Government transfers make a difference to female lone-parent families.

OTTAWA -- After tax family income rose for the fifth straight year mostly due to higher government transfers and lower personal income taxes. Female lone-parent families recorded one of the largest increases in after-tax income in 2001 with a boost of 4.6 per cent to $31,200 yearly says a report from Statistics Canada.

Average government transfers paid to families rose to 3.3 per cent halting four straight years of decline while at the same time the average amount families paid in income tax fell by 8.2 per cent.

The report, based on data from two household surveys, The Survey of Labour and Income Dynamics and the Survey of Consumer Finances, includes figures adjusted for inflation and all income estimates are expressed in 2001 dollars.

Average after-tax income for families in 2001 increased for all families in every province, except for Nova Scotia and Prince Edward Island with no province showing a significant decline. All provinces posted declines of 3 per cent or more in average income taxes paid by families with the largest declines occurring in British Columbia and Prince Edward Island, where average income taxes paid by families fell 13 per cent.

For the first time since the 1980's the proportion of total income, which is market income plus government transfers going to taxes dropped below 19 per cent to 18.1 per cent. This was also down from 19.9 per cent in 2000.

Further, the average market income of families of two people or more rose marginally to 0.8 per cent in 2001 to $63,700 from four years of robust growth, including a 4.5 per cent increase in 2000. The report indicates that this decline in growth is largely the result of weakening labour market conditions during the year.

However, the average market income for female lone-parent families, unlike that of most other families, continued an upward trend in 2001 with a 5.7 per cent increase compared to an average annual growth of 7.9 per cent between 1996 and 2001.

This continued increase was primarily attributed to a higher labour force participation by female lone-parents resulting in about 82 per cent of those families having income in 2001 compared with only 65 per cent having earnings in 1996.

As well, the low income rate among children under 18 years of age, and based on after-tax income, declined for the fifth straight year in 2001 while an estimated 786,000 children or 11.4 per cent lived in low-income families. This was down from 12.2 per cent in 2000.

Since 1980, the earliest year for which comparable data are available, the low-income rate among children in 2001 was the lowest while the proportion of children living in after-tax low-income families has continued to declined since 1996 when it peaked at 16.7 percent.