Speaking out against TFSA change
The government has decided to reduce the annual amount that you can put into your Tax-Free Savings Account (TFSA) by nearly 50 per cent. In 2015, you could deposit up to $10,000, but that will drop to $5,500 this year. This change will mean higher taxes on your savings — higher taxes at a time when many Canadians are struggling with the effects of low commodity prices. Raising taxes is rarely ever a good idea, and this could not come at a worse time.
TFSAs are a vital part of financial planning for many Canadians. Some politicians have repeatedly claimed that TFSAs are only used by the wealthy. However, the numbers clearly paint a very different picture. In fact, data shows that TFSAs are used primarily by low- and middle-income Canadians and by seniors. More than 65 per cent of TFSA holders make under $60,000 per year. Almost half of TFSA holders make less than $40,000 per year. One number stands out in particular: more than half of those who max out their TFSAs make less than $60,000 per year.
The Liberals have proposed an alternative tax plan, which provides no additional benefit for savers. It cuts taxes for some, but notably, it provides no tax relief for those making $45,000 per year or less. By cutting down TFSAs and not providing any alternatives for those in the lowest tax bracket, the government’s plan hurts the most vulnerable, and makes it harder for them to save for the future. It does the exact opposite of what the government claims to want.
Tax cuts brought in by the last government, such as cuts to the GST and the lowest marginal tax rate, were of much greater relative benefit to middle- and low-income Canadians. Those tax cuts helped Canada remain relatively strong through the great recession.
TFSAs help seniors save for retirement. They help younger people save up to buy a home or put money away for a rainy day. They encourage people to save, and help to counter high household debt. If the government is truly concerned about Canadians not saving enough for retirement, then they should leave in place the vehicle that most effectively helps Canadians save for retirement.
As your MP, I am committed to being a strong voice for low taxes. Not at the expense of essential programs — but most of the programs you rely on are delivered at the local and provincial level, not the national level. Lower taxes are something that almost all Canadians can appreciate, and cutting taxes helps to inject energy into our economy. That is why, in one of my first votes in the House of Commons, I stood up to oppose the government’s decision to reduce TFSAs. As your Member of Parliament, I will work to ensure that Canadians keep as much of their hard-earned income as possible.
Garnett Genuis is the member of Parliament for Sherwood Park-Fort Saskatchewan. He can be contacted by e-mail at email@example.com. Genuis was first elected in October 2015.
Published: January 28, 2016