Liberals promise study of discrimination against single-income families
Jumping on a gaffe by a junior minister in the federal government, the Reform Party brought the issue of tax inequities between dual-income and single-income families to the centre of political attention recently.
During what should have been a routine response during question period, Jim Peterson, the secretary of state for finance, put his foot in his mouth by implying that families which have one parent stay at home to take care of their children work only half as hard as families in which both parents work outside the home. He also claimed that dual-income families incurred twice the work-related expenses.
Peterson was defending the lavish tax deduction for child care expenses that benefits dual-income families. Such families can get a tax refund of up to $7,000 for a child under seven. Currently, a single-income family of four making $60,000 will pay $9,589 in federal taxes. A dual-income family of four with the same income would pay only $5,790 – a difference of $3,799.
Opposition members quickly came to the defence of stay-at-home parents and called for equitable tax treatment. Reform MP Dick Harris (Prince George-Bulkley Valley) told the House of Commons that the current taxation policy “charges (stay-at-home parents) for the sacrifice they make to stay home to look after their families.” Reform revenue critic Jason Kenney (Calgary Southeast) said the policy “tells stay-at-home parents they are second-class citizens.”
A Reform motion would have had the federal government admit it discriminates in tax policy and promise to do something about it. The exact wording of the motion was “That, in the opinion of this House, the federal tax system should be reformed to end discrimination against single-income families with children.”
To remedy the inequity, Reform proposed changing the non-refundable tax deduction to a refundable tax credit which would give money back to families regardless of how much tax they pay. This would lessen the tax burden for every family with children and would even put money in the hands of low-income families with children, whether or not a parent stayed at home.
Reform’s motion was supported by every opposition MP, but attracted the vote of only a single Liberal MP and was therefore defeated 145-123. According to the March 10 National Post, “All Liberal MPs were ordered to be in the Commons to vote against the opposition.” As a compromise, the government promised to examine the issue in a newly created Commons finance committee.
Jason Kenney told The Interim that Reform worked with the other opposition parties to gain their support. “We were seeking an admission that there is a problem in the way families are taxed,” he said.
The Liberals also had to defend the indefensible at the United Nations recently, where Calgary homemaker Beverley Smith is arguing that Canadian tax, divorce and child care laws discriminate against stay-at-home parents. In its brief to the UN body hearing the complaint, the federal government argued that, “Any new measure targeted only at parents who stay home to provide care for their children would only reinforce barriers to employment by reducing the incentive to engage in paid work.”
Critics say that, in effect, the government is admitting it would prefer to have both parents work outside the home. According to government statistics, in 1997 about one in five Canadian families with a child under 16 years of age had a stay-at-home parent. In 1977, about half of all such families had a parent at home.
Fry argument ‘complete bunk’
Hedy Fry, the secretary of state for the status of women, defended the current deduction, claiming that dual-income families actually have twice the expenses of single-income families. She added insult to injury when she appeared to imply that women who work outside of the home must return to clean the house and make dinner, while stay-at-home moms take it easy in the evening. Fry also attacked the Reform Party for “trying to keep women barefoot and pregnant.”
Kenney said Fry’s comments reflect a “disgusting, demeaning view of stay-at-home parents,” based on “negative, prejudicial stereotypes.” He said that parents who stay at home still have houses to clean and dinners to cook. He also noted an increase in the number of men staying home to care full-time for their children.
According to the March 9 Toronto Star, Fry said there should be tax relief for dual-income families because after the added expenses related to working outside the home (child care, clothes, travel, hiring cleaning help) and considering programs designed to help families in which one parent stays at home (the spousal deduction), dual-income families have less income than families in which one parent stays at home. The minister claims a dual-income family making $60,000 pays $4,400 more than a single-income family making $60,000.
Kenney said the minister’s argument is “complete bunk.” By bringing in all these other costs, Fry is trying to get the issue away from fair taxation and toward total income and standard of living. Furthermore, she ignores the tremendous “opportunity cost” of having a parent stay at home. For example, the average woman in the workforce earns $30,000, but Fry doesn’t take into account income forsaken.
