Amid criticism that it favours the wealthy and will saddle future governments with a tax leakage problem that could cost billions, Finance Minister Joe Oliver defended his budget's plan to almost double the TFSA limit on Tuesday, saying we should "leave that to Prime Minister Stephen Harper's granddaughter to solve."
On Tuesday's The Exchange with Amanda Lang on CBC, the finance minister told Lang that criticism of his recently unveiled budget is unfounded, arguing that the benefits for Canadians today more than offset any future revenue problems associated with it that may or may not ever come to pass.
The doubling of the TFSA limit to $10,000 per taxpayer every year was a core plank of Oliver's balanced budget. But critics including the opposition parties and private sector economists have said the populist move will create a revenue problem for governments down the line, as more and more investments get protected from taxation.
The Parliamentary Budget Office recently estimated that the impact of existing TFSAs on government revenues was $1.3 billion this year. And that was before the new changes. The government's own numbers on Tuesday said the proposed changes will reduce revenues by a further $85 million in this tax year, up to a cumulative impact of more than $1.1 billion within five years.
Economist and research fellow with the Broadbent Institute, Rhys Kesselman, recently estimated that doubling the limit could cost Ottawa almost $15 billion a year within a few decades.
That's a windfall for savers and investors, but a direct hit to the bottom line of governments that have to pay for services.
When asked by Lang if the plan would saddle future governments with a revenue shortfall in the billions of dollars, Oliver replied, "I heard that by 2080 we may have a problem. Well, why don't we leave that to Prime Minister Stephen Harper's granddaughter to solve that problem."
Calling TFSAs the "most important savings vehicle for Canadians since RRSPs" Oliver said the proposed changes are important changes that will help Canadians today, regardless of any problems down the line.
"If you have to go to 2080 to say there's a problem with the program I think you've got a pretty good program," Oliver said.
The opposition jumped all over the comment on Wednesday, with NDP leader Thomas Mulcair saying he thought the comment was emblematic of the government's unsustainable policies.
"I was shocked to hear Minister Oliver say yesterday to Amanda Lang that he was going to leave the problem of the unsustainability of his budget to Stephen Harper's granddaughter," he told reporters after a caucus meeting on Wednesday.
"I don't want to leave problems of sustainability on the backs of future generations. I have a granddaughter, and I don't want her to be responsible for picking up the mess that the Conservatives are intentionally leaving."
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