Mr. Speaker, I was just beginning to address the issue of the proposed increase in the bill for the child care tax deduction.
Let me explain what it is. We have had much debate in this place over the past two or three weeks about the lack of fairness toward single income families with children. One of the issues I wanted to bring to attention of this place was the unfair, unjustifiable discrimination against single income families that decided to do what they believed was best by their kids and raise them at home.
The child care tax deduction says to parents who have two incomes that if they pay someone else, a third party, whether a day care operator, a babysitter, a hockey summer camp or music summer camp, to take care of their kids for a period of time and are issued a receipt for the expenses incurred, the government will allow the spouse with the lower of the two incomes in those double income families to deduct the value of the child care receipt from their taxes.
This says that families that give up the second income and have the father or the mother stay at home full time to raise the children and give up tens of thousands of dollars in potential income are out of luck. They assume an enormous opportunity cost and in so doing voluntarily reduce their standard of living. In many instances they give up the second car, the larger house or the three week vacation. Those families do not qualify for the child care tax deduction, the value of which is increased in Bill C-72. It says to those families that they will be forced through the tax system to subsidize the day care choices of one kind of family, that is to say the double income family that pays for outside child care.
This deduction is absolutely, fundamentally unfair. We in the official opposition attempted to bring the issue to a head in the supply day motion on which we voted Tuesday last. Unfortunately, because apparently government members who agreed with us were whipped to vote against it, that motion did not pass.
However, at least we succeeded in having the government admit there might be some kind of problem. Virtually every economist and social scientist who has studied the matter agrees that there is discrimination against single income families with children in part due to the child care tax deduction in the bill.
The problem with the bill is that it raises the inequity. It increases the unfairness. It moves the deduction from $5,000 to $7,000. While we are trying to bring single income families in line with or in parity with their double income counterparts, the government is actually increasing the unfairness.
The government's own budget documents demonstrate this quite clearly. The budget documents tabled by the hon. Minister of Finance last month indicate that the tax inequity between single and double income families ranges between 60% and 115%. That is to say, single income families pay between 60% and 115% more. In some cases they pay twice as much in federal income taxes as do their double income counterparts.
This is for families that are generally on the lower end of the income scale. This is for the single income families that according to the Vanier Institute of the Family are 3.8 times more likely to be poor. This is simply inexcusable. I will vigorously oppose the bill because of the increase in the child care tax deduction.
One provision in the bill allows for a deduction for children between the ages of seven and sixteen. What does this mean? It means that a double income family, theoretically a wealthy double income family, could pay for a 15 or 16 year old child to go to an expensive hockey school or music summer camp and claim a full $4,000 tax deduction. At the same time the low income family, the single income family on the other side of town that is bringing in only $30,000 in income but has dad or mom full time at home with the kids, gets no commensurate deduction.
We do not propose, by objecting to this issue, to remove the deduction for child expenses completely. We propose to convert it into a refundable credit that would be available to all families regardless of their child care choice. Single income families would have the full advantage of a refundable credit equivalent to the maximum amount of the $7,000 deduction. This would amount to $1,200. Every child under seven, under the credit we are proposing, would benefit through their parents to the amount of $1,200 a year. This would be an important step to reducing the tax discrimination which was only increased in the last budget.
In closing, we are disappointed that notwithstanding the debate of the last couple of weeks the government is going precisely in the wrong direction. Instead of levelling the playing field, it is in fact increasing the inequity between these different kinds of families. That is very disappointing indeed.