The RSM Canada National Tax Centre is pleased to present a five-part series on the role of taxation in promoting economic gender equity. This series focuses on consideration of gender bias in taxation and its potential impact on both individuals and the economy, highlighting key challenges amid the COVID-19 pandemic, the path forward, and what we as tax practitioners can do to assess and check our own gender biases in the tax system.
Until recently, the federal government established economic policies and budgetary measures in a relatively gender-blind fashion—resulting in gender inequity in fiscal policy, including taxation.
For example, according to 2019 statistics from the Canadian Centre for Policy Alternatives, the five largest tax breaks that benefit men most are the employee stock option deduction, foreign tax credit for individuals, spouse or common law partner credit, registered retirement saving plans and pension income splitting.
On the other hand, the five largest tax breaks benefiting women most are the eligible dependant credit, child care expense deduction, medical expense tax credit, pension income credit and age credit.
Significantly, the top tax breaks that predominantly benefit men are potentially much more valuable than those predominantly benefiting women.
To help address this type of inequity in fiscal policy, the government passed the Canadian Gender Budgeting Act in 2018, with the goal of expanding gender-based analysis to the government’s budgetary and financial management processes—including decisions regarding tax expenditures and the federal spending base.
The government went on to include key diversity measures and apply gender-based analysis in its development of recent federal budgets. The 2021 budget, for example, included three significant provisions: expansion of early learning and affordable child care, support for women entrepreneurs, and creation of the Task Force on Women in the Economy.
More affordable child care and increased investment in early learning is one of the most significant 2021 initiatives, totaling up to $30 billion over the next five years, with a potentially significant payoff: greater flexibility for working mothers and more support for women seeking to re-enter the workforce.
In recognition of the pandemic’s disproportionate effect on women and the systemic barriers they face in pursuing business ownership, the 2021 budget also proposed increased funding for the Women Entrepreneurship Strategy, a program designed to improve women’s access to financing, mentorship and training in starting and growing a business.
Finally, the 2021 budget created a Task Force on Women in the Economy to advise the government on policies and measures to address women’s employment and other gender equity issues. The task force will continue to provide feedback on future budget measures to support an inclusive, equitable economic recovery as we move into the endemic phase of COVID-19.
In summary, the government has come to recognize that gender equity and workplace diversity are fundamental to a thriving economy. Recent budgets have proved the government’s commitment to fairness in fiscal policy by introducing infrastructure needed to promote gender equity, such as improved access to child care and additional resources for female entrepreneurs.