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Kathleen A. Lahey
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If anyone needed proof that seemingly neutral proposals can have devastatingly different impacts on women and men, New Brunswick now has a case in point. An analysis of the New Brunswick government's proposed tax review - the first such study of a major prospective tax policy document in Canada, using Statistics Canada's Social Policy and Simulation Database and Model and other resources - illustrates how the sexes still live in very different social, economic, and political worlds.

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A group of about 75 landlords and tenants protest against inequity in the property tax system. Professor Kathleen Lahey says the provincial government’s proposed tax reforms will create new inequities, by giving men tax breaks at the expense of women.

Earlier this summer, the New Brunswick government proposed a review of taxation with two objectives, to "leave more money to taxpayers" and "to make the province more attractive for business, investment and people." The New Brunswick proposals would reduce personal income taxes, either through a 10 per cent flat tax rate or a two-rate structure at 9 per cent and 12 per cent and reduce corporate income tax from the current 13 per cent to either 10 per cent, 7 per cent or 5 per cent. It would increase the HST by 2 per cent and introduce a carbon tax on fuels. Finally, it would introduce a non-refundable universal child tax credit of up to $400 per child, as well as a universal child care taxable benefit of $50 per month per child and increase the personal exemptions for taxpayer and spouse to $12,000.

Women in New Brunswick, like elsewhere in Canada, have substantially smaller incomes, heavier workloads and limited access to critical resources. The government in New Brunswick, like elsewhere, has heavy obligations to eliminate remaining areas of disadvantage faced by women. So the question asked in conducting a gender impact analysis of these proposals, was whether each one would at least maintain existing areas of gender progressivity, or could help eliminate remaining areas of gender regressivity. The gender impact analysis shows that the tax review proposals would widen the existing gender gap between women's and men's total incomes, taxable incomes and aftertax incomes and seriously destabilize the tax base and reduce government's capacity to address core needs to support women's economic development, like child care resources, especially when combined with large non-targetted spending proposals for higher income people.

The New Brunswick proposals would increase the fiscal barriers to women's paid work and personal savings, and give expensive tax benefits to single-income couples - both effects that would undercut women's economic autonomy.

The problem arises not just out of the cuts for higher income taxpayers, nor out of the increase to HST, but out of the interaction between these two proposals. It slices 28 per cent of the personal income tax load off at the highest income levels, replaces only two-thirds of that lost revenue, and replaces it with the most regressive type of tax. It will dramatically reduce the tax load on high-income New Brunswickers, who are predominantly male. This will make it more difficult in the future for women to move toward economic equality.

The tax and transfer systems in New Brunswick currently provide a slight degree of redistribution: women are able to keep a slightly larger percentage of their total income after taxes than men do, though in early earning years and in retirement years, the system remains gender regressive, redistributing significant amounts of pre-tax incomes from women to men.

In New Brunswick in 2005, 41 per cent of N.B. women and 27 per cent of men who filed income tax returns had no tax liability at all, so many of the government's proposals would not benefit them.

The government's proposal of a 10-per-cent flat personal income tax would have virtually no impact on people currently taxed at 10.12 per cent, but it would give everyone with taxable incomes greater than $34,800 cuts of between 5 per cent and 8 per cent. It would increase women's average aftertax income only slightly, but increase men's quite dramatically. The gender gap in the increase in aftertax income with the flat-tax option is 37 per cent; with the two-rate tax option, it is 60 per cent.

An increase of the personal exemptions to $12,000 would add to the invisible barriers to women's paid work, because the larger the tax-free zone for a high-income single-income couple, the more income the wife/partner will have to earn in order to financially justify paid work, since she is depriving her partner of a valuable tax credit. Such credits benefit those who earn single incomes large enough to support the whole family and are not available for couples where both work out of necessity, not choice. Only if it were made refundable would it be of use to those who have no provincial income tax liability.

The expensive new non-refundable child tax credit would be more fully available to male taxpayers, and if the personal exemption were also increased, even single mothers would be highly unlikely to benefit from the child tax credit. Only if it were a fully refundable tax credit, preferably integrated into the federal child tax benefit and based on the individual income of the parent with the lowest income, might this proposal avoid becoming a barrier to women's paid work.

Similarly, a proposed monthly grant of $50 per child would also have a strong negative impact on women. It would be costly and still not improve access to full-time regulated child care. It becomes a luxury payment to parents who can live on one income.

The proposed increase in the HST would fall more heavily on those with the lowest incomes - the same group that will not be receiving any benefits from tax rate cuts or from increases in tax credits and exemptions, and will be exposed to carbon taxes and the inflationary effects of those taxes. Women, having lower incomes, spend a greater portion on HST-taxable goods and services. The HST would account for an increasing share of government revenue and would make it more difficult for women to close the gender gap in aftertax income.

If governments want to ensure that at the very least, they "do no harm" to women or to the current level of equality, they must conduct gendered analysis of the whole tax and spending system. Were that done, government proposals would often look very different.

Kathleen A. Lahey is professor in the faculty of law at Queen's University, Kingston, On. Professor Lahey's research, What About Women? Gender Analysis Of Discussion Paper On New Brunswick's Tax System, is available online at www.acswcccf.nb.ca/english/documents/What per cent20About per cent20Women.pdf