by Gail Fawcett and Richard Shillington

The treatment of people with disabilities has emerged again as a topical policy issue with the establishment of a task force on disability by the federal government. The task force is investigating issues concerning the economic security of persons with disabilities in particular, the effects of income support programs and the tax system. In this issue of Insight, we highlight some findings from the tax data, and from a forthcoming book by Gail Fawcett on the economic circumstances of Canadians with disabilities which will be published later in 1996 by the Office for Disability Issues at Human Resources Development Canada.

Income support programs for persons with disabilities

Income support programs for persons with disabilities often have arbitrary eligibility rules and provide uneven levels of support. These programs include social assistance, CPP/QPP Disability Benefits, Workers' Compensation, and private and employer disability insurance benefits, both short-term and long-term. Some of the program benefits are taxable, others are not. Eligibility for these programs depends upon a person's age, their work history and how they acquired their disability.

Poverty rates vary markedly among persons with disabilities who rely on these different income support programs. Two-thirds of those who rely on social assistance live in poverty. Because of insufficient work histories, these individuals are often not eligible for CPP/QPP or Workers' Compensation benefits. Those with access to CPP/QPP Disability Benefits are somewhat better off, but still more than one-quarter are poor. About 14% of those receiving Workers' Compensation available only to people whose disability was caused on the job are poor (which is comparable to the poverty rate of the general population).

Employment for Persons with Disabilities

Table 1: Labour force participation rates of persons aged 15-64 with and without disabilities, 1991

Without disabilities	80.9%
With disabilities	56.3%
Mild disability	70.9%
Moderate disability	44.8%
Severe disability	25.6%

Employment is certainly an important factor in alleviating poverty for persons with or without disabilities. Yet employment is often problematic when an unaccommodating work environment turns a personal disability into an employment handicap. The labour force participation rate for all working-age persons with disabilities is lower than that of the general population (Table 1). Not surprisingly, the participation rates ares lowest for persons with moderate and severe disabilities. These data demonstrate that there is room for improvement in the employment of persons with disabilities which would, in turn, increase their self-reliance and their economic security.

Figure 1 illustrates that persons with and without disabilities who have higher levels of education are more likely to participate in the labour force. The negative impact of disability on labour force participation is greatest for those with the least education. Both these factors suggest that education is an important way to minimize the employment disadvantages that can result from having a disability.

Does the tax system help?

The disability tax credit and the credit for allowable medical expenses are two important measures designed to provide income tax relief to persons with disabilities. These non-refundable credits reduce the amount of income taxes paid and they are transferable to supporting family members. These measures, referred to as tax expenditures, reduce annual federal and provincial government revenues collected by about three-quarters of a billion dollars (Finance, 1995). They are sometimes criticized because they are of no benefit to persons with disabilities who do not have taxable income.

Only 2.3 per cent of taxfilers claim the disability tax credit far below the 18% of the population with disabilities. The rate of claim is somewhat higher for lower-income groups (Figure 2). The Department of Finance estimates that one-third of persons with severe disabilities get no value from the disability tax credit.

The pattern of take-up rates by income is similar for the medical expense claim (see Figure 3). Lower- income taxfilers are slightly more likely to claim medical expenses, and overall, about 6% of taxfilers use this credit. It is worth noting that the amounts claimed increase substantially as income rises. This pattern suggests that lower-income persons with disabilities may not be getting equal access to this tax credit, either because they do not have the cash to spend on medical expenses in the first place, or because they do not have access to sophisticated tax advice on the availability of this credit or how to claim it.

Gail Fawcett is a research associate with the Centre for International Statistics at the CCSD. Dr Fawcett has a PhD in sociology and specializes in statistical analysis and disability issues.
 
Richard Shillington is the Centre for International Statistics' senior research associate. Dr. Shillington has a PhD in statistics. He has worked for several commissions investigating social policy questions and issues of taxation.

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