To the Editor:
A few days ago, I published an article examining the Harper government’s most recent statistics on the public’s use of Tax Free Savings Accounts (TFSAs).
The figures, freshly published by the Canada Revenue Agency (CRA) for 2013, together with the pre-budget and post-budget analyses of the Parliamentary Budget Officer (PBO), make one point absolutely clear. There is a good policy case for maintaining TFSAs with an annual limit on contributions at $5500, but there is no compelling argument to nearly double that annual maximum to $10,000.
Finance Minister Joe Oliver felt obliged to respond to my blog. The Minister’s reply was rhetorical and ideological. He made no effort to address the CRA’s latest numbers because they contradict him.
If he is trying to argue that the annual TFSA limit at $5500 is too low and needs to be drastically increased, he would have to demonstrate that a large and growing number of Canadians are regularly maxing-out and need a higher limit. But that is simply not the case.
Here are three “killer facts” from the CRA that destroy Mr. Oliver’s position:
First, over 28-million Canadians are legally entitled to hold a TFSA, but more than 60 per cent don’t participate at all. And only a tiny fraction of those eligible -- a very small 6.7 per cent -- are contributing the maximum.
Second, any room to contribute that a TFSA-holder does not use up in one tax year can be added onto future years. According to the CRA, the average TFSA has, within existing limits, some $13,500 in unused room available for more contributions.
Third, the numbers of people maxing out their TFSAs has been dropping steadily in both absolute and percentage terms since the program’s first year. In 2013, it was down 39 per cent from five years earlier.
So where is the argument for increasing the limit? Mr. Oliver certainly hasn’t advanced one.
By the government’s own prognostications, what they’re proposing is pricey. Nearly doubling TFSA limits will cost several hundreds of millions of dollars over the next five years, and some tens of billions of dollars over the longer term.
Mr. Oliver seems to think that’s a good thing -- even if more than 93 per cent of Canadians get no benefit -- because, in his view, anything and everything that diminishes the Government of Canada is a step in the right direction.
But if the federal government weren’t so warped by that ideology, what are some of the other policy choices that might be made?
Veterans could be treated with greater generosity and respect.
The middle class income tax rate could be reduced.
Child Benefits to help parents with the costs of raising children could be substantially enhanced for nine out of ten Canadian families.
The eligibility age for Old Age Security and the Guaranteed Income Supplement could be restored to 65.
We could have a strong national system for helping military personnel, police officers, firefighters, paramedics and other first responders with the debilitating realities of PTSD.
Mr. Harper’s plan to scale back federal support for medicare could be reversed.
Our country could make a quantum leap forward in building vital public infrastructure to underpin a more prosperous, productive economy, generating both jobs and growth.
We could tear down barriers to education and skills training, and climb back into the top ranks of countries investing in scientific research, new technology and innovation.
It’s all about choices and priorities. There are many better alternatives -- to nurture Canadians’ precious tax dollars, break free from mediocrity, and build a better country. One that works for all of us.
Ralph Goodale
Member of Parliament for Wascana
