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Mintz Op-Ed: Give Terror Victims Tax Deduction

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National post

By Jack Mintz

Jack Mintz is the former Predident and CEO of C.D. Howe. He is Professor of Business Economics, J. L. Rotman School of Management, University of Toronto and Visiting Professor, New York University Law School

Recently, I had an opportunity to revisit the site of the World Trade Centre in New York, a rather stark reminder of what the 9/11 terrorism did to thousands of victims and their families. After almost six years, the subway station has been replaced and many nearby buildings have been renovated. Much still needs to be done, such as replacing the mould-infested Deutsche Bank building and erecting the Freedom Tower, new office buildings and memorial structures.

This slow pace of renewing the World Trade Centre site is going a lot faster than Canada’s tortoise-moving response to provide assistance to Canadian victims of terrorist acts. A bill has been introduced in the House of Commons, supported by Stockwell Day, Minister of Public Safety, to make it easier for Canadians to sue terrorists and their supporters, but even this one simple measure of justifiable restitution for victims seems to be tied up in knots so far.

This lack of attention paid to help victims of terrorist actions arises from our mistaken belief that Canadians are unlikely subjects of terrorist acts. The evidence, however, clearly contradicts this view. Hundreds of Canadians have been killed by terrorist acts, including the 1985 Air India bombing, a 1996 bombing in Paris, a 1996 attack by gunmen in Chechnya, the 2001 World Trade Centre disaster, the 2005 Bali bombing and a 2005 terrorist attack in Egypt. More incidents will unfortunately come in the future, as al-Qaeda has listed Canada as a prime target. While we have been spending billions of dollars on security in recent years, we ignore putting in place policies to help Canadian victims deal with their loss.

A recent report published by the Canadian Resource Centre for Victims of Crime (CRCVC) provides a strong case as to why Canadians should help victims of terrorist actions. Psychological pain, distress and financial difficulties have been experienced by many families of victims murdered by terrorists.
As it should, Canada has supported families of the military, but does little to help innocent Canadians who fall victim to a different war that they cannot control. Federal, provincial and municipal leaders should pay attention to the CRCVC report.

The CRCVC report recommends municipal family assistance centres to assist victims of terrorist acts. Training programs are recommended for provincial victim services and federal consular officers and staff to respond to victims who have to cope with trauma and bereavement. And the feds should develop a framework for the design of emergency communications when disaster happens. Given the numbers involved, the most efficient approach would be to link various assistance programs with other ongoing efforts related to crime and security.

The most contentious recommendation made by the report is to provide a compensation fund to assist Canadians victimized abroad when no other compensation exists, such as in the case of the Air India flight, when only limited financial support was given by Air India itself.
Governments are often reluctant to establish special funds, as it opens up demands for other forms of compensation, such as by victims of domestic criminal acts. Compensation might also encourage individuals to take on risks that could imperil their lives.
As studies have shown, most victims would prefer restitution from the offender rather than the government — hence, the amendments to Canada’s Criminal Code and State Immunity Act are important.

On the other hand, both the United States, after the 9/11 attacks, and the U.K. authorities have made compensation funds available to victims of terrorist actions. Canadian provinces provide some limited compensation to crime victims, but they are unable to address injury outside their province.
Perhaps a better idea than a compensation fund is for the government to provide tax relief for victims of terrorism and, if need be, other crimes. Temporary income loss, legal expenses and other unexpected costs arising from the death of a close family member make it harder to cope with tragedy. A tax burden at these times for families of victims is salt rubbed into the wound. The Canadian Coalition Against Terror is pressing for a two-year tax exemption for Canadian victims of terrorism, similar to U.S. provisions for their citizens subject to 9/11 attacks.

A full exemption goes somewhat overboard since the tax relief would not be linked to monetary and emotional costs incurred by families. However, it does make sense to provide a generous annual tax deduction of $100,000 (or an equivalent credit) to offset these costs. This special deduction could be rolled in with provincial and other compensation so that victims of terror and crime are treated fairly. Some federal-provincial consultation would be needed to co-ordinate financial assistance and tax support.

Governments should begin now to examine their systems in support of victims from terror. They shouldn’t wait until the next tragedy occurs before putting something smart in place.

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