Education Funding

Canadians Debate Education Tax Credits

By Karla Scoon Reid — November 14, 2001 7 min read
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Ontario lawmakers have enacted the largest and least restrictive education tax- credit plan in North America for parents whose children attend independent schools.

But the Progressive Conservative government’s tax-credit plan blindsided Canadian education observers, and what began as a quest for fairness in the funding of the province’s religious schools evolved into a debate about school choice and public school reform.

If the Liberal Party, which is gaining significant voter support, wrests control of the Ontario government the next time elections are called, its leaders have vowed to repeal the measure. Even though Mike Harris, the premier of the Conservative provincial government, announced last month that he would resign as the party’s leader, those vying to replace him claim they are committed to the current plan.

Ontario’s plan, when fully implemented in 2006, would provide tax credits of up to $3,500 annually for each child. Minnesota currently offers the largest state tax deductions for parents who send their children to private schools—up to $2,500 a year.

The debate that raged around the tax-credit plan in Ontario, worth some $300 million to taxpayers in Canadian dollars, echoes policy disputes here in the United States.

“If we can afford to spend maybe more than $300 million, then we should be spending it on the public education system,” said Annie Kidder, a spokeswoman for the Toronto-based People for Education, a nonprofit parent organization that supports Ontario’s public schools.

Countered Claudia R. Hepburn, the director of education policy at the Fraser Institute, a conservative think tank in Vancouver, British Columbia: The tax-credit plan “is going to spur public schools to stop bickering among themselves and focus on serving parents rather than fighting the government.”

Even with its rhetorical similarities to the school choice controversies in its neighboring country, there is a distinctly Canadian twist to this tale.

In Ontario, independent schools are private secular schools and non-Catholic religious schools, while the Roman Catholic school system is publicly financed. Catholic schools enroll 670,000 students in Ontario, Canada’s most populous province, which stretches along the Great Lakes.

For Ontarians who send their children to independent religious schools, the tax credit is the first successful step in a decades-long battle to achieve equality in the classroom.

“You can’t have a just society that discriminates among religions,” said Ed Morgan, the chairman of the Ontario region of the Canadian Jewish Congress.

Historical Anomaly?

Publicly subsidized Catholic schools are a guaranteed right established in the 1867 British North America Act. In the act, the two founding nations of Canada—England and France—struck a compromise to ensure that the denominational rights to education of English-speaking Protestants and French-speaking Catholics would be protected by paying for the education system for both with taxpayer funds.

But as Ontario became religiously more diverse over the past 40 years and legal challenges curtailed religious teaching in the classroom, the English Protestant public school system evolved into a secular one.

Over the same time, the argument by non-Catholic Christian, Muslim, and Jewish school advocates emerged: Why should the provincial government pay for the Roman Catholic system and not other religious schools? The United Nations Human Rights Committee agreed, ruling in 1999 that Canada was violating the International Covenant on Civil and Political Rights.

But in Ontario’s capital city of Toronto, provincial-government leaders, including Janet Ecker, the minister of education, remained solidly behind the publicly financed secular and Catholic schools. Officials contended that an expansion of funding to other schools would be harmful to the system.

“It’s better to treat the Catholic arrangement as a regrettable historical anomaly rather than a precedent,” argued A. Alan Borovoy, the general counsel of the Canadian Civil Liberties Association.

‘Supporting Choice’

What led up to the provincial government’s about-face is unclear. In May, Minister of Finance Jim Flaherty unveiled the province’s budget, which included the tax-credit plan. Conservatives, who hold a majority in the legislature, easily pushed the plan into law in June.

Reaping the benefits of the tax credit will be the families of the more than 102,000 Ontario children who attended independent schools last year, according to the Edmonton, Alberta-based Federation of Independent Schools in Canada. Ontario’s independent school enrollment has increased by 34 percent in the past decade. The province enrolled 2.1 million children in its public schools, including those in the Catholic school system, in 2000.

Parents are eligible for the tax credit for independent schooling regardless of their income levels or whether they even earn enough to pay taxes. Every child can receive the credit, and there is no family limit. In this, its first year of implementation, the maximum tax credit is $700 for each eligible child, but that is set to climb to a maximum of $3,500 in 2006.

Government officials insist that the tax-credit plan was not a response to the U.N. panel’s ruling or the campaign for religious equality in education. Sue Craig, a spokeswoman for the Ministry of Finance, stressed that the Ministry of Finance is footing the cost, and that the tax credit is not an education initiative. “It’s about supporting choice,” she declared.

Using public dollars for independent schools is a decades-old practice in several of Canada’s 10 provinces, said Gary Duthler, the executive director of the Federation of Independent Schools in Canada. Alberta, British Columbia, and Manitoba, for example, provide direct grants to the independent schools. Saskatchewan supports a handful of independent high schools.

Still, the government’s stunning tax-credit-plan announcement set off a campaign by Liberal politicians, teachers’ unions, and other public school organizations to derail the proposal.

Dalton McGuinty, the Liberal government leader in Ontario, argued the Conservatives were attempting to cloak the tax-credit plan in the “guise of equity.”

“It’s about further undermining support for public education,” he charged.

Since the Conservatives and Mr. Harris came to power in 1995, many critics have claimed the government was “manufacturing a crisis” to devalue public education.

Support for public schools in Ontario appears to be waning. According to the latest Ontario Institute for Studies in Education/University of Toronto poll, 44 percent of Ontarians are satisfied with the school system—down from a high of 55 percent in 1982.

Catholic schools, meanwhile, support government funding for other faith-based schools, according to John Stunt, the executive director of the Ontario Catholic School Trustees Association in Toronto. But Mr. Stunt said the association opposes the tax credit because it could erode financial support for the publicly financed school system, including Catholic schools. Catholic schools, he pointed out, pay a price for the government subsidies: They must adhere to academic and financial-accountability measures—something the independent schools will escape because the tax credits go directly to parents.

“It has the same effect as an American voucher,” said Liz Sandals, the president of the Ontario school boards’ association. “It appears the government has no intention of attaching strings.”

Isolating Children

Tax-credit critics also argue that funding all religious schools will lead to isolation by dividing children along religious and ethnic lines.

“I would have thought that the wisest public policy would be to shore up wherever we can those institutions that promote a more viable integrated community,” said Mr. Borovoy of the civil liberties association.

But John W. Vanasselt, the director of communications for the Ontario Alliance of Christian Schools, said Mr. Borovoy’s argument assumes that public schools are the only place where children can learn about social harmony.

The dire prediction that the tax credits would lead many students to abandon Ontario’s public schools for independent schools has not been realized. In fact, a month before the plan became law, most independent schools were at capacity, said D. Elaine Hopkins, the executive director of the Ontario Federation of Independent Schools.

The tax credits could indirectly prompt independent schools to raise tuition, which ranges from $6,500 to $12,000, to increase teachers’ salaries, recognizing that parents will be receiving additional financial assistance, said Mr. Duthler of the Federation of Independent Schools.

The overall benefit, however, could be the introduction of “healthy competition” that would improve both public and independent schools, Ms. Hopkins added.

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A version of this article appeared in the November 14, 2001 edition of Education Week as Canadians Debate Education Tax Credits


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