Unfortunately, committing to a TFSA hike would also mean having to admit the accounts are excellent policy (buried as they might be in the Tories’ goofy collection of other tax-cut baubles). Instead, both opposition parties immediately committed to rolling back the increase as a way to stick it to the evil rich.
Said NDP leader and former lawyer Thomas Mulcair, whose salary comes in well above $200,000 per year: an enhanced TFSA is “great if you’re having trouble making your payments on your second BMW, but it does nothing for the middle class that is actually earning less than today than it was 30 years ago.”
Wealth, in the eyes of Mulcair’s NDP, is apparently yucky, to be achieved only by the most heartless Canadians (never mind that a BMW costs little more than a Honda Odyssey or Toyota Sienna — second vehicles many parents would presumably use to ferry their kids to the NDP leader’s heavily subsidized, ultimately unsustainable daycares at significant expense to every other tax-paying Canadian).
The problem with Mulcair’s narrative, however, is that it completely misrepresents what TFSAs are about, who uses them, and how much of an advantage they provide to the “rich.”
Whereas RRSPs are meant to serve as a retirement saving vehicle, TFSAs offer everyday Canadians an efficient way to save not only for retirement, but also for a home, a car, a university education, an emergency situation, or simply boost their salaries a bit with some investment income.
As the government’s budget document pointed out, 80 per cent of those who’ve opened TFSAs have incomes under $80,000 per year, and those individuals owned 75 per cent of all assets held in the accounts. Furthermore, 60 per cent of individuals contributing the maximum amount had incomes of less than $60,000, so clearly there’s some room to grow.
The fact is, the new limit amounts to about 20 per cent of the average Canadian’s salary — not an outlandish or extravagant sum. Most financial advisors recommend saving 10 per cent of gross income, but note that 20 per cent should be the target in order to ensure a really comfortable, even affluent retirement. And that’s what government should be encouraging Canadians to pursue.
NDP Hates TFSA!
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