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Statement
to the Department of Finance Consultation Regarding Eligibiltiy for the Disability
Tax Credit (DTC), January 15, 2003
Publish date: January 15, 2003
Author(s): Andrew Jackson
Statement by the Canadian
Labour Congress to the
Department of Finance Consultation
on Eligibility for the Disability Tax Credit (DTC)
le 27 novembre 2003
"The Government of Canada is committed to improving the quality of life for persons with disabilities through its own programs and services, and to working with all partners to make a real difference in the opportunities for people with disabilities to participate fully in society."
Advancing the Inclusion of Persons
with Disabilities.
Government of Canada Policy Paper. December 2002.
"Four times during the past decade, the symbolic importance, visibility and economic value of the tax system for persons with disabilities have collided with the policy and administrative approach of the Department of Finance and the Canada Customs and Revenue Agency. ...Each time Finance and the CCRA tried to restrict eligibility for the DTC. Each time, Parliamentarians responded to the outcry of Canadians ...and emphasized the need for the tax system to deal in a humane and compassionate manner with Canadians with disabilities by improving the policies and administration of the income tax system generally, and the Disability Tax Credit in particular."
Tax Fairness for Persons with Disabilities.
December 2002
Report of the House of Commons Committee on Human Resources Development and
the Status of Persons with Disabilities.
Introduction
In this short submission, the Canadian Labour Congress endorses and expresses its full support for the recommendations regarding eligibility for the Disability Tax Credit which were put forward in the March 2002 report of the House of Commons Standing Committee "Getting it Right for Canadians: The Disability Tax Credit." These recommendations were unanimously endorsed by the full House of Commons in a vote on a motion by the New Democratic Party on November 20, 2002. They are an important interim step to the much wider and more comprehensive policy agenda required to promote full citizenship for persons with disabilities.
This brief puts the DTC in a wider policy context, but speaks narrowly to the issue of eligibility which is the subject of the current Department of Finance consultation.
Disability and Workers
Recent evidence (for 2001, from the Participation and Activity Limitation Survey) shows that 1 in 10 working-age Canadians have a disability, with disability rates being somewhat higher for women than for men, and much higher among some marginalized groups, notably Aboriginal Canadians.
More than 1 in 6 older workers (persons aged 45 to 64) have a disability, partly because of health risks due to age alone, and partly due to accumulated lifetime exposure to unhealthy working conditions. Many older workers have suffered physical injuries, or experience chronic pain arising from work. Rising levels of workplace stress and increased workloads are a major factor in high levels of chronic disease and mental illness among older workers.
One in three adults with a disability — 1.4 million adults in 2001 — reported experiencing severe or very severe activity limitations in 2001. This is three times the number of persons qualifying for the Disability Tax Credit. This fact alone suggests that eligibility criteria for the DTC are highly restrictive.
Roughly half of all persons with disabilities experience continuing, long-term disability, while many more Canadians experience temporary disability, often as the result of workplace injuries or workplace conditions.
The evidence shows, not surprisingly, that working-age persons with long-term and severe disabilities are much less likely to be employed or to hold down full-time, full-year employment than other Canadians. Clearly, some disabilities preclude regular paid employment. However, 40% of all adults with disabilities are employed all year (compared to 62% of persons without disabilities), and employment rates are even higher among persons with disabilities with higher levels of education. While serious disability is a major barrier to employment in stable jobs at decent wages, lack of accommodation in the workplace and discrimination also account for much lower than average levels of employment of persons with disabilities in decent jobs.
Persons with serious and long-term disabilities are at extremely high risk of poverty because of low earnings and inadequate income support programs. Fully two-thirds of adults with long-term disabilities live in poverty (and it should be borne in mind that some such persons have working spouses whose incomes protect them from poverty). High poverty rates reflect the gross inadequacy of social assistance incomes in all provinces, inadequate private insurance coverage, and the weaknesses of Canada's major income support programs for workers with disabilities (Workers Compensation and CPP/QPP disability benefits).
The Labour Movement and Disability Issues
The Canadian Labour Congress (CLC) is the major national voice for more than 2.5 million unionized workers. We have had a long-standing interest in disability issues, not least because many of our members and their families have some experience with disability over the course of their working lives or in retirement. The goal of full citizenship and full recognition of the human rights of persons with disabilities is central to our vision of a democratic, inclusive and equal society.
