Mr. Speaker, this private member's bill proposed by the hon. member for Calgary Centre would allow taxpayers to deduct expenses related to the adoption of a child to a maximum of $7,000. While I am sure that the member opposite from Calgary Centre has been motivated to present this bill to the House of Commons for all the right reasons, a basic principle of our income tax system is that tax relief is not generally provided for personal expenses, such as adoption costs.
Although the government is aware that parents adopting a child incur relatively high costs, these and other personal expenses do not qualify for tax assistance because they are incurred at an individual's discretion in widely varying amounts and types depending on the individual's tastes, lifestyle and economic status. The higher the socioeconomic status of the taxpayer, the more likely he or she is to incur larger and more varied personal expenses. If these expenses were made deductible, a portion of the personal expenses incurred by some taxpayers would be financed by taxpayers at large.
When tax assistance is provided with regard to expenses, it applies to expenses incurred to earn an income, for example child care expenses, union dues or job related moving expenses, or to largely non-discretionary expenses, such as higher than normal medical expenses.
Let us take the example of child care expenses. As hon. members know, eligible child care expenses are deductible in computing income. The purpose of the child care expense deduction is to recognize that taxpayers who need to incur child care expenses to earn employment or business income, to attend a recognized educational institution or to take an eligible vocational training course have a lower ability to pay taxes than taxpayers with the same income who do not need to incur such expenses.
The child care expense deduction provides a tax deduction of up to $7,000 annually for expenses related to the care of a child under the age of seven and of up to $4,000 for a child between the ages of seven and 15.
Since it would be difficult to separate the personal and non-discretionary components of child related expenses, tax assistance is provided to families with children in the form of a benefit, the amount of which is predetermined, rather than in the form of tax credits or deductions for specific expenses.
As the House may know, the government provides considerable financial support to families with children through the Canada child tax benefit, the CCTB. More specifically, the CCTB has two components: the base benefit and the national child benefit. Under the base benefit families currently receive up to $1,020 per child. In addition, supplements of $213 for each child under the age of seven where no child care expenses are claimed and $75 for the third and each subsequent child are added to the base benefit.
Additional assistance is provided to low income families with children under the national child benefit, the NCB.
As of July 1999 NCB benefits are $785 for the first child, $585 for the second and $510 for the third and each subsequent child. Therefore, the maximum CCTB benefit is $1,805 for the first child and $1,605 for each subsequent child.
Over the last few years our government has proven that it is committed to investing the future of our children. In fact, even before the budget was balanced, the government committed $850 million to the Canada child tax benefit to start building the national child benefit in 1997. In the 1998 budget the federal government enriched the NCB by an additional $850 million. The design of this enrichment was set out in the 1999 budget which also proposed an additional investment of $300 million to extend benefit enhancements to modest and middle income families.
Moreover the budget tabled in the House on February 28 contained a five year plan to increase benefits under the Canada child tax benefit by $2.5 billion annually by 2004. That means that the maximum Canada child tax benefit has increased to $2,056 in July 2000 and will reach $2,400 by 2004.
In the three budgets preceding the 2000 budget, the government invested a total of $2 billion a year in the Canada child tax benefit. With the additional investment of $2.5 billion a year proposed in the 2000 budget, by 2004 over $9 billion will be devoted each year to helping families with the cost of raising children.
Before concluding, I also want to emphasize that the significant tax reduction measures proposed in the last four budgets were especially beneficial to families with children. By 2004-05, the measures in these budgets will translate into a 30% reduction in the tax burden for families with children, compared to 22% on average for all Canadians. The measures presented in the 2000 budget alone will mean a 21% reduction in the tax burden for families with children, compared to 15% for all taxpayers.
The five year tax reduction plan announced in budget 2000 proposes to restore full indexation of the personal income tax system. This will protect families against automatic tax increases and erosion in benefits caused by inflation.
In addition, the plan proposes broad based personal income tax reductions. For the first time in 12 years, a reduction in a tax rate is being proposed. The middle tax rate will be reduced from 26% to 23% by 2004. As well, it is proposed that by 2004 the amount Canadians can earn tax free will increase to at least $8,000, while the income levels at which the middle and top tax rates begin to apply will increased to at least $35,000 and $70,000 respectively. It is also proposed that the 5% surtax be eliminated.
In total, the 2000 budget proposes a minimum of $39.5 billion in personal income tax relief for Canadians.
It was announced at that time that the government hoped to accelerate the five year tax reduction plan. Well, the government is now able to guarantee that it will do so.
In conclusion, the government believes that parents should receive financial assistance to help them meet the needs of their children, and we are giving it to them.
However, it would not be appropriate to ask taxpayers at large to subsidize adoption expenses through the tax system because of the largely discretionary nature of these personal expenses. Therefore, I ask that all hon. members not support this bill.