Madam Speaker, the private member's bill proposed by the member for Prince George—Peace River proposes to allow taxpayers to deduct expenses related to the adoption of a child, to a maximum of $7,000.
Let me first explain that a basic principle of our income tax system is that tax relief is not generally provided for personal expenses such as adoption costs.
The government is aware that parents adopting a child incur relatively high costs, but 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.
In fact, the better a taxpayer's socioeconomic situation, the more likely he is to incur greater and more varied personal expenses. If these expenses were deductible, a fraction of the personal expenses incurred by certain taxpayers would be paid for by all taxpayers.
Where tax relief is provided for personal expenses, it applies either to expenses incurred to earn income, such as child care expenses, union dues and moving expenses incurred to take employment at a new location, or to largely non-discretionary expenses such as above average 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.
Up to $7,000 annually can be deducted for expenses incurred for the care of a child under the age of seven, and $4,000 for a child between the ages of seven and fifteen. The ceiling for children who qualify for the disability deduction is $10,000.
Because it would be very difficult to separate the personal and non-discretionary elements of the costs associated to children, tax assistance is provided to families with children through a predetermined benefit rather than through tax credits or deductions for specific expenses.
The government provides considerable financial support to families with children through the Canada child tax benefit, the CCTB. More specifically, the Canada child tax benefit has two components: the base benefit for low and middle income families and a national child benefit supplement for low income families.
As of July 1, 2001, families will receive up to $1,117 per child under the base benefit. In addition, supplements of $221 for each child under the age of seven where no child care expenses are claimed and of $78 for the third and each subsequent child are added to the base benefit.
The maximum national child benefit supplement as of July 2001 will be $1,255 for the first child, $1,055 for the second and $980 for the third and each subsequent child. Therefore, the maximum Canada child tax benefit will be $2,372 for the first child, $2,172 for the second child and $2,097 for each subsequent child.
Our government has proven that it is committed to investing in 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 NCB in 1997. In the 1998 budget, the federal government enriched the national child benefit 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. The 2000 budget and the 2000 economic statement and budget update enriched benefits by an additional $2.6 billion.
As a result of these actions, maximum Canada child tax benefits will rise to more than $2,500 for the first child by the year 2004. By 2004 this will bring the federal government's commitment to the Canada child tax benefit to $9 billion per year.
As members know, improvements to the CCTB were an important part of the general tax cuts for individuals proposed in the 2000 budget and in the economic statement and budget update for 2000.
Families will also benefit from the following measures: the reduction in tax rates for all income levels; the elimination of the deficit reduction surtax; the increases in the amount they can earn tax free and the amounts at which higher tax rates apply; the restoration of the full indexation of the personal income tax system, which will protect families against automatic tax increases and the erosion of benefits, including the Canada child tax benefit, caused by inflation.
In total the 2000 budget and the 2000 economic statement and budget update will provide $100 billion in cumulative tax relief for Canadians by the year 2004-05.
I would like to emphasize that these cuts were especially beneficial to families with children. By the year 2004-05 these measures will translate into a 27% reduction in the tax burden for families with children, compared to 21% on average for all taxpayers.
Before concluding, I would like to add that measures were announced in the 2000 budget to improve the parental leave provisions under the EI plan.
The budget proposed to increase the number of weeks of parental leave from 10 to 35. It also proposed changes to make benefits more flexible and accessible. These improved benefits are also available to parents who adopt a child effective December 31, 2000.
In conclusion, the government recognizes that parents should receive financial assistance to help ensure that their children's needs are met. I believe I have clearly demonstrated that the government places a very high priority on investing in children and is providing the assistance they need.
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.
For these reasons I would ask hon. members not to support the bill.