While working-age persons with disabilities are greatly under-represented in the workforce, the unionization rate for the minority of workers with disabilities who work on a full-time, full-year basis is about the same as for the workforce as a whole. Increasingly, workers with disabilities are actively involved in the labour movement.
Member unions of the CLC have sought to advance the interests of workers with disabilities through collective bargaining. Most unionized workers enjoy some protection against loss of income through long-term disability plans. Accommodation of the special needs of workers with disabilities, including measures to facilitate the return of injured workers to the job, has been a long-standing focus of concern in bargaining. The labour movement has also been a strong supporter of employment equity programs for persons with disabilities.
The CLC and our member unions have also been major advocates of progressive reforms to income security programs of particular concern to persons with disabilities — Workers Compensation programs for workers injured on the job, disability benefits under the Canada/Quebec Pension Plan, provincial social assistance programs, and Employment Insurance.
Not least, the CLC has been and remains a major advocate of the development of not-for-profit, community-based supports and services for persons with disabilities, which are essential to full inclusion in society and, where appropriate, in the workplace.
Recently, the CLC has established a national working group on workers with disabilities, and has ensured that workers with disabilities have direct representation on the CLC Executive Council.
It is important to underline that the labour movement's vision of full inclusion of persons with disabilities will only be accomplished through renewed efforts on our own part in bargaining, and through major changes to many government policies and programs.
While this consultation is narrowly focussed on eligibility for the Disability Tax Credit, it has to be underlined that this is not the only needed policy instrument to secure inclusion and social justice.
The Disability Tax Credit
It is important to be clear about the purposes of the Disability Tax Credit
as a context for defining eligibility.
One key purpose of the DTC, as highlighted and recognized by the Department of Finance, is to establish ‘horizontal equity' between taxpayers by recognizing that persons with disabilities face significantly higher living and employment costs than do persons without disabilities. As such, the same dollar income in the hands of a person with a disability translates into a lower real ability to buy goods and services.
From this perspective, the DTC is (at a maximum value of just under $1,000) far too low, and should be raised to reflect the actual costs of supports and services.
We endorse the criticisms of disability organizations and Parliamentarians that eligibility of the DTC are far too restrictive, and support the key recommendations of the Standing Committee on Human Resources Development and the Status of Persons with Disabilities (March 2002 and December 2002) as important interim measures.
As a long-term principle, we believe that all costs associated with a person's disability should be treated as a collective cost to society. It is the responsibility of society as a whole to ensure the full participation of persons with disabilities through the provision of supports and services, accommodation of specific needs in the workplace and in the community, and through the offsetting of out-of-pocket costs incurred by individuals. This means that all out-of-pocket costs should be recognized for tax purposes. Making the Disability Tax Credit refundable would ensure that payment is made to persons with very low taxable incomes, who fail to benefit from the current credit.
A second, more potential than actual, role for the DTC is to provide an income supplement for persons with disabilities. The case for a significant enhancement of the DTC, and making the credit refundable (i.e. available to persons with disabilities with very low or no taxable income) has been strongly advanced by disability groups and social policy advocates such as the Canadian Council on Social Development and the Caledon Institute for Social Policy. The House of Commons Sub-Committee on Persons with Disabilities has recognized the potential importance of the DTC as a basic building block for income security for persons with disabilities.
The current approach of the Department of Finance ignores this dimension of the issue, and is at odds with the broad thrust of federal government social policy.
The case for an income supplement for persons with disabilities is twofold. First, as noted, many persons with disabilities live in deep and continuing poverty because of the gross inadequacy of provincial social assistance benefits and very restrictive eligibility criteria for the CPP disability benefit (which effectively requires that applicants be almost completely unable to work).
Second, many persons with disabilities fail to qualify for CPP or social assistance disability benefits because they can and do participate in paid work, but are able to obtain only very precarious and low paid employment. Such persons are excluded from income support programs, but are also excluded from decent jobs because of serious disability, workplace barriers, discrimination, as well as general barriers to decent employment. What such workers with disabilities need to achieve some measure of income security is a supplement to inadequate wages.
It is perverse that recent key government social policy documents such as the joint federal-provincial-territorial report In Unison stress the desirability of inclusion of persons with disabilities in the workplace when government income support programs effectively exclude persons with disabilities once they enter the workforce. To be sure, inclusion in the workforce demands investment in community and workplace supports and services. But it remains and will long remain the case that many workers with disabilities are much more likely to find only low wage and insecure jobs on account of their disability.
In short, income supplementation has a role to play in fostering inclusion, along with major investments in workplace and community supports and services. This should be explicitly recognized by the Department of Finance as a policy objective of the DTC.
Eligibility for the Disability Tax Credit
The eligibility criteria for the DTC are far too restrictive, and interpreted far too restrictively, to accomplish either of the two above purposes.
The fact that the eligibility criteria for the DTC are excessively and, indeed, harshly restrictive has been accepted by the Federal Court of Appeal and by all parties in the House of Commons. Outrageously, the Department of Finance introduced amendments to nullify a less restrictive definition in the wake of the Federal Court decision to recognize the costs of dealing with a serious food allergy. While the amendments have been temporarily withdrawn, it speaks volumes regarding the attitude of the Department that the amendments were proposed in direct contradiction to the thrust of recommendations from the Committee.
The Department has narrowly and obsessively concentrated on reducing the costs of a small and inadequate program and ignored human rights and broadly supported social and employment policy goals. In 2000, the Department of Finance and the Canada Customs and Revenue Agency (which is responsible for the administration of the credit) required 106,000 existing DTC beneficiaries to re-apply for benefits (one-third of whom were denied continuation until the process was suspended) despite the fact that full and complete applications by medical practitioners and other professionals were on file. As noted by the Committee, this is part and parcel of a long-term trend. In their words, there has been "an unacceptable lack of action" on recommendations from Parliamentarians dating back to at least 1993, and the Department of Finance and the Canadian Customs and Revenue Agency have continuously tried to restrict eligibility for the credit rather than "deal in a humane and compassionate manner with the real life circumstances of Canadians with disabilities." The Department of Finance, in particular, has imposed administrative criteria which are significantly more restrictive than those required by the language of the Income Tax Act.
The policy intent embodied in legislation is that the credit should be available only to persons with "severe and prolonged mental or physical disability, the effects of which markedly restrict the ability to perform a basic activity of daily living." The focus on "severe and prolonged" disability ignores the fact that persons with less severe and temporary but recurrent disabilities can face much higher living costs than other Canadians. This focus also ignores the fact that severe disability may not necessarily be prolonged, but can be recurrent. This is the case, for example, with multiple sclerosis and many forms of mental illness.
The stress on "severe and prolonged disability" — unless generously interpreted — serves to exclude many persons with disabilities. As recommended by the Committee, the definition of "prolonged" should include persons who have long-term but episodically serious conditions.
It is abundantly clear that administrative criteria for review of DTC applications, set by the Department of Finance, are much more stringent than is required by the Act. To take several examples:
A person is not considered to be hard of hearing or to have a speech impairment if they can hear (or speak to) a person that they are familiar with in a quiet room — hardly the norm for people who work or are engaged in the community.
A person is not considered to be unable to walk unless they are unable to walk more than 90% ("all or substantially all") of the time, so a person who can walk limited distances with difficulty is rendered ineligible.
Similarly, a person with a mental illness is not considered to have an eligible claim unless they cannot "perceive, think or remember" more than 90% of the time.
Difficulty in breathing is not considered a disability.
There is no allowance for multiple conditions which cumulatively result in a serious disability, even if each individual condition is ineligible.
As noted by the Committee, the heavy focus on extremely severe, long-term disabilities places medical practitioners and other professionals who must certify eligibility in an impossible position. They know that individuals face major and costly difficulties in daily living, even if they fall outside the narrow administrative guidelines.
Recommendations
As interim measures, the CLC is pleased to endorse the key points regarding eligibility for the DTC, as presented in the report "Getting it Right for Canadians: The Disability Tax Credit" (March 2002) which were endorsed unanimously by the House of Commons. These recommendations would require only limited amendments and changes to guidelines to address the issues briefly identified above.
The CLC is supportive of the basic direction for change suggested by the Federal Court of Appeal that is to make eligible all persons who must spend an inordinate amount of time engaged in the basic activities of daily living.
In addition, we strongly support the call by the House of Commons Committee for a comprehensive review of the Disability Tax Credit, to be undertaken with the full participation of organizations representing persons with disabilities.
The CLC supports expansion of funding for the Disability Tax Credit so as to widen eligibility and allow for proper recognition of the costs of disability.