though women comprise a large part of today's workforce wage disparity still exists, yet this is not reflected in the current taxation structure.
The only way a single parent mother can benefit from the current legislation is if she happens to be in a low income tax bracket. Fortunately, Canadians have been working toward more equal treatment of women in the workforce and equal pay for equal work. The current tax situation impedes this progress for single parent working mothers by chipping away at their income and thus increasing their burden.
Studies by the Canadian Advisory Council on the Status of Women have shown that in 49 per cent of situations the child support payer's tax saving did not exceed the recipient's tax obligation which resulted in no overall tax benefit. In 20 per cent of these cases the child support provisions in the Income Tax Act actually decreased the resources available for child support.
The Income Tax Act needs to be amended so that it reflects current realities and provides support where the support is needed most, with the custodial parent. In one parent families, the non-custodial parent is given a tax incentive even though the parental responsibilities remain.
When a divorce occurs neither parent's responsibility toward their children changes. Child support payments should therefore not be considered taxable income of the custodial parent, but merely a continuation of the responsibility of the non-custodial parent for the care and maintenance of the children involved.
I have touched upon some of the points surrounding this issue but I would like to come back to my central theme which is justice. Most one parent families are headed by women. The majority of these households live below the poverty line and bear a disproportionate amount of this country's total poverty burden. The current Income Tax Act only contributes to this unfortunate problem.
Clearly this is not justice. We have an opportunity to take a step toward fairness for women and for single parent families. It is my sincere wish that this motion be adopted by the House and embraced by the government in the form of amendments to the Income Tax Act